Stocks, Bonds, and War
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- Опубликовано: 28 мар 2022
- Wars and financial markets have coexisted, and often been intertwined, for hundreds of years. Countries that have lost major wars have had their financial markets decimated, while global markets have been relatively resilient, even to major conflicts. Despite the relative resilience of global markets, crises and wars tend to reduce global market returns and increase their volatility.
Special Rational Reminder episode: rationalreminder.ca/podcast/s...
Referenced in this video:
War, Peace and Stock Markets: papers.ssrn.com/sol3/papers.c...
ICB Project: sites.duke.edu/icbdata/
WHY DOES STOCK MARKET VOLATILITY CHANGE OVER TIME?: www.nber.org/system/files/wor...
Earning from History? Financial Markets and the Approach of World Wars: www.brookings.edu/wp-content/...
The General Theory of Employment: macroeconomiauca.files.wordpr...
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10:20 I think he meant *decreased* recovery times. Taking longer to recover losses would not be a benefit.
Or, did he mean that recoveries (as in periods of positive returns) tend to be more prolonged for diversified portfolios?
No you are correct. I meant to say decreased. Thanks for paying attention!
@@BenFelixCSI you can do some simple post edits in RUclips’s editor if you want to!
I did not realize I could edit a video once it’s live.
@@BenFelixCSI HA! I should read the comments before making my own. Well done.
I think he meant accelerate or improve
When the world needed him most... he came back
@@joachimmilberg2313 I lost £1200 carelessly trading on a platform,then I was referred to Juan Antonio Landa. she recovered the loss and made an extra profit of £4600.
A lot of positive comments about Juan Antonio Landa, I thought I was the only one benefiting from her.
My first returns with Juan Antonio Landa gave me a profit of over £8500
I began investment with £500 with Juan Antonio Landa last month,I had some doubts about her before I got my first payment of £4,570..
Wow I can brag about Juan Antonio,she has managed my account in such a way winning is the only standard I know.
He is... The Dark Knight.
Once again giving us that much-needed rational thinking in irrational times! Thanks Ben!
Welcome back Ben! We missed you so much and were really pining for our rationality fix.
Next time you're craving a fix, check out the podcast...a weekly dose of rationality, jumbo sized.
I think I look forward to new video's from this channel the most. You put more research together than any other finance channel.
Thank you Ben!
I live in Ukraine and this war is devastating.
But with help if Canada, US and our western friends we will win the war and rebuild the economy!
Lyubomyr
We support you and will help. I have donated personally but am very happy with out government's current proposal for a $33B aid package. Your country's courage is inspiring the world.
@@brendanh2097 thank you
It is always nice to watch you video, Ben. In Russia we have one major ETF provider. This war affected to ETF infrastructure. Maybe first time in ETF history. Market makers loose ability to provide liquidity because of currency exchange shock. Also Euroclear frozen transactions to our local depositary. My portfolio is globally diversified with stocks and bonds ETF. I hope our ETF infrastructure will be fixed soon. I hope this war will ends soon.
This man has educated me through his youtube more than any formal education throughout my life
I like the frequency of the videos. Feels like it's building up a canonical library released at timely moments.
The best Video on the topic I have seen - and I have seen many!
Ben, I sense some progresive relaxation in your dressing code... :)
Fantastic information and perspectives! Thanks!
The timing of this video is just perfect. I really needed to hear this. Thanks Ben.
I was just looking through your videos hoping for some insight! Thanks for the video!
I always appreciate your well informed videos. I look forward to your future ones, thanks!
Glad you're back Ben. CSI has been away too long!
So much valuable information. Thanks!!
Hi, could you please compare starting a business, buying a business that is already in motion, and investing? I am a big fan of your videos. You are literally the only reliable source on youtube. It would be great to see you tackle this with your evidence based approach.
Very intriguing video! I appreciate the historical content. Niall Ferguson's book sounds interesting. I waasn't aware of him. I am reminded of what Peter Lynch said: "As I look back on it now, it's obvious that studying history and philosophy was much better preparation for the stock market than, say, studying statistics."
Profiting from War is an American Classic.
He’s Canadian, so…
Do you comment on every video from popular finance you tubers? Spam spam spam
I wish you made more videos! Been following you for a while. Thank you for the rational take on the situation.
Can you do an update on the inverted yield curve? US30Y-US05Y inverted last week and US10Y-US02Y is close to inverting.
He is back! The man! The legend!
Thank you
Was really happy to see this notification this morning! Thanks for the amazing content as always.
