mathjak107 wrote: ↑
Fri Jul 03, 2015 3:42 am
i really abandoned the pp because after watching the bond action i did not want to place such a big bet on rates at this point with the bond market yield s trend being up lately for months and stock market gains just squeaking out .
Earlier I did some volatility checking of bonds from 1925 to date and various subsets, especially the bond bear from 1946 to 1981 which had low rates at the outset comparable to today. Unfortunately, it seems that monthly data really masks the volatility one would experience on a daily basis as I was getting low volatility values not in any way comparable to 1977 to date (13.09%). Isn't it normal to annualize by multiplying the square root of a value by the standard deviation of the returns representing the sampled temporal interval? i.e. 12 for monthly data?
I don't know what the answer to the bond conundrum is, but I do know one thing. The 1970's is no longer representative because it was high rates increasing higher (minimal duration). We're at 1940's low rates that are going to increase higher (maximum duration). If anyone is not scared, they should be.
yep , unless we have some extended calamity betting to heavy on rates now can be betting against the house , fighting the fed and forgetting the trend is your friend.
these sayings are there for a reason.
in the financial world not making the money you could is akin to losing that money .
getting overly defensive and leaving a pile of money on the table just for the fear of fear is in effect losing that much.
don't forget this important fact.
you only get one shot at building up everything you need for retirement . to leave money on the table because of fear of some calamity you come up with in your head that may never come to be and likely won't may be very dangerous to your wealth .
the accumulation stage is the time to try to go for that pedal to the metal approach . after all even 2008 recovered in 5 years. trying to overly protect against the outside chance everything goes to crap can cost you dearly and odds are Armageddon isn't around the corner.
just something to think about if you are still years from retirement ..
the most important thing financial i learned , i learned from jason zweig . (his dad was marty zweig -famed wall street week elf ) .
jason's book your money your brain taught me our brains are geared to sabotage us .
the brain hates losing money and when it stresses over real money it even uses different sections for reasoning then it does when you hypothetically think about doing something .
so your brain will get you to take the safest path and throw reason after reason at you as to why you should not take that more volatile path.
when i was debating buying in to that real estate venture which would cost more money than i even owned and had no guarantees , i was up night after night as my brain pounded me with every reason as to why i should not do this.
but reading jasons book i knew i was not being handed a rational decision.
so i bit the bullet , did the deal , borrowed more money than i ever dreamed i would and it was the best thing i ever did.
it was a calculated risk but a risk. the first lease buy out of a tenant fetched 7 figures for the apartment and our share paid off the loans. we still had 7 more apartments left and a 10% stake in the commercial lease rights to the building .
those lease rights were sold last year for the whopper of an amount , 18 million dollars . we got 16 million cash and they are paying us out the other 2 million over 4 years . we held a 10% stake in this deal.
this deal which cost us all of 500k to buy in turned out to be amazing.
but if i listened to my brain i never would have done it.
here is the story of our lease right sale if anyone cares to read it.
http://therealdeal.com/blog/2014/01/29/ ... r-for-18m/