M*: What’s Your Investment Faith?

Ted

FYI: In "The Active Dangers of Passive Investing," on a website serving financial advisors called Advisor Perspectives, guest columnist Vitaly Katsenelson writes:

"If you own the S&P 500 (or long-term bonds), you implicitly think one of several things is true: 1) Interest rates have a zero or insignificant probability of going up; 2) I'll be able to get out in time; or 3) I have a life-sized statue of John Bogle in my living room, and I have a very, very, very long time horizon."

Purchasing long-term investment assets requires trust. Doing so involves handing over a valuable possession--that is, money--with no guarantee that the sum will be returned in full (as expressed in real terms), except for certain inflation-protected securities. Investing is an act of faith.

However, as Katsenelson suggests, views differ. Your reason for owning long-term assets may not match mine.
Regards,
Ted
https://www.morningstar.com/articles/922789/whats-your-investment-faith.html

MikeM2

Agnostic.

jerry

My view is that I don't want Katsenelson as an adviser. Does he have a reputation of being frequently correct?

Old_Joe

Born-again atheist.

LewisBraham

The reason to own long-term investment assets is because they thrive when the world does.

This analysis confuses general economic wellbeing with increases in investment capital when the two aren't necessarily correlated. In other words, a company can lay off employees and its stock price will go up as a result. If anything, the correlation between investment well being and economic well being has declined significantly with improvements in technology, i.e., productivity and the advent of companies like Google and Netflix which can produce oodles of money while not employing that many people. If one compares for instance the amount of employees at Netflix versus Blockbuster at its prime, you can see how much fewer employees Netflix needs to do a better job at renting video than Blockbuster.

Investing is an act of faith.

This is true. But the faith is not that investing produces happiness and wellbeing for the world. It is faith that the rich will always find new and more creative ways of exploiting the poor. This has been true throughout human history and is the fundamental reason why in the long run stocks tend to go up. The more profits companies can squeeze out of their employees and consumers, the better it is for investors and the wealthy rentier class in general. There are some benefits to this exploitation--better iphones for instance--but the realities of capitalism are more like this than Rekenthaler claims:

hank

“In addition--this part usually remains unsaid, but it should be surfaced--neither asset class will withstand major wars.”

Maybe give thanks to Robert Oppenheimer?

hank

In addition to John Oliver’s focus on investing in mobile homes, you might also want to invest in mobile home parks. Some reasons (From Mobile Home University):

- “From the New York Times to Bloomberg, mobile home park investing is starting to be recognized as an attractive real estate sector ... Mobile home parks have the highest yields in commercial real estate, with starting cap rates often over 10%, and cash-on-cash returns of 20% standard fare.”

- “If you believe that the U.S. economy will continue to decline in the years ahead, ... then mobile home parks are virtually the only form of real estate that performs better in a recession. ... Over 20% of the U.S. population has a household income of $20,000 per year or less (which is nearly the poverty line). As America gets poorer, mobile home parks are the only form of housing devoted to this demographic ...

- “One reason that mobile home parks have long held their value is the simple fact that virtually no city or town in the U.S. will allow new parks to be built. Why? Nobody wants a mobile home park as a neighbor, and their vocal dislike for mobile home parks eliminates any chance of political approval.”

- “Another interesting barrier is the difficulty tenants have in moving their home out of a mobile home park. It costs around $5,000 to move a mobile home, so virtually no tenants can ever afford to move. As a result, the revenues of mobile home parks are unbelievably stable.”

https://www.mobilehomeuniversity.com/articles/why-invest-in-mobile-home-parks.php