Good to see you back
Thx a lot for this very informativ video and best greetings from Germany.
In the US, is there a solid set of ETFs that follow the global stock market and global bond market? Not VXUS/SCHF as they exclude many countries.
Thanks Ben
Thanks Ben!
Time in the market beats timing the market, never sell just buy and hold good quality assets.
Another great video Ben! Thanks from a fan south of the border!
Great stuff man!
Cheers Ben.
Thank you Ben for your research and useful information!
Great video
Great video!
I was waiting for this, thank you
Our boi is back!
Hey Ben, long time viewer. I think I have a great idea for a future video I and I'm sure many others would love to see, the apparent persistent overpriced nature of derivatives. Is the volatility premium a factor akin to value and size? Seems like something right up your alley. thx
I am not so worried about war as much as I am about the Federal Reserve rate hikes. While not a perfect correlation, there certainly is a strong one.
The king is back!
Welcome back!
Cheers / a new Ben Felix video 🥂
he returns. thx. Great video as always
Spam in the replies
YES! FINALLY A VIDEO 😍
Welcome back dude! We missed you! 😭😭😭😭
Ben i would like u to speak about the American I bonds. Thanks a mill
Yasss, I'm so happy to see you again 😄
Good to see you
Been waiting so long for a new video
The legend is back !
Ben, which scientific journal do you suggest to read/check to improve my understanding of portfolio management, risk calculation, ETF etc... I have found the journal of investing for example, publisher: portfolio management research...what do you think?
What are some good foundamental books? I am not scared about tough mathematics or university books...
Thank you!!!
Return of The King
He's back! :)
welcome back!
There are only a few people on the Internet with actual good content, especially from the Finance perspective, and you're definitely one. Thank you for the videos.
Ben is the man.
Cool title bro! They should interview you on CNBC and Bloomberg TV!
Happiness is a new Ben Felix video.
the goat has uploaded at last
Ben I missed you so much!
Thanks. Missed you all too!
Great to see you back Ben! Fantastic content as usual!
Appreciated
@+①④⑥⑨④⑧②⑦⓪⑦④whatsAℙP oh, look, it's my Nigerian prince
Like always amazing profesional content! Thanks Ben you are great!
4:10 Did you mean that a higher discount rate will provide of a lower PV (present value) of CFs meaning a lower expected return? I may be wrong here but would love some insight. Thanks!
High discount rate = high expected return. Given future cash flows, the less you pay for them (higher discount rate, lower PV) the higher your return if you collect the cash flows.
@@BenFelixCSI That makes sense. Thanks so much for the insight. I was able to work it out if I put that into perspective with the following formula: PV = (FV/1+r)^1/n -1. In this case, higher the discount rate, lower the PV, and higher the return % needed for it to reach its FV (to collect the future CF/s). Once again, thank you!
Another thought I should have had earlier is that higher the risk (discount rate) should automatically = higher expected return. due to the +ve correlation b/w risk and return.
I forgot Bonds even exist
Great content, as always
Long time, no hear Felix. Good to have you back.
My exposure to both countries is via foreign companies with operations exposure. But, fundamentals are still there. Part of me believes capital market should support Ukraine by keeping their investments intact. But that's just an opinion.
He is more active in the podcast space though
Nice
Nice you made a summary video of the war and peace podcast episode. Is it possible for you guys to also discuss the barbell investing strategy? If bonds can also be so risky wouldn't it be better for me to instead of a 60 stock 40 bond allocation to have a 50 stock 50 HISA instead?
Thanks for the video. I'm from Russia. Although the Russian market has not fallen as much as it could, investors may now have limited access to diversification due to the mass departures of foreign brokers. I hope IB will remain available to customers from our country
I hope nothing will be available in your country untill you back out from Ukraine and long after.
Very happy you're back Ben, and thanks for this great video. It would have been interesting to also see how gold behaves during war times as it's perceived as a safe alternative money especially in economies with high inflation, which wars often cause.
War is an ultimate manifestation of competition.
Yeah, there is such a thing as too much competition.
Ben, not sure if you realize this but in some ways you are a financial therapist, not just a portfolio manager :D
Ben, how would you recommend an average retail investor to get into bonds?
Are there similar tips to what you frequently share for stocks?
Personally, I use VBTLX to trade in bonds. Vanguard does all the work, you collect all the profit, minus the 0.05% expense ratio.
Welcome back lol. I missed your videos heh
Would love to hear your POV on the "disposition effect" and also how to decide when to cut a loss, including the usual way that you base your analysis and conclusions on research papers and factual results ...
