- #561
artis
- 1,481
- 976
true, well then simply invest in something that doesn't drop in value or isn't volatile if one wishes to safe guard their assets without further risking with them
Have you seen the online game "Crack shack or Mansion" ?artis said:it is wise to invest in stuff that doesn't swing back and forth in value like a leaf in the wind.
I get your point, but doubt either can do that in practice. Most bezillionaires have tehir wealth in the stock of a company - where it is illiquid (but can serve as collateral for a loan). With the average dividend yield of 3.1% and the rule of thumb that your mortgage can be 2.5x your income, you get $78M in house per billion in assets.Office_Shredder said:Only one of them let's you drop a billion dollars on five giant mansions across the country without worrying about the cost.
Vanadium 50 said:I get your point, but doubt either can do that in practice. Most bezillionaires have tehir wealth in the stock of a company - where it is illiquid (but can serve as collateral for a loan). With the average dividend yield of 3.1% and the rule of thumb that your mortgage can be 2.5x your income, you get $78M in house per billion in assets.
There are people who can do that - about 15 of them.
I pointed this out on Reddit a couple of days ago and was told it's really just code (they don't necessarily really believe it). Code for what, wasn't explained. In two separate threads people implied they recognized a bubble/game of musical chairs...though they implied they though all stocks were like that.Vanadium 50 said:But...but...stonks only go up!
but at 3% interest vs a 23.8% max LTCG tax, its cheaper to realize gains rather than let the interest compound. At a zero cost basis the 3% interest becomes more expensive after 8 years.Office_Shredder said:Billionaires borrow money against their stock to fund whatever they want. If you have 15 billion in assets, you can borrow a billion dollars, pay 30 million a year in interest, and buy everything you want right now.
You only need a divided friend of 0.2% on your assets to support the interest.
This is pretty standard stuff - wealthy people don't sell stock when they need money, they borrow money to avoid paying capital gains tax.
You can also get a pretty good interest rate - borrowing a billion dollars secured by 15 billion dollars of assets is a pretty safe bet. I don't know the specific details of how these loans work but I would guess for people who own growth assets, they let the loan grow in lieu of interest for the first couple years.
No I have not, should I ?Stephen Tashi said:Have you seen the online game "Crack shack or Mansion" ?
Exactly. I actually think the Cali cartel and other top 5 drug empires or other criminal enterprises might have at some point had more realistic assets than many of today's billionaires because unlike them the drug lords had all their money pretty much either cash or in other real valued items like diamonds, gold, property etc.Vanadium 50 said:That is my point exactly - being a billionaire does not mean you can write a check for a billion dollars. It's not like Scrooge McDuck, who has a basement full of gold.
Many of the well off (not necessarily Billionaires - just wealthy) do the wheel or modified wheel. The wheel is you select, using fundamentals detailed in classics like the Intelligent Investor (i.e. basically what Warren Buffet uses) strong stocks. You buy them at discounts using puts. That means you get paid while waiting for the share to reach your price. Once it reaches your price, it is assigned, and you sell calls at ten delta, meaning 90% of the time, you collect the premium. In the rare case that the stock reaches your strike price, you have collected the premium and hopefully a nice profit in the share rising. If you don't make a profit, you sell your call, keep the stock, and continue selling calls. If it is sold, you buy another using a put and keep repeating. The modified version used by Warren Buffett is to sell puts on shares he wants. Or you could trust Warren and buy Berkshire Class B shares. But instead of then selling calls, he keeps the stock. If he doesn't have the cash to buy the share if assigned, you can easily borrow the money against your other shares (most option accounts give you a 50% margin these days), but it is also easy to sell the put and take a bit of a loss. The details of the strategy can vary a bit but let us say you have a million-dollar stock portfolio but little or no cash. Of course, you can borrow against it, but you can also sell puts using the stock as 'collateral' or 'margin'. Nothing is sold. It is kept aside should the trade not work out. Here are the details on one way of doing it (forget the sales pitch):Office_Shredder said:Billionaires borrow money against their stock to fund whatever they want.
You're ignoring the potential for future growth on the assets that you would have owned if you didn't sell them to buy your stuff. If you have a billion dollars of stuff earning 30 million a year, selling it to buy stuff vs borrowing a billion dollars and using your 30 a year to pay the interest is economically equivalent. (Where here 30 million a year might be mostly contained in the growth of the asset, since we're assuming they're cash poor to begin with)BWV said:but at 3% interest vs a 23.8% max LTCG tax, its cheaper to realize gains rather than let the interest compound. At a zero cost basis the 3% interest becomes more expensive after 8 years.
They aren't exactly wrong. Companies go up and go down. How many of the original Dow 30 are still in it? How many are still solvent? The Reddit crowd seems not to like shorting on principle, but fact of the matter is that companies can and should shrink. Acme Buggy Whips is not the great deal it once was.russ_watters said:people implied they recognized a bubble/game of musical chairs...though they implied they though all stocks were like that.
Neither are tulips and hats.Vanadium 50 said:Acme Buggy Whips is not the great deal it once was.
