Dividends provide income even during flat stock prices, and historically they account for around a third of total returns. So, calling entire decades 'lost' for stocks is likely an overstatement.
Interesting point about gold is that it acted like a stabilizer in my portfolio when stocks and bonds tanked. Like Tyler mentioned in your podcast, gold alone is not that attractive/profitable but if it is an ingredient in your investment “cake”, then you might have a good recipe. 🎂
Stock market returns are un-related to nominal GDP growth, whereas bond yields are correlated to nominal GDP growth. This because stocks and bonds respond differently to bad economic news. Stocks beat inflation if the level of inflation rate is below 5%. Government bonds beat deflation. Stocks and bonds are un-related, but in an environment with persistent high inflation or interest rate both will fall in prices. In an environment of persistence high interest rates will be good for assets like gold, money market funds, financial stocks and short duration government bonds. High tariff and protectionism are back in fashion and increasing geopolitical tensions in a changing world can lead to persistent high inflations (above 5%) and possible much higher interest rates which may be negative impact traditional 2-funds portfolio (stock market index fund + long-term government bonds). Diversification can help you to some extend, and having some safe haven assets like gold, money market funds, short-term government bonds and cash will protect your portfolio.
I had mentioned the golden butterfly portfolio to you a very, very long time ago. I am pleased to see you discussing it in this video. Please discuss it more if you wish I would like to know your opinion thanks.
I've never been crazy about this idea "your gains come from growth" why does the business have to grow? As long as it's profitable the money should be coming back to me.
100% agree. This mistaken belief seems to come from the idea that stock prices are dependent on earnings, and we all want stock prices to go higher right !? Well, not necessarily. Imagine two companies, A and B. A is growing earnings at 2% but pays no dividend. B pays a dividend of 5% but has no earnings growth. B is clearly the better investment, but 90% of investors don't seem to understand this.
I really learned a lot from this video. Thank you very much for your time and knowledge. One thing that is still unclear to me is how short term corporate bonds would respond to something like a war. Would they respond more or less the same like short term government bonds or completely different?
If you are making your investment decisions based on the expectation of inflation and all else being equal. Normal times (expected inflation 2-5%), stable growth and moderate interest rates: Buy stocks, corporate bonds and real estate. Expected deflation (below 2%), interest rates are cut to simulate growth: Buy government bonds and hold cash as bond prices increases and cash now have increase purchasing power. Expected high inflation (above 5%), rising interest rates. money market funds are now more attractive with low risks.
If you compare the development of the UK and Germany GDP in last 20 years Germany has grown much faster than the UK , but that's not reflected in the per capita GDP, so the country is producing more but has also absorbed a lot of immigration , the famous german productivity has basically stalled for the last 20 years, not least because of the amount of high tech production that has been moved to eastern europe and asia. I suspect a lot of the GDP growth has been in low value areas and purely domestic.
Surely if it's German GDP, then of course it's domestic, it wouldn't be another country. Are you saying that cars are low tech, as Germany appears to have been exporting huge amounts of cats every year. Just look at the UK alone and see how many German cars there are, Mercedes, BMW, volkswagon group, Volkswagon, Audi, Seat and Skoda. Since 2010 the UK economy hasn't really gone anywhere & now appears to be in a bad recession, our GDP Since 2010 was lower than even Greece
Can you imagine UK GDP growth would be like without immigrations? My guess its would be shrinking and persistent high inflation due to shortage of labor. The problem is most European countries are short-sighted and no real long-term coherent industrial strategies. The policies are changed once they changed a new prime minister in the UK, not the political party. Instead of focusing on things like green technology, next generation semi-conductor technology, quantum computing, AI and many other new innovations and industries the could have developed and do well, this country chooses to wasted its time and money on brexit and many other nonsenses.
Also about the tariffs, it is extremely naive to not take any action and expect the market dynamics to take care of the imbalances when the game is not played fair and square. China is deeply authoritarian country. The fact that they don't appear too aggressive does not mean they will play nicely in the future. Whenever too much power is concentrated at a single man, bad things will happen inevitably almost like a physics rule. In fact there are extremely few cases when this didn't happen so it would be utter stupidity to treat this as a tail risk. By weighing the risks as is, and acting upon it, you're also effecting the outcome. So I fully support the tariffs but I should add that the car tariff seems very high, no? I'd normally expect it to be to the tune the Chinese government's subsidy to level the playing field. 100% tariff means that they're 50% subsidized, can that be true?
I disagree that China beat US in electric cars. They do produce more for sure with the help of factories like Tesla in China but does that mean they're ahead? I'd look at the value you get instead. If you're buying a Chinese car you'd get a cheap car baring any tariff, sure. This is because of the subsidies, economies of scale, extremely shortened parts supply chain and less hours spent on engineering & quality assurance. But the Chinese counterparts are not as high quality and/or efficient as Tesla, Lucid or Rivian. For example, BYD's top models have usability, quality, efficiency, durability and performance issues to the point that their cheapness is not enough to cover the gap. If you're someone who doesn't use car much and not aware of the competition, you may be motivated by the initial sticker price but that doesn't change the fact that they're worse products. Some people always buy the cheapest thing regardless of what they buy but overwhelming majority of people doesn't always buy the cheapest car and the reason is clear. They want more for the money they pay. That "more" the manufacturer brings to the table is what puts them ahead, IMHO. Sales volume or price alone are not a good indicator to decide which country is ahead.
Personally I think tesla are way over priced. And they appear to be in the middle of a change to try and produce lower cost electric cars. But it seems they don't want to spend money on new production lines. I don't think tesla are really that good quality, it's all just marketing hype a lot of people appear to have been fooled into buying their cars, which really aren't environmentally friendly as they make out. Just the same as the people who buy the oversized & over priced SUV's have been conned
Don’t kid yourself, the Chinese sensibly absorbed what they could concerning the knowhow required, added it their own, and then went to work producing electric cars, that is how economies work. America didn’t invent the steam engine, or in fact as much as European countries prior to WW2, note their low number of Nobel prizes prior to WW2. And they became a superpower after WW2, even today they import a lot of know how, and they are the world’s biggest economy.
A lot of people want a small car to drive around the city. In China they can buy a small EV for less than $10k. Why spend $50-100k on a Tesla or other SUV if a small cheap car is all you need. In fact 20 years ago in Europe, most people drove small hatchback cars. It's the trend to bigger SUVs that have put prices up. Manufacturers make bigger profits from them.
@@douginprague I think it's a con. Some clever marketing people at car manufacturing companies came up with the idea of SUV's to make more profits, & they've managed to persuade a lot of people to buy them, possibly using some clever psychology . As I understand it the SUV's don't cost much more to make than average family cars like the Ford mondeo, or VW Passat etc but they are charging a lot more for them
@@fredatlas4396yes, probably some truth in that. An old fashioned estate car has as much space and is more practical than many crossovers and small SUVs.
