Have We Hit The Top?

[cubsfan]

1 hour ago, Castanza said:

Nonsense! There are far less barriers to success today than there ever has been in human history. The only thing preventing people from becoming “successful” is motivation and self discipline. The real difference between today and the 1950s post war era is attitude. 

 

 

 

+1 - so true.

 

I don't see a lot of work ethic and discipline out there these days, especially among the young. You young guys that do have it - will absolutely kick ass if you just focus and keep moving.

[73 Reds]

2 minutes ago, Spooky said:

 

We will need to agree to disagree. Your version of reality sounds nice but it is not what I see day to day.

Of course.  Do you think that what you tend to see day to day is a product of expectations?  As other posters have pointed out, older generations had to work harder/longer for less and we've gone from a survivalist mentality to a rather comfortable experience-oriented mentality in a very short period of time.  I just can't see how today's youth doesn't have an advantage when it comes to education and opportunity.  

[cubsfan]

1 hour ago, Castanza said:

How much if that reality is self induced? I’d say the majority of it. A quick glance at spending habits of individuals in the 1950s vs people today will tell you all you need to know. 
 

There is a reason my grandmother/grandfather had the same small house, same couch, drove used cars, an outdated kitchen for damn near 40 years. Not because they couldn’t have upgraded but because they were frugal and they weren’t constantly trying to borrow against their future. They understood the value of their time and the value of their money. People today value their things against other peoples things. 
 

I don’t feel bad for couples with 80k in student debt, combined income of 160k, a mortgage over 2k and another $1500 in car payments that are struggling to make it. 
 

 

 

It was called the Greatest Generation for a reason. They saved, worked hard, bought everything with cash, did not use debt, focused on their work & families without distractions. Getting rich quickly was the furtherest thought in their minds. It just happened since they did not live beyond their means. They were frugal & focused - which resulted in economic freedom after many years.

 

Anyone can replicate this behavior - and the results will likely be the same.

 

 

[Spooky]

2 minutes ago, 73 Reds said:

Of course.  Do you think that what you tend to see day to day is a product of expectations?  As other posters have pointed out, older generations had to work harder/longer for less and we've gone from a survivalist mentality to a rather comfortable experience-oriented mentality in a very short period of time.  I just can't see how today's youth doesn't have an advantage when it comes to education and opportunity.  

 

Agree that our existence in developed countries is comfortable relative to the not so distant past. I still think the key is to work hard, save money, invest diligently and be patient. Just need to keep compounding over a long period of time. For reference I'm 39 but my spouse and her friends are about 5 years or more younger. I'm also in Canada. I see a lot of the part about expectations leading people to be unhappy - people my age that are investment bankers that own homes etc. still not being happy because they are comparing themselves to others or comparing themselves to their parent's generation. But I have also seen a lot of the latter where young people are struggling to make ends meet, to pay rent (buying a house is out of the question), to find meaningful employment, etc. Generally the mood is one of hopelessness and negativity about the future which I believe social media is contributing to. As an optimist I am an outlier.

[73 Reds]

2 minutes ago, Spooky said:

 

Agree that our existence in developed countries is comfortable relative to the not so distant past. I still think the key is to work hard, save money, invest diligently and be patient. Just need to keep compounding over a long period of time. For reference I'm 39 but my spouse and her friends are about 5 years or more younger. I'm also in Canada. I see a lot of the part about expectations leading people to be unhappy - people my age that are investment bankers that own homes etc. still not being happy because they are comparing themselves to others or comparing themselves to their parent's generation. But I have also seen a lot of the latter where young people are struggling to make ends meet, to pay rent (buying a house is out of the question), to find meaningful employment, etc. Generally the mood is one of hopelessness and negativity about the future which I believe social media is contributing to. As an optimist I am an outlier.

Its somewhat ironic that politics also plays a part; conservatives tend to be more optimistic and liberals more downtrodden.  Not sure I can rationally explain that.  But you are so right about hard work, saving, discipline, etc..  Life has to be about a proper balance.  Some are raised with it; others have to adopt it.  There is genuine satisfaction in a life lived responsibly, well beyond financial rewards.

[Castanza]

38 minutes ago, james22 said:

 

The Howard Marks letter posted above mentions the difficulty simply obtaining information earlier.

 

You can extend that to everything.

 

Interested in a career field? A school?

 

What is easy today was near impossible then.

 

Exactly

 

Today you can take MIT courses online for free. You can get into healthcare with a 1-2yr school at a community college for very little money. You can take one year and bang out your A+, N+, SEC+ IT certs with free resources and a few hundred bucks in testing fees, get a entry level IT job and easily within a few years get your CCNA, Azure, AWS, etc. cert and be making 80k+ in LCOL markets before your HS peers even graduate college....