Astronuc said:Ethereum co-founder says every ‘average smallholder’ impacted by Terra’s stablecoin crash should be made whole, cites FDIC’s $250,000 as ‘precedent’
https://finance.yahoo.com/news/ethereum-co-founder-says-every-215033542.html
Sure, I get that but a growing loan balance and volatility risks triggering the ~50% LTV levels that would trigger a margin callOffice_Shredder said:You're ignoring the potential for future growth on the assets that you would have owned if you didn't sell them to buy your stuff. If you have a billion dollars of stuff earning 30 million a year, selling it to buy stuff vs borrowing a billion dollars and using your 30 a year to pay the interest is economically equivalent. (Where here 30 million a year might be mostly contained in the growth of the asset, since we're assuming they're cash poor to begin with)
BWV said:Sure, I get that but a growing loan balance and volatility risks triggering the ~50% LTV levels that would trigger a margin call
Maybe the seller should have used Reddit.A lavish Bel Air mansion listed for $87.8 million reportedly received just half the asking price when it went to auction last week.
According to CNBC, the highest bid for the property was just under $45.8 million—around 52% of the mammoth asking price.
Tulips only go up!Astronuc said:Neither are tulips and hats.
In the Springtime!Vanadium 50 said:Tulips only go up!
Interesting position. "We don't want government involvement, until we do."Astronuc said:Ethereum co-founder says every ‘average smallholder’ impacted by Terra’s stablecoin crash should be made whole, cites FDIC’s $250,000 as ‘precedent’
Vanadium 50 said:Interesting position. "We don't want government involvement, until we do."
I didn't read that as a promise of FDIC insurance but rather a promise to reimburse losses directly because they don't have FDIC insurance. Not, "we want government involvement" but rather "we can do it all ourselves".Vanadium 50 said:Interesting position. "We don't want government involvement, until we do."
Vanadium 50 said:Obviously, if they have billions of dollars, they can do with it what they will. The question then becomes why they didn't do this proactively. "Terra - the satblecoin that's jot very stable" is not the best slogan I have every heard.
In order to think to put the policy in proactively they first have to believe there is a non-zero possibility that their The Algorithm could fail. But this is crypto we're talking about. It's a totally safe and stable alternative to currency backed by fickle and unstable governments like the US.Vanadium 50 said:The question then becomes why they didn't do this proactively. "Terra - the satblecoin that's jot very stable" is not the best slogan I have every heard.
Hmmmm...russ_watters said:they first have to believe there is a non-zero possibility that their The Algorithm could fail.
SNAP Snap Inc. | 12.79 | -9.68 | -43.08% |
https://en.wikipedia.org/wiki/Snap_Inc.The founders own a combined 95% of voting shares (Spiegel with 48% and Murphy with 47%), which are undiluted and transferable to the other when one retires or dies.
Around the middle of April, Cathie Wood sat onstage at the storied Fontainebleau hotel in Miami. It was an awkward time to be a keynote speaker at a conference for money managers: Wood’s flagship fund, the ARK Innovation ETF, had lost roughly half of its value over the prior year, as its aggressive bets on hot companies from Coinbase to Robinhood and Tesla had melted down amid a bear market in tech stocks.
Wood, though, had evidently not lost her luster — judging by the crowd’s applause — nor her brazen bullishness. A year earlier, she’d thought her firm, ARK Invest, would deliver annualized returns of 15 percent, she acknowledged, setting up what seemed like a mea culpa for her poor performance. Instead, she doubled down: “Now we think 50 percent.”
I read some headline hype about Cathie Wood and ARK, and only recently did I learn about her and how she became the investor she did. I think she got lucky, then it went to her head.So far, she’s been wrong — her main fund is down another 34 percent since her comments — but her firm still has more than $16 billion in assets, according to fund-tracker Morningstar. While that’s a fraction of the $40 billion ARK had in March (a figure the firm still lists on its website), it means Wood’s pool of money is still roughly the same size as major hedge funds like Bill Ackman’s Pershing Square. (Wood declined to comment for this article.) In the realm of Wall Street, Wood is an unusual creature: Not only is she a rare female portfolio manager, but she was also an outlier in her nearly boundless optimism about the riskiest investments on the market, including cryptocurrency and Tesla, which four years ago she (correctly) predicted would go up more than 1,000 percent. Last fall, she put a $500,000 price target on bitcoin, then — as bitcoin’s price cratered — raised it to $1 million a few months later.
Wood’s willingness to make such calls so far ahead of reality — and so out of step with Wall Street’s old guard — has earned her a rockstar reputation among stonks-obsessed retail investors, making her a mascot for buy-the-f***ing-dip Robinhood traders, some of whom have dubbed her “Cathie Bae” on Reddit. In an industry loath to make guarantees about the future, Wood’s brand was like price-prediction porn: To hear her talk was to feel your mind liquefy in a clickbait-like flood of dopamine-inducing buzzwords — her portfolio a cornucopia of self-driving cars, crypto, genomic cancer cures, AI, streaming, and gaming. She told risk-drunk investors exactly what they wanted to hear. In her view, it seemed, tech stocks only went up and to the right.
The $10k/a limit vs. the current rate of inflation; 10% isn't bad, but too many hoops...?Vanadium 50 said:are they good investments