97

Fundamentally, I think there's a high level (and perhaps unsatisfying) answer to this. It's because that's not "banking" as a business, and a bank is established to do banking, not to get into the stock market. In other words, this question strikes me about the same as asking, why don't ice cream shops stop selling ice cream, and instead get in the ...


16

Because your "bank" will fail The related questions assumes a "buy low, sell high", or even better, a "buy low, never sell" scheme of investment. But your proposed geared fund will not have that. They will have clients. Clients that can withdraw at worst possible moment. Recessions come hand to hand with markets down run. Long recessions will cause ...


7

Even if you own a roulette wheel, letting a gambler bet you your entire net worth (or even sizeable % of it) in a single wager is a very high risk thing to do, despite the fact you have a clear edge and will win over time in a very stable manner as they make repeat bets. The main problem for investors outside of people already sitting on millions+ is it is ...


6

You are correct, that all of those plans have significant downsides themselves, and no one here knows what will be the best strategy going forward. If you believe that "the corona crisis is just at the start, so the stock prices might still drop severely" then you could stick to cash or government bonds (although yields are at historic lows right now). But ...


4

The short answer is that it is impossible to KNOW when the best time is to sell a stock. There are a number of reasons to sell a stock: You need the money Company fundamentals have changed Share price has advanced very rapidly, perhaps unsustainably The stock is overvalued The stock is overvalued compared to its peers The dividend has been cut Portfolio ...


4

If there is a major downturn in EUR, your asset would actually appreciate in EUR even if the index does not move, because US stocks are traded in USD and Unhedged ETF has USD as Base Currency. An Unhedged ETF could be EUR denominated simply because a Market Maker constantly help you convert money in Foreign Exchange Market.


4

Why doesn't any (serious) bank offer a savings account with a fixed 2% interest rate for an unlimited amount of time? I don't want to assume your age but you may not remember that this was actually a completely real situation in the past. When I was a growing up in the 80's I recall my basic savings account had an annual interest rate of somewhere between ...


3

Depends on the kind of pension you're talking about. Common UK pensions are money purchase. You put money towards a pension and once you hit a certain age (usually 55) you can spend it as you wish, although you'll pay tax. final salary. You're guaranteed a monthly payment till you die. state. You pay into this via National Insurance and it pays out from ...


3

I suspect what you mean by "take money out of the market" is obtaining returns above the market average, i.e., "beating the market". Indeed, your intuition is correct that unless you can statistically predict stock returns better than the "random walk" model, you cannot beat the market just by applying "risk management rules" like profit targets or stop ...


2

WeWork has a residential brand, WeLive, that does not own it's buildings. I guess we'll find out if this is a business model that can grow into single family homes. The New York-based startup does not own any of its WeWork or WeLive properties, but rather leases floors and buildings from landlords, improves the spaces, and then rents them back out. ...


2

It terms of level of risk, from what I've seen the broad risk is comparable to broad equities (returns in the 7-15% range), but rather then the level of risk, real estate presents different risks than bonds of equity. The benefit of this is that real estate is a diversifying asset when combined with bonds and equity, since the odds of "bad things" happening ...


2

Why doesn't any (serious) bank offer a savings account with a fixed 2% interest rate for an unlimited amount of time? If they did that, I would do this: Divide my money 50-50 between the bank account and stocks Balance yearly. That way I would end up taking money from the bank account whenever stocks are low, and put money there whenever stocks are high. ...


2

The FED didn't bail them out. The FED brokered (in somewhat strong-arm fashion) a deal for a group of banks to step in and take over LTCM's portfolio of trades. LTCM's investors recovered about 10 cents on the dollar from the previous year's mark. The banks then held the risk on the portfolio. I believe they made a small profit when all was said and done,...


2

Banks have to have enough assets to cover the value of savers’ deposits at all times. Just relying on having enough cash on hand to cover withdrawals is what Ponzi schemes and fraudsters do. (Note that the assets don’t have to be liquid, so banks can still run into trouble when they can’t call in the long-term loans they have made to cover a sudden rush of ...


1

In 2008, about 25 banks failed and nearly 150 more failed in 2009. The FDIC was quite adept at making a seamless transition of ownership without the need to close the banks. The odds of a bank closure are slim because the 'suits' are involved before the failing bank fails. Though not asked, it's a good idea to have a second brokerage account. When a ...


1

You should look for "impaired life" annuities. However, don't expect to get anything like the same extra value as you might pay in extra life insurance. Health is very uncertain and there's an information asymmetry between the applicant and the insurer/pension company (in fact often annuities are ultimately provided by insurance companies). For an impaired ...


1

The one armed bandits in Vegas are programmed somewhere near a 40% payout. During a short period of play, you may win, you may lose because it's a finite sample. Over the long haul, the house wins. It's the same with your hypothetical set up. If the odds are even that "you have a 1:2 risk reward ratio meaning that for every 1 dollar you are risking to ...


1

You need an edge to make money over long term. Proper risk management will increase your sharpe ratio and protect against bankruptcy. Even with a strong edge you can go bankrupt without proper risk management. Ways of risk management is diversification, stops and not having too high leverage.


1

There is 50% chance that the price will rise to 14 and 50% chance that the price will fall to 6, this anyone would agree. No, absolutely not. The chance of the price going to 14 is significantly greater than the chance of the price going to 6. Is my analysis correct, or have I missed something? What you've missed is the fact that on average, stocks are ...


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