Comments on: Investing and the Worst-Case Scenario http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/ Investing Blog: The Oblivious Investor Thu, 29 Jul 2010 15:54:20 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Mike http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1347 Mike Wed, 22 Apr 2009 19:02:02 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1347 emailing you the spreadsheet now... emailing you the spreadsheet now…

]]> By: SJ http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1346 SJ Wed, 22 Apr 2009 18:42:24 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1346 Thanks for doing the analysis! Are they also un-correlated in time? Does debt vs. ownership receive benefits at different notions in time? Also, wondering where you might have gotten the data... cheers! Thanks for doing the analysis! Are they also un-correlated in time? Does debt vs. ownership receive benefits at different notions in time?

Also, wondering where you might have gotten the data… cheers!

]]> By: Niklas Smith http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1342 Niklas Smith Wed, 22 Apr 2009 09:57:18 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1342 Re. Mark Wolfinger: The problem with hedging is that it costs money. I think Mike's point is that any fluctuations short of global meltdown will be ironed out over a period of decades. If you have only a few years left to retirement then by all means hedge or switch to inflation-indexed bonds to protect your capital. But if you're in your twenties or thirties I suspect hedging can only lose you money over the long term. Re. Mark Wolfinger: The problem with hedging is that it costs money. I think Mike’s point is that any fluctuations short of global meltdown will be ironed out over a period of decades. If you have only a few years left to retirement then by all means hedge or switch to inflation-indexed bonds to protect your capital. But if you’re in your twenties or thirties I suspect hedging can only lose you money over the long term.

]]> By: Mark Wolfinger http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1340 Mark Wolfinger Tue, 21 Apr 2009 17:19:58 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1340 Your portfolio will never again suffer large losses if you simply learn to hedge (reduce the risk of owning) your investments. Conservative option strategies are ignored by financial pros, the press, an stockbrokers. But they are easy to understand. Your portfolio will never again suffer large losses if you simply learn to hedge (reduce the risk of owning) your investments.

Conservative option strategies are ignored by financial pros, the press, an stockbrokers. But they are easy to understand.

]]> By: Mike http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1339 Mike Tue, 21 Apr 2009 16:22:28 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1339 Now there's a fun question SJ. No, it doesn't mean they're correlated in real life. (Just ran a calculation in excel. The correlation coefficient of year-by-year stock returns to year-by-year bond returns for the period 1928-2008 was 0.0186. If you look at after-inflation returns, it jumps up to 0.1076--higher, but still not very high.) What I'm suggesting is that in an extreme economic catastrophe scenario, they would become correlated (as they'd both be moving rapidly toward zero value). Now there’s a fun question SJ.

No, it doesn’t mean they’re correlated in real life. (Just ran a calculation in excel. The correlation coefficient of year-by-year stock returns to year-by-year bond returns for the period 1928-2008 was 0.0186. If you look at after-inflation returns, it jumps up to 0.1076–higher, but still not very high.)

What I’m suggesting is that in an extreme economic catastrophe scenario, they would become correlated (as they’d both be moving rapidly toward zero value).

]]> By: SJ http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1338 SJ Tue, 21 Apr 2009 16:12:54 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1338 I think it should go 1. Own a gun. 2. Grow your own food Gun is more important... if all rules fall apart =D I do have a question; so does this mean bonds and stocks are correlated? I think it should go
1. Own a gun.
2. Grow your own food

Gun is more important… if all rules fall apart =D

I do have a question; so does this mean bonds and stocks are correlated?

]]> By: Baker @ ManVsDebt http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1337 Baker @ ManVsDebt Tue, 21 Apr 2009 15:04:11 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1337 Although I'm not currently in the market, I can definitely related to this theory. I still think it would be hard for my conservative side to stomach, but I'm interested to see how my perspective changes over the next few years getting out of debt! Good read! Although I’m not currently in the market, I can definitely related to this theory. I still think it would be hard for my conservative side to stomach, but I’m interested to see how my perspective changes over the next few years getting out of debt!

Good read!

]]> By: Neal Frankle http://www.obliviousinvestor.com/investing-and-the-worst-case-scenario/comment-page-1/#comment-1336 Neal Frankle Tue, 21 Apr 2009 14:31:45 +0000 http://www.obliviousinvestor.com/?p=3441#comment-1336 Another zinger Mr. M. This is a rational argument and one that is often difficult to hear when investors are in the throws of fear-tantrums. Good one .... Another zinger Mr. M. This is a rational argument and one that is often difficult to hear when investors are in the throws of fear-tantrums.

Good one ….

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