The wealth-building thread

[blueone]

Leverage is at the heart of every financial disaster, but I'd still answer: depends on what you are leveraging. I'm not uncomfortable with my mortgage. You could make a decent quantitative argument from history that leveraged high yield beats equities and CLO investors are quite convinced they beat equities.

The unknowns get you. Nobody thought mortgages were a problem until home values actually decreased.

I know I'm not being entirely rational by not having a mortgage and investing the money it would yield, especially when 3% and lower mortgages were common. But I grew up in relatively modest circumstances, and not having a mortgage is a source of reoccurring satisfaction. I don't know what it's precisely worth, but it's a lot, especially now that I'm retired.

 

[ahofer]

I don't know what it's precisely worth, but it's a lot, especially now that I'm retired.

Much like audio, preference and peace of mind are unquantifiable yet occasionally critical. My last house was fully paid, but then we decided to move into New York City, and my whole 6BR house in the suburbs turned into the downpayment on a 2/3BR co-op apartment.

 

[blueone]

Much like audio, preference and peace of mind are unquantifiable yet occasionally critical. My last house was fully paid, but then we decided to move into New York City, and my whole 6BR house in the suburbs turned into the downpayment on a 2/3BR co-op apartment.

Wow. You must have really needed or wanted to move to NYC. I can't imagine that myself, but I hope you've figured out how to be happy there.

 

[ahofer]

Wow. You must have really needed or wanted to move to NYC. I can't imagine that myself, but I hope you've figured out how to be happy there.

I grew up here and I generally love it. But the big thing was not commuting. They say commutes are a huge driver of unhappiness, and we were both doing it. Plus I like to go to concerts/jazz clubs in NYC, and having to go all the way back to Princeton NJ was a huge drag. This is a really fun and easy place to live if you don’t have underage kids.

And I have a weekend place in the middle of nowhere, Northwest CT to retreat to.

 

[EJ3]

I know I'm not being entirely rational by not having a mortgage and investing the money it would yield, especially when 3% and lower mortgages were common. But I grew up in relatively modest circumstances, and not having a mortgage is a source of reoccurring satisfaction. I don't know what it's precisely worth, but it's a lot, especially now that I'm retired.

If you own a place outright, then not having a mortgage is a wonderful position to be in.

 

[muslhead]

I'm in the investment management business.

A RIA?

 

[JeffS7444]

When I started this thread more than 3 years ago, I thought of myself as one of Warren Buffett's "average investors", and to date, investing most of my money into low-cost S&P index funds has worked well. Sometimes I worry that I should be doing more to justify the rewards, but the feeling soon passes.

But with feelings of success comes the risk of lifestyle creep! Lucky for me, I did much of my hifi-related YOLOing in my earlier years when I was fearless stupid about buying stuff that I couldn't actually afford on credit.

 

[ahofer]

A RIA?

Portfolio Manager. For reasons too weird and arcane to relate, part of my firm is registered but not all of it, and I straddle both worlds.

 

[EJ3]

When I started this thread more than 3 years ago, I thought of myself as one of Warren Buffett's "average investors", and to date, investing most of my money into low-cost S&P index funds has worked well. Sometimes I worry that I should be doing more to justify the rewards, but the feeling soon passes.

But with feelings of success comes the risk of lifestyle creep! Lucky for me, I did much of my hifi-related YOLOing in my earlier years when I was fearless stupid about buying stuff that I couldn't actually afford on credit.

The last time I saw that word was in relation to this:
The word was criticized for its use in conjunction with reckless behavior, most notably in a Twitter post by aspiring rapper Ervin McKinness just prior to his death, caused by driving drunk at 120 mph (190 km/h): "Drunk af going 120 drifting corners #F@#$It YOLO."
Good thing that you got away from that. It's dangerous to portfolios. And apparently just dangerous in general.

 

[Leporello]

I do a lot of Python scripts, hacky stuff that works, but not clean code. Fed one of my scripts to ChatGPT the other day, was quite impressed with the very clean, nicely structured, highly readable code it spit back out - and it ran perfectly.

This is my experience, too. I build integration processes with a low code visual system but every once in a while there is a need for C# code snippets. ChatGPT and Copilot have saved me hours of frustrating trial and error work. You can also learn from their recommendations, not least because they provide explanations and comments in the code.

 

[muslhead]

Portfolio Manager. For reasons too weird and arcane to relate, part of my firm is registered but not all of it, and I straddle both worlds.

hmm, would hate to be the compliance officer :-}
As PM would guess it doesnt matter much.

 

[levimax]

What this means is dealers are going to pay out to option traders more than usual.

As a former "options dealer" I just want to clarify how things work as saying "dealers are going to pay out more than usual" is for the most part not accurate. Most (not all) "dealers" make their money on the "bid / ask" spread. They make a little money a lot of times without taking a lot of risk. The way you do this is that as soon as you for instance "sell some calls" to a "trader" is to hedge the position by buying some of the underlying security. The "dealers job" is to make a 2 sided market (bid and offer) on any option they are active in and lay off the "delta risk" (market direction risk) with either the underlying security or other options.