 

I know a guy who does nothing but snake drains for $250 flat rate. He averages 3-10 a day.....think about that....You don't have to be a rocket scientist to make a good living, you just have to be willing to work and take what the market gives you. Instead we have people paying 60k for a Business Administration degree from a State School to end up working as the manager of a local Sherwin Williams making 50k a year....

Edited January 9 by Castanza

[John Hjorth]

5 hours ago, Gregmal said:

Conversely I’ve also heard that the market is detached from reality and that “everyone is being greedy and euphoric/irrational” in…2012, 2013, 2015, 2017, 2018, 2019, 2020, 2021, 2023, 2024, 2025…

 

This is to me soo funny!  - And true, also here on CofB&F during those years! Greg [ @Gregmal ], perhaps we could even add all the 'double dip' talk starting during 2009 and the years onwards to perhaps ~2012. 

[Libs]

On 1/8/2025 at 12:54 PM, james22 said:

 

The most difficult thing for a young investor to accept is that their intelligence and education, no matter how demonstrable (test scores, grades) and analytically rigorous (field of study, school ranking), gives them very little advantage.

 

Agreed......a good investor's advantage is in temperament, not in the above. Buffett is dead right about that. An obvious example is: feeling euphoric, rather than fearful, when the market plunges. This is the opposite of the typical reaction. But it's where the money is made. You don't need to have cash either, although that's nice. You can just sell dollar bills for 75c and buy other dollar bills for a 25c when stocks are washed out.

 

(BTW I'm kind of shocked to hear people on this board write that stocks were uninvestable in 2011, 2012. Good Lord. They were cheap, even 3 years after the 2009 washout and subsequent run-up. )

 

In summary, don't let macro stuff influence you. If you found a great local business you could buy for a steal, would you hesitate because of anything going on in the world today? Same with stocks.

 

Not saying this is easy for everyone, BTW. Maybe you have to be born with it. Buffett implied as much.

 

 

 

 

[Spekulatius]

People think today is tough should time travel back to the 70’s , 80’s or even 90’s and I bet they would not like it. The labor market was totally crap for most of the decades up until the mid/ late 90’s, pollution, crime in the cities way worse than what we have now etc.

Edited January 10 by Spekulatius

[rkbabang]

On 1/8/2025 at 5:51 PM, Gregmal said:

ing covid was pure comedic genius. 

 

13 hours ago, james22 said:

 

Young kids should zoom out. Look at the last 30 years.

 

How'd the market do? Despite inflation, deflation, bubbles, recessions, deficits, riots, wars, changing administrations, hurricanes, etc., it went up.

 

So? Be fully invested. Your one great advantage over more knowledgeable and experienced investor is that volatility means nothing to you.

 

 

^  This.

 

I've been fully invested since 1996.  I've pretty much never had more than 5% cash and usually less than 2%.  I got pretty much wiped out in 2000 because I was young and stupid and invested almost 100% in tech stocks.  I learned a few things after that.   I was actually in the green in 2006 and 2007, while everyone else was having a bad year or two.  If you invest what everyone else is invested in your returns will be like everyone else's, if you invest elsewhere your returns will be different from the macro (one way or the other).  Don't follow the herd. Don't put all your eggs in 1 basket, and don't be afraid to go outside of the box.  By 1 basket, I don't just mean 1 company, I mean one style of investing, 1 type of company, 1 strategy. Don't build yourself a box to begin with.  But yes, stay fully invested for 30-50+ years putting as much money as you can in along the way and you will be wealthy.

 

[treasurehunt]

8 hours ago, Spooky said:

It is just a fact that Millennial and Gen Z have less wealth at this stage than the baby boomers.

 

Is it?

 

 

[Spooky]

11 hours ago, treasurehunt said:

 

Is it?

 

 

 

I can't see the picture in this post - what is the source?

 

https://www.visualcapitalist.com/charting-the-growing-generational-wealth-gap/: 

 

"As young generations usher into adulthood, they inevitably begin to accumulate and inherit wealth, a trend that has broadly remained consistent. But what has changed recently is the rate of accumulation. In the U.S., household wealth has traditionally seen a relatively even distribution across different age groups. However, over the last 30 years, the U.S. Federal Reserve shows that older generations have been amassing wealth at a far greater rate than their younger cohorts.

As the visual above shows, the older have been getting richer, and the younger have been starting further back than ever before."

 

Here is the distribution of wealth from the Fed: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:119;series:Net worth;demographic:generation;population:all;units:shares.