Really like your videos; they are solid, sound work. Question: Why are your videos listed as for kids? This means I cannot make YT notify me when you post. And I want to be notified!
I’ll have to look into that. They should not be listed as for kids. Thanks!
8:48 point
Heads up, volume is low compared to RUclips standard
YAY
can you do a video on how to game the market by manufacturing an international conflict ? thank you
Being just retired I hold 50% in XEQT for growth and 50% in XINC for income, maintaining a 60/40 portfolio. I think this is a better approach than holding just XBAL alone, because in case of a major market drawdown it gives me an opportunity to reallocate some funds from XINC to XEQT and get a better overall return that way instead of holding just XBAL.
At how much drawdown will you rebalance considering you don't know how much market is gonna drop and there will be fear of investing with people losing their minds.
Where have you been Ben? Glad to see you back
Taking a nap 😴
@@BenFelixCSI
Hope to see videos from you more frequently, your videos are arguably the best in the sector, thanks 🙏
Where have you been, all this while
Damn, where were you Ben? That other intellectual hard to understand podcast you got?
Great content again, more please! Thank you a lot for this insights and clear thoughts.
Ben we are waiting for the lease vs buying video
Where ya been????
Im Ukrainian-American. Ty for saying this
What do you do when sanctions prevent someone from globally diversifying? We can't invest in Russian commodity markets anymore. Not that I'm picking a side, but its a fair question.
Vanguard FTSE Global All Cap or similar low cost funds offer global diversification. Having global diversification doesn't mean you must have every country represented, so I wouldn't worry too much about excluding the Russian economy in my own personal opinion.
@@Joe-jh8po I would worry more about including Russia in my portfolio. Ethically it is inapropriate. The fund you have mentioned from vanguard has gratelly reduced Russia's % so that is a good news.
1:41 Classic risk premium?
Wonderful video as always!
Could you please look at 60/40 UPRO (or TQQQ) and TMF? In case you can't/won't discuss specific securities, you could just analyze the strategy in general 3x daily leveraged terms. It doesn't just beat the market but destroys it!
He's done a video on leveraged ETFs and stated the returns are unpredictable. They're designed for daily use, long term it's not certain. There are loads of securities that have "destroyed" the market.
@@robertbones326 But this isn't looking at the combination of both that and bonds (TMF) and how they provide much higher risk adjusted returns over decades.
Can you just do this full time? These once every quarter videos just aren't enough.
At 10:21 you accidentally said that it "increases" recover times but you meant to say "decreases" recover times.
Yes I pinned a comment with a correction. Thanks.
Great video! Do you have a video on the importance of bonds in a diversified portfolio?
I understand the way they reduce risk, both legally and in terms protfolio volatility, but is that actually advantageous? Wouldn't an investor be better off owning more shares of a diversified group of companies with significantly greater potential return? Doesn't diversification nullify the purpose of owning bonds? Unless of course growth is not desired and consistent income is all that matters. I'm specifically thinking of an accumulating investor.
Reminds me of Fama & French's 'Volatility Lessons'.
Sure, conflicts and wars are sources of great uncertainty but given the duration of most wars (e.g. WW1 & WW2) to last less than 10 years, it is safe to say no real conclusions about future expected returns can be drawn from the current short timeline of events.
This is a terrible and incorrect take, David. You’re likely talking about the US market after the 1929 crash. The 25 year number is based on a price only index (no dividends) in nominal terms. That period had massive deflation which boosts real returns. Accounting for dividends the market recovered in 15 years. Accounting for purchasing power it recovered in 7.
I debunked this in an older video ruclips.net/video/Jh9Gn58r9Fw/видео.html
Edit to apologize for not being polite. Sorry David and thanks for the comment.
@@BenFelixCSI It is hard to compare countries that have had their infrastructure destroyed to what America and Canada experienced in wartime. Canada and America has benefited from an industrial standpoint from wartimes.
The recapitalization required to rebuild an economy after its physical infrastructure has been destroyed does reduce market returns relative to economic growth as the economic growth is spread across lots of new shares in existing and new companies. However, historically, countries like Germany and Japan have recovered after wars.
This is also why global diversification is a necessity.
It was specific to that recovery. The tight US monetary policy, which resulted in deflation, is thought to be one of the main reasons that the depression was as bad as it was. That experience informed future monetary policy.
Aren’t wars a justification to sell bonds?
Ukrainian people thank you for your support!