You're all implicitly claiming that all assets return nominal value above inflation, which isn't even remotely true when we teach it to pimple-faced undergraduate students.
When you get down into the details, they're all just "things you can own" and the categories like "investment" and "wealth store" start to look very made up.
No, because while cash loses value, so do many assets. Simply putting money into assets instead of cash doesn't mean you make more money. You might, but you might also lose more money.
No, they haven't. You're thinking specifically about how the US market has been lucky enough for that to occur.
There is absolutely nothing intrinsic about that happening as a guarantee. Look at other countries' stock exchanges.
There have also been periods of time in US history where your equities would have lost catastrophic value as you were ready to retire and all of a sudden you wouldn't have been able to draw down on your retirement without a blend of income from somewhere else.
You're putting words in my mouth and responding to arguments I have never even made.
> There have also been periods of time in US history where your equities would have lost catastrophic value
This is true, but it also is true for cash. You rarely (never?) need all the value of your portfolio at once, so I don't understand your point. Also, most investors invest throughout their lives so even dramatic losses could actually just be a breakeven due to compounding[1]. My point stands that longer-term, an index vastly outperforms cash.
> you wouldn't have been able to draw down on your retirement without a blend of income from somewhere else
Guess what? This is exactly what happens in most cases (at least in my country) anyway as the national pension doesn't give nowhere near enough to live.
[1]: I've found a simulator that goes back a very long time back (https://dqydj.com/sp-500-periodic-reinvestment-calculator-di...). I've selected a period from January 1884 to December 1932. 1932 is one of the big dips, and 1884 would be the time someone would start working if he retired in 1932 (roughly 45 years earlier). For monthly investment you can put whatever you wish, but I've set the initial investment to zero. You can see that your scare tactic doesn't work as the investor still made a huge profit despite an apocalyptic market crash.
You can't attack other users like this here. Since we've asked you many times to stop breaking HN's guidelines and you've continued to do it, I've banned the account.
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html.
Cash loses value every year. This has been true for every currency. We don't have late 20th century inflation but people who know basic personal finance do not want to hold too much cash right now.
Cash loses value at a relatively predictable rate. Equities and other assets gain and lose value at unpredictable rates. There are different rates and different predictabilities. When investors are happy, equities skyrocket to the moon; when investors are unhappy, they crash. US equities in the last 100ish years had an amazing upwards run that is atypical of anywhere else, anywhen else, or any other asset class; is that expected to continue or is it just survivor bias?
Stocks tend to go upwards much more than cash, in the long term, even accounting for crashes. But those crashes are still big. IIRC, if you buy right after a big crash, you get about twice as much stock for the same price, and skip ahead 10 years (25% of the complete duration of the game) compared to someone who bought right before. I haven't run the numbers but I'm assuming that means it's worth holding only cash for 10 years if you're sure there will definitely be a crash some time in that 10 years. That's a best case scenario but 10 years of retirement is not something to be gambled lightly.
> it's worth holding only cash for 10 years if you're sure there will definitely be a crash some time in that 10 years
Oh, because you know for sure that there will be a crash in the next 10 years? A prediction like that alone is worth billions, and I honestly doubt that you're different from the thousands of other who advocated for the same thing since the last 50 years.
In real life, an investor starts to keep assets that aren't as volatile but still aren't cash (e.g. bonds) as he approaches retirement. But even then, if they retire officially (i.e. at 65) then they probably have a national pension to draw from anyway.
> also, is Bitcoin a currency?
I don't care about cryptocurrencies at all, but it is the same classification as gold. People use it to speculate and reassure themselves thinking that "if it goes bad, it will preserve my wealth" and it doesn't have any value except when you trade it with someone for a usable currency.
Equities also lose and gain value. There's a reason to hold cash when it's preferrable to lose real, time and inflation-adjusted, value versus losing to speculative equities or other securities.
But go ahead, downvote me since you and the rest seem to think any asset is better than cash.
Which, of course, once again, isn't true.
You can buy bonds with real coupon rates worse than inflation; you can buy speculative equities whose YoY return nets negative.
But yeah, cash is bad, cash is bad. Buy assets no matter the value!
Go buy Pokémon cards! Right? I mean you guys are so smart, why hold cash? That's basic personal finance!
I bet you also like to tell people "don't time the market, it's time in the market," right?
There's no such thing as the "Lost Decades," that's a spooky Halloween story.
In fact, you're right, go invest in Keurig Dr. Pepper, or no no, how about Kraft Heinz. Those did so well compared to just holding cash.
What about real estate, huh? How about AirBnB? That better enough than cash for you? Not a fan of real estate?
How about Warner Bros Discovery? Yeah? That better than cash?
You could have lost money constantly on GameStop, but wait, there's more, you can go still lose money on it today! Why hold cash?
> I bet you also like to tell people "don't time the market, it's time in the market," right?
That's right.
> In fact, you're right, go invest in Keurig Dr. Pepper, or no no, how about Kraft Heinz. Those did so well compared to just holding cash.
You're either trolling me or don't know anything about modern personal finance. If you're willing to get out of your cave and open your worldview a little bit, I recommend reading the Bogleheads wiki.
Your argument is also flawed, as cash still lost some of its value. As it always did.
Also, comparing cash to investment in specific companies stock is an unfair comparison. USD vs S&P500 index is a fairer comparison.
It's fine if you yourself prefer to hold cash for whatever personal reasons you have, but please stop talking nonsense. A comparison of any currency in the world vs a roughly diversified index would invalidate all your points.
Not at all. Buying and selling on a fixed schedule regardless of the price of the asset is absolutely not timing.
Let me take the Investopedia definition[1]: "Market timing is the act of moving investment money in or out of a financial market—or switching funds between asset classes—based on predictive methods. Market timing is the opposite of a buy-and-hold strategy, where investors buy securities and hold them for a long period, regardless of market volatility." (emphasis mine)
> It's fine if you yourself prefer to hold cash for whatever personal reasons you have, but please stop talking nonsense. A comparison of any currency in the world vs a roughly diversified index would invalidate all your points.
Which is a sign the government has printed way too much money. What are they doing to fix it? Printing more...
There's actually an imbalance going on - the government has printed way too much money towards the stock market, and way too little towards the basics of a stable society, which is why there are symptoms of too much money and too little money simultaneously.