 

Here is another article which references a study conducted by Allianz: https://fortune.com/2024/10/03/boomers-wealthiest-generation-millennials-biggest-losers/

 

"A U.S. boomer born in 1960, for example, with an annual savings rate of 10% over 40 years will have generated lifetime savings of more than 850% of their disposable income.

 

An American Gen Xer, meanwhile, who has saved at the same levels will now have a fortune worth 606% of their disposable income, with an annual return rate of 6.7%.

 

But even a gap of 200% between boomers and Gen X looks attractive compared with the deal millennials got.

Millennials born in 1984—who saved at the same rate as their parents’ generation—will see their total lifetime nest egg amount to just over 430% of their disposable income.

 

Of course, millennials still have a couple of decades to keep topping up their savings while they continue to work. Even then, Allianz suggests they will never accumulate the same levels of wealth as boomers themselves—netting 670% of their disposable income within their lifetime.

 

Gen Zers—the youngest generation entering the workforce—fare better than their millennial peers, but not as well as the oldest generation."

 

 

[Jaygo]

12 hours ago, Libs said:

(BTW I'm kind of shocked to hear people on this board write that stocks were uninvestable in 2011, 2012. Good Lord. They were cheap, even 3 years after the 2009 washout and subsequent run-up. )

 

That was me!! And I was explaining what my mindset was at the time. I was scared, I was really upset about loosing all my money plus a bit of borrowed money too. I was 23 and I was back to Zero.

 

In 2012 the time was perfect to invest but all my "research" pointed to more trouble. My way of telling Blake how hard it is to combine macro with market performance.

[Vish_ram]

Wisdom = returns; 

 

when someone posts we’ve to discount where they’re in this graph 

[TwoCitiesCapital]

I've basically been concerned my entire adult life

 

Not necessarily because of valuations - that didn't start until 2015/2016 when the US started to really get elevated to the rest of the world (and then later on an absolute basis). 

 

But more from a policy stand point. It's clear to me that too much debt IS the primary issue and we keep 'solving' it with more debt which is problematic. And I have been concerned about those policy responses since starting investing in 2007 by buying Ford stock. I think what I had failed to appreciate is that 1) debt crisis can take decades to work through and don't have to correct overnight and 2) it's different when you're the reserve currency. 

 

My caution probably would have been justified if I were European. Double dip recession in 2011. Brexit/Grexit fears thereafter. Started to recover and catch up to the US and then COVID reset the game. Then Russia's invasion of Ukraine blowing a hole in your energy security. 

 

But none of that matters to the US when you have the fortune of printing as much money as you like and there always being a bid for it as the rest of the globe is net short USD. Plus smaller impacts like one of tax changes, the explosion of fracking, etc also probably helped. 

 

Ultimately I don't think it's sustainable. I'm still concerned. But also recognize I have no ability to know where it ends. I've largely given up buying puts on the market, but still watch the market for the direction of the tide. 

 

 

Edited January 10 by TwoCitiesCapital

[Longnose]

I just read the trading game by gary stevenson.

 

He made his money for his career trading currencies. The bet that he kept making after the GFC was that countries cant raise rates and that rates must remain low or the global economy will collapse. So any time a country would raise rates he would take the opposite side saying that the rates will have to come down because the global economy cant sustain it. 

 

Its been about a year since ive done any hard listening or reading in the BTC space but a lot of the bitcoin podcasts I used to listen to used to talk about this that the global economy cant sustain raised rates. So for many the BTC bet is that our current money system (global reserve currency and all other centralized currencies) is broken. 

[Vish_ram]

18 minutes ago, Longnose said:

I just read the trading game by gary stevenson.

 

He made his money for his career trading currencies. The bet that he kept making after the GFC was that countries cant raise rates and that rates must remain low or the global economy will collapse. So any time a country would raise rates he would take the opposite side saying that the rates will have to come down because the global economy cant sustain it. 

 

Its been about a year since ive done any hard listening or reading in the BTC space but a lot of the bitcoin podcasts I used to listen to used to talk about this that the global economy cant sustain raised rates. So for many the BTC bet is that our current money system (global reserve currency and all other centralized currencies) is broken. 

 

You've hit the nail on the head. 

Just do this inversion. In an ideal world, the owner of a $1 note should see the benefits of productivity increase (the small relentless force in existence for 1000s of years). $1 should be more and more valuable each day, each year. This is natural currency deflation. 

 

1) People falsely link currency deflation with economic deflation. You can still have a growing economy, wealth with a currency that is appreciating.

2) Economists incorrectly argue that people postpone spending with currency deflation and that full employment cannot be achieved with that. Wrong. Basically this is theft by Govt. 

 

BTC fixes this. 

 

For BTC haters, killing it is easy. Fix the monetary devaluation, deficit issues. 

