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Tirant

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You guys talking about year to date made me go check, haven't benchmarked myself lately.

Pleasantly surprised I'm +37.91% vs +17.67% on SP500.

Thank you Newmont. This even includes going into Liberation day with $45k of NVDA calls, I swear I'm the only person that lost my ass on NVDA this year.
 
Furry

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Rangoth said:
If you are just trying to long term(1 year + or 10-15 retirement type thing). There is not a *huge* disadvantage to a normal brokerage account. You'll only pay long term capital gains when you sell so if you just bought SPY with whatever extra income you had each year there is really not any tax. You would pay tax on the dividends I guess but that really won't be much.

Most of the pain comes in on normal accounts when it comes to trading, because a 1k profit for example in a 401k is tax free *at the time the profit is made*. In a regular account you would owe 35$ or whatever "instantly". But if you just buy major ETF and look away it's not a big deal.
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401k is tax wise pretty much always superior to a brokerage until you can guarantee 47.1k/year in retirement, and still relatively better until you can get like 191k/year in retirement in it, which obviously is a lot more than 99.99% of 401ks.

The difference after 47.1k isn't that big generally though, and brokerages tend to be a lot more flexible. My aim was to guarantee that 47k in retirement income and then focus more on my brokerage. I'd be completely justified to keep dumping in my 401k, but flexibility was a key concern for me, since I plan to SEPP my 401k, so I'm focusing more on my brokerage now.
 
Jysin

Jysin

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Furry said:
401k is tax wise pretty much always superior to a brokerage until you can guarantee 47.1k/year in retirement, and still relatively better until you can get like 191k/year in retirement in it, which obviously is a lot more than 99.99% of 401ks.

The difference after 47.1k isn't that big generally though, and brokerages tend to be a lot more flexible. My aim was to guarantee that 47k in retirement income and then focus more on my brokerage. I'd be completely justified to keep dumping in my 401k, but flexibility was a key concern for me, since I plan to SEPP my 401k, so I'm focusing more on my brokerage now.
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Honest question: Where did you get this specific $47.1k number from?
 
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Furry

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Jysin said:
Honest question: Where did you get this specific $47.1k number from?
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Tax Brackets. There's also standard deduction, but I hit a number that will give me that well before I'll retire, so a lower contribution and natural returns will almost certainly take me over standard deduction too.
 
Arden

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Sanrith Descartes said:
No. Both are 200 day moving averages.
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Could be wrong, but my understanding is that the disparity is at least partially due to the fact that BTC’s 200DMA uses crypto exchange data, updated every day (including weekends), while IBIT’s 200DMA uses market close prices (Mon–Fri only). So IBIT's is “sparser” and often lags BTC’s real-time trend by a few days to weeks.
 
Rangoth

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Jysin said:
Honest question: Where did you get this specific $47.1k number from?
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I always welcome being told I’m wrong with facts, but my current knowledge says this is literally not true. The advantages with 401k, as I understand them are 2. You dont pay taxes on what you put in each year and the potential company match is “free money” and you don’t pay taxes until you withdraw.

with a regular old brokerage account you pay taxes at instant of profit. So, ignoring the minor stuff, if you make 100 in short term gains it’s taxed at your regular rate…basically no difference than if you made 100 working at Walmart. If you made 100 after a year or more of holding, you pay long term gains which is less, but still maybe 15% for average dude. So yes, holding for 1 year or more is ideal.

now 401k, again ignoring early pull and all the one-Off shit, when you retire you pay *normal* taxes on each withdrawal. this will not be taxed at long term but rather regular rates. This biggest difference is that if I sell and buy 50x in my 401k I don’t pay taxes until I retire and withdraw.

im positive a lawyer, cpa, or finance major will push my shit in on this topic, but assuming you never touched anything.…if you put 10k into the SPY today in both a regular account and a 401k account it would be damn close to neutral. In the regular account you’d pay taxes on dividends but if you sold in 10 years you pay long term capital gains and that it, end of story. In the 401k you NOT pay taxes of dividends but you’d pay regular income taxes on each withdrawal you did.

again I’d have to run the math but I think a regular account is better for the close your eyes and look away for 20 years trader. The reason 401k‘s are so awesome is company contributions, and the money is not taxed when it comes out of paycheck each week(is this true?).

ignoring company match, I’d love to see metrics of 401k vs regular account after 30 years. My gut tells me they are close
 
Jysin

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swayze22

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Rangoth said:
I always welcome being told I’m wrong with facts, but my current knowledge says this is literally not true. The advantages with 401k, as I understand them are 2. You dont pay taxes on what you put in each year and the potential company match is “free money” and you don’t pay taxes until you withdraw.

with a regular old brokerage account you pay taxes at instant of profit. So, ignoring the minor stuff, if you make 100 in short term gains it’s taxed at your regular rate…basically no difference than if you made 100 working at Walmart. If you made 100 after a year or more of holding, you pay long term gains which is less, but still maybe 15% for average dude. So yes, holding for 1 year or more is ideal.

now 401k, again ignoring early pull and all the one-Off shit, when you retire you pay *normal* taxes on each withdrawal. this will not be taxed at long term but rather regular rates. This biggest difference is that if I sell and buy 50x in my 401k I don’t pay taxes until I retire and withdraw.

im positive a lawyer, cpa, or finance major will push my shit in on this topic, but assuming you never touched anything.…if you put 10k into the SPY today in both a regular account and a 401k account it would be damn close to neutral. In the regular account you’d pay taxes on dividends but if you sold in 10 years you pay long term capital gains and that it, end of story. In the 401k you NOT pay taxes of dividends but you’d pay regular income taxes on each withdrawal you did.

again I’d have to run the math but I think a regular account is better for the close your eyes and look away for 20 years trader. The reason 401k‘s are so awesome is company contributions, and the money is not taxed when it comes out of paycheck each week(is this true?).

ignoring company match, I’d love to see metrics of 401k vs regular account after 30 years. My gut tells me they are close
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you are forgetting the reason 401ks are called tax-advantaged accounts - the money that goes into the account isn't reduced by your income tax, it's pretax. Whereas in a brokerage account the government has already taken income taxes out of that amount. Also with 401k you don't pay taxes on the amount you contribute thus lowering your overall taxable income and tax burden for the year, reducing your spend every single year until retirement.