 

[Timcognito]

Has anyone considered the impact of mass deportation of undocumented immigrants on the US economy? This new wrinkle in the equation could significantly impact our economy. I found the following stats:

1. Approximately 7.6 million undocumented immigrants are employed in the U.S. labor force.
2. Undocumented immigrants contribute approximately $11.74 billion in state and local taxes annually.
3. They contribute about $13 billion per year to Social Security even though they aren't entitled to benefits.
4. 1.2 million US homes are owned by undocumented immigrants. Many with mortgages.
5. More than one in ten construction workers are undocumented—twice the rate of the U.S. workforce as a whole. Approximately 1.6 million undocumented workers contribute to the construction industry. There is currently a construction labor shortage.
6. Nearly half of agricultural workers in the United States are undocumented immigrants. Deporting them would remove approximately 950,000 workers from a total agricultural workforce of 2.2 million. Expect fresh produce to be difficult to source and higher prices?
7. In 2018, there were 208,482 foreign-born maids and housekeepers in the hospitality industry. There were 76,782 foreign-born dishwashers in the industry in 2018. The industry has faced challenges with employment verification: Many hotels steer clear of E-Verify programs because if they learn their workers have presented false papers, they would be obligated to fire them.
8. Landscaping businesses rely on undocumented workers. This also keeps legal immigrants wages down as both compete for similar jobs. Mass deportation could dramatically increase costs for landscaping work.

Mass deportation would impact lots of other sectors as well. Plus, it will increase the size of the working poor with mixed families. Estimates calculate a reduction of USA GDP by 1.4% if just 1 million of the 7.6 million undocumented immigrants are deported. Imagine the impact if 50% were deported. This will likely be a time of economic and resource dislocation in markets. People will probably be oblivious to the impact until they can't find labor to build new homes, fresh produce is hard to find and US financial market reports start showing a decline in economic activity.

This will spur massive protests and along with tariffs will tank the economy, cause a recession. Public reaction in the midterm elections could reverse the the makeup of congress and enhance problems with massive bailout programs and more debt, weakening the dollar. The market has had some very good performance and the fixed income market is remained reasonable. Time to take some profit, hedge into more stable investments and hope cooler heads prevail.

 

[muslhead]

Has anyone considered the impact of mass deportation of undocumented immigrants on the US economy?

Of course, there are 100's of articles expounding on what people think. Do a google search and you will find the answer to your question

 

[Willem]

It will reduce the quantity of cheap labour, and will cost quite a bit to implement. Industries that rely on cheap labour are likely to move some of their activity abroad, if possible. Labour shortage will increase wages a bit, but as consumers these workers will pay more. It is hard to model how this will work out, but my hunch is that few Americans will benefit.

 

[JeffS7444]

Has anyone considered the impact of mass deportation of undocumented immigrants on the US economy?

Not to worry, USA citizens will be eager to pick up the slack in the country's strawberry fields, meatpacking plants, trades, and service sector.

One can hope that business interests will act as a moderating force.

 

[JeffS7444]

Surprised that no one has brought up the topic of crypto recently, as it seems to be having it's moment in the sun.

 

[JeffS7444]

I would not be surprised to see SPY up 1% by close today.
Current price = 585.45
MaxPain = 595

2 hours into trading 588.92 = 1/2 way to Monday target
591.78+ Monday target for close.

Are you basing this prediction on historical trends?

 

[JeffS7444]

nope
I can't rely on history.

MaxPain - DEFINITION
As an options contract nears expiration, the strike price that would cause the maximum amount of pain for the highest possible number of options traders is said to be the maximum pain point.

Max Pain Explained: How It's Calculated, With Examples

Max pain is the price at which the greatest number of options (in dollar value) will expire worthless.

www.investopedia.com

It's uncanny how prices follow MaxPain most of the time.
This makes it a nice tool for evaluating where trading may go within the period of 3-7 days.
Follow the money!
Market will try to fake you out at every turn but, when it comes to options settlement they have a target price range in mind - to cause the max amount of pain.

Thanks, I have to admit that the Investopedia article still left me puzzled, but I found a YT video which helped me to understand it better, from the institutional investor's point of view.

 

[bilifen]

I've read some of the last pages and man, there is some good info in a compact place and it's very understandable. Thanks y'all.

Myself, I am doing "only" some passive ETF stuff in Germany for retirement. Not that happy with what ETFs are in the group but it's much better what I was doing before (which was something at a local bank). I just needed to start something so I did that, had an opportunity through getting to know some people and did some insurance policies (plus the retirement ETF thing) that already (sadly) are getting put to use.
Iirc 55% in the SP500 which is kinda scary but also kinda needed. The other % I don't remember, if someone wants to know, I will look it up.

That SVOL thing I read about here seems really interesting to me, the problem is the access to this ETF from Germany, can't just do something easy like Trade Republic, the EU seems to have some strict rules which makes this not that easy to do.

Personally, I'm a "I would like to do more risk" but in reality, I'm not actually doing risky stuff with money. Even now a certain amount of money is on an account with passive interest (Trade Republic), which throws the "Opportunity Cost" thing in to play that I don't really want to think about.