Edited January 10 by Vish_ram

[Blake Hampton]

32 minutes ago, Longnose said:

I just read the trading game by gary stevenson.

 

He made his money for his career trading currencies. The bet that he kept making after the GFC was that countries cant raise rates and that rates must remain low or the global economy will collapse. So any time a country would raise rates he would take the opposite side saying that the rates will have to come down because the global economy cant sustain it. 

 

Its been about a year since ive done any hard listening or reading in the BTC space but a lot of the bitcoin podcasts I used to listen to used to talk about this that the global economy cant sustain raised rates. So for many the BTC bet is that our current money system (global reserve currency and all other centralized currencies) is broken. 

This is an interesting train of thought and I do think it’s a possible future scenario, especially under someone like Trump.

 

The entire purpose of raising rates is to offset inflation. If central banks can’t raise rates to do their job, the result is simply hyper-inflation. This is when you want to own assets and not cash.

 

Bitcoin is worthless and if you wanted to do something along the lines of currency, I think gold would be a far better bet. I would personally stick to productive assets such as oil and real estate. A mortgage can be inflated away.

 

Edited January 10 by Blake Hampton

[Blake Hampton]

“Bitcoin is worthless artificial gold.”

- Charlie Munger

[Longnose]

Also, his continued bet was that the world wont let the global economy fail. So the big guy will keep screwing the little guy harder and harder, expanding the wealth gap between the haves and the have nots and rates will continue to move towards 0 or lower over the long haul. Even though no one wants to believe it.

[gfp]

"The interest rate the Federal Reserve sets doesn't effect inflation the way you are assuming it does" - gfp

[Blake Hampton]

1 minute ago, gfp said:

"The interest rate the Federal Reserve sets doesn't effect inflation the way you are assuming it does" - gfp

Probably not but it is their main tool for dealing with it. If inflation does manifest, expect rates to go up. If they don’t, people might just lose faith in the currency.

[Gregmal]

8 minutes ago, gfp said:

"The interest rate the Federal Reserve sets doesn't effect inflation the way you are assuming it does" - gfp

100%. I’ve been utterly shocked at how many people the last 3-4 years have just blindly taken the inflation is solved by rates thesis as bible. It’s scary how ignorant it is. But hey, if it’s in the textbooks…and oh yea, there was this one time!

Edited January 10 by Gregmal

[nsx5200]

11 minutes ago, Vish_ram said:

You've hit the nail on the head. 

Just do this inversion. In an ideal world, the owner of a $1 note should see the benefits of productivity increase (the small relentless force in existence for 1000s of years). $1 should be more and more valuable each day, each year. This is natural currency deflation. 

There are two(probably more) forces to the value of currency, and you're focused on just one.  The ones that I can think of, inflation and productivity gain play significant roles.

 

Things that improves with productivity does come down over time.  I remember when the availability of sub $1000 computer was a big deal.  Productivity gain and the availability of new manufacturing capabilities from China influence the price of many thing when China started coming on-line to the global market 10-20 years ago.  Now that we're starting to decouple from that manufacturing  machine, as well as China plateauing on their productivity, price of things are getting influenced by inflation more now.  This is probably the dominate factor causes the perception that inflation is rising so much faster than the past decade or so.

 

17 minutes ago, Longnose said:

Also, his[Gary Stevenson] continued bet was that the world wont let the global economy fail. So the big guy will keep screwing the little guy harder and harder, expanding the wealth gap between the haves and the have nots and rates will continue to move towards 0 or lower over the long haul. Even though no one wants to believe it.

I saw his YT videos, and his theory makes a lot of sense.  I don't see a solution that would fix the system.  There's not enough political will power to implement what he's proposing: tax the rich, and tax wealth, not income.  The best that we can muster is to at least lessen generational wealth transfer by closing the estate tax loopholes so there can be no infinite generation wealth transfer.  Having infinite generation wealth transfer turns merit-based society into ovarian lottery based society.

[Blake Hampton]

Inflation itself is simple: it's an equation. It's when too many dollars are chasing too few goods. On one side, you have the supply of money, and on the other, goods and services.

 

Consider the Federal Reserve. They come into the inflation game by operating under a dual mandate:

• Promoting price stability
• Promoting maximum employment

There's always a tension between these two variables because when you raise interest rates, you promote price stability but impede employment. Vice versa.

 

The equation of money to goods is the root of inflation, and the purpose of raising interest rates is to keep inflation from getting so out of hand that it becomes devastating.
 

When you print a dollar, it has to lower the value of the other dollars in the system unless growth in goods and services can mitigate its creation. However, exactly when it ends up being reflected in the value of those other dollars is still in question.

 

Edited Monday at 11:02 PM by Blake Hampton