Hi. Unfortunately, I spent years without looking for this type of content in youtube because I always ended up either on weird channels about investing in cannabis delivered in teslas or on news channels. I am not interested in any of those. I am interested in illuminating interviews like this one (already bought the book btw). I just recently discovered Benjamin's channel and this podcast and I really feel the need to say WELL DONE! Thanks. That is all. Cheers.
Yes, this really is the light in a sea of darkness regarding finance RU-vid. Got here via the plain bagel and Patrick Boyle who also are quite good but not enough of the really deep stuff:)
Another good one, guys. Listening to Mr. Housel speak reminded me of myself. I've always held a fair amount of cash, compared to others. A couple months ago, I formally took this cash out of my settlement account and put it in a savings account at the credit union. That way, it put friction in case I wanted to invest my safe money. Last March, I saw the value of my investments go down more than the assessed value of my (cheap) house, IN ONE DAY. What did I do about it? Nothing really. I had my plan. That was to sell positions that showed tax losses and buy other investments. I won't say that I was quite so fast on the buys, but I had most of it done by early April. I'm an older guy and I've seen this in 1987, 1992 (or so), 1998, 2000-2002, 2008 and now 2020. By this time, I realized that I should just do nothing, but just sit there. (credit: Jack Bogle)
I watched this a year ago and watched again and found insights that when understand and apply will improve my well being, the concept of enough, invest like an optimist and save like a pessimist. Fantastic episode! Thank you
I feel like with the topic of leverage we seem to be talking in extremes. Either no debt, or people going 10x leverage with margin calls. There are other ways to leverage, without margin calls and without 'swinging for the fences' . There is a middle ground between those two points.
I created a spreadsheet that models this. I found that having a low leverage ratio, around 20% is very effective when you never adjust the ratio downward. This avoids having to sell at a loss and since the initial ratio is so low, a margin call is also unlikely. When the underlying investments go up, you can increase the leverage back go 20% but never decrease. It's really effective because it's safer and reduces the drag from selling at a loss that is required from most leverage strategies.
Also, it depends on the underlying investments, but using the S&P500 and 20% leverage ratio, assuming your Margin Requirement is 50%, you would have gotten a margin call only during the great depression, and you still would have ended up ahead after a 30 year period.
Great podcast but FYI , Taleb does not consider COVID a black swan event. It was predictable and talked about in reports from years ago suggesting risk of global pandemics due to lack of preventative measures
There is a great difference between a "bad" decision and one that is merely "suboptimal." Paying off one's mortgage means that the savings in interest (given today's ultra-low rates) are less than what the money could have made while invested in today's bull market. So it is suboptimal, but owning a domecile, which everyone needs to have, and owning it outright and having less debt is not a bad decision.