SIMPLIFIED EXAMPLE: If I make $200,000 and max my 401k (23,500) it reduces my taxable income to $176,500. If I make $200,000 and put the same amount in brokerage my taxable income remains $200,000.

$100 from my gross paycheck into my 401k is $100 invested, $100 gross from my paycheck into a brokerage account is probably like $70-80 to invested after income taxes.

Then when you cash out later down the road you pay additional capital gains on the $70-80 invested in brokerage. Compared to 401k you will just be taxed at your income rates. Presumably with 401k that rate will be much less in retirement than your prime earning years tax rate (~20-30%) when invested, in addition to the the capital gains rate (10-15%), likely half the tax burden compared to brokerage.
 
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Gravel

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So it seems like what really happened is Burry made a small stake bet on the AI bubble crashing within the next two years. If it doesn't, he's not even losing very much.

The difference in my opinion between this and 2008 is that investors are betting that AI makes the industrial revolution look like a small blip in humanity. 2008 was bad regulations compounded by wall street greed to insure against their own gamble, which then had to eventually take down whoever was left holding the bag. And it was made even worse because the government bailed them out.

I don't see how the two scenarios are even remotely comparable. At worst, it's similar to the dotcom bubble, but even then, that was mostly people thinking shit companies were "can't miss" whereas this is everyone piling money into a handful of the biggest companies because if they hit, everyone wins massively. If they don't, well, nothing really changes.

If he were in fact the genius they make him out to be, he'd be hedging against AI making jobs obsolete. That's going to be the disruptive event that throws everything into turmoil. I have no idea how one accomplishes that, but that's the real gamble here.
 
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Gravel said:
So it seems like what really happened is Burry made a small stake bet on the AI bubble crashing within the next two years. If it doesn't, he's not even losing very much.

The difference in my opinion between this and 2008 is that investors are betting that AI makes the industrial revolution look like a small blip in humanity. 2008 was bad regulations compounded by wall street greed to insure against their own gamble, which then had to eventually take down whoever was left holding the bag. And it was made even worse because the government bailed them out.

I don't see how the two scenarios are even remotely comparable. At worst, it's similar to the dotcom bubble, but even then, that was mostly people thinking shit companies were "can't miss" whereas this is everyone piling money into a handful of the biggest companies because if they hit, everyone wins massively. If they don't, well, nothing really changes.

If he were in fact the genius they make him out to be, he'd be hedging against AI making jobs obsolete. That's going to be the disruptive event that throws everything into turmoil. I have no idea how one accomplishes that, but that's the real gamble here.
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I think he's mostly looking at the shady circular financing we've been hearing about and that the energy requirements necessary for the growth projections of AI are years away while the AI companies are acting like it's months away. With those 2 things AI is going to trip in the much nearer future than the market disruption from AI taking jobs from people.

Or at least that's my read on his analysis. I share those 2 concerns, but I have no idea on how the timing will work out and I think that's pretty key on whether or not Burry's bet pays off or not.
 
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Gravel

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I think Burry knows that being correct is the smallest portion of it, and the timing is what's really important. So yeah, I'd agree that those are absolutely concerns. I'm not sure they pan out within 2 years.

Likely why his bet isn't actually that big.
 
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Khane

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Gravel said:
So it seems like what really happened is Burry made a small stake bet on the AI bubble crashing within the next two years. If it doesn't, he's not even losing very much.

The difference in my opinion between this and 2008 is that investors are betting that AI makes the industrial revolution look like a small blip in humanity. 2008 was bad regulations compounded by wall street greed to insure against their own gamble, which then had to eventually take down whoever was left holding the bag. And it was made even worse because the government bailed them out.

I don't see how the two scenarios are even remotely comparable. At worst, it's similar to the dotcom bubble, but even then, that was mostly people thinking shit companies were "can't miss" whereas this is everyone piling money into a handful of the biggest companies because if they hit, everyone wins massively. If they don't, well, nothing really changes.

If he were in fact the genius they make him out to be, he'd be hedging against AI making jobs obsolete. That's going to be the disruptive event that throws everything into turmoil. I have no idea how one accomplishes that, but that's the real gamble here.
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I agree its similar to the dotcom bubble but I think you are downplaying it a bit. Sure he is betting against two big companies that most likely aren't going to suffer much long term even if it is a bubble and pops.

Its all the other AI and "AI" companies that people are dumping money into similarly to how much money was being thrown at every dotcom back in the late 90s. Lots of snake oil in that space currently. Most of what you read of as AI is nothing more than good, old fashioned software. And not even very sophisticated at that.
 
Flobee

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Also worth considering that AI can massively change the world and still not be overly profitable for the companies pushing it. At least not in the short/medium term. So the "AI thesis" can be correct and the stocks can be massively overvalued
 
Sanrith Descartes

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Gravel said:
If he were in fact the genius they make him out to be,
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Lets not pretend Burry doesn't know wtf he is doing as an investor. He opened Scion in 2000 and these are his results going into his bet against housing. Counting 2006 and excluding 2000 he netted 96% gains. The S&P in the same period was 26%

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