A weekly thread to discuss financial matters - from personal all the way up to global.
Ground Rules
- Remember that we're all just Internet randos. Don't bet your life savings on a hot tip from this thread.
- Keep culture war in the culture war thread. Yes, global events may impact our personal finances, but that does not mean we have to incessantly harp on culture war aspects here. If you are going to discuss it, please stick to the practical impacts of it on an individual level.
- Be kind. Remember that everyone here comes from different circumstances. We all have different resources available and different risk tolerances.
- Don't let the perfect be the enemy of the good. Better is better. Celebrate people when they take a step up and work to move their finances in the right direction. Don't flame out because they haven't followed what you consider the optimal path. Everybody has to start somewhere.
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Notes -
Yes, my mistake and hopefully Claude would have caught that. Other calculators I've seen have included a correlation.
One reason that bonds did so well in the 2010s is that they were generally anti-correlated with stocks, making a levered stock-bond portfolio outperform the stock market with less volatility.
Since Covid there have been times when stocks and bonds have shown positive correlation, making bonds less useful as a hedge.
Tough to predict which regime we'll enter in the future.
Yes, that's more or less what I was thinking of in my initial reply.
I assume so, if you used a sensible prompt.
Also, sorry, I made an unrelated edit after you replied. To expand on the variance swap replication, it looks like even the one-year term strip is crazy illiquid. Like, literally zero open interest on most nodes. Eyeballing the quoted mid IVs, though, @omw_68 could be right that the market is (at untradable mids) underpricing forward AI vol.
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