# Chronicles of 2026 - the next chapter
**URL:** https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935
**Category:** Coffee
**Created:** [January 3, 2026, 12:28pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935 "2026-01-03T12:28:38Z")
**Posts on this page:** 20
**Page:** 42
### Author:  [@ProvidentRetriever](https://forum.mustachianpost.com/u/ProvidentRetriever)
#### Post date: [July 16, 2026, 6:45pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/854 "2026-07-16T18:45:56Z")
> [@jks21](#):
>
> It’s easy to ride the market when it delivers such exceptional returns for so long.
>
> My impression is that under these conditions, many investors (maybe most?) become greedy—and easily disappointed, if not panicked, at even a short correction. (Check for example the messages in this forum when the US tariffs were announced)
I fully agree, and have said it multiple times on the forum. For most investors, it is inappropriate to be 100% in stocks. 18 years without a real **financial** crisis gave a false sense of security to people who have never been through one.
This isn’t about timing the market. It’s about finding an appropriate allocation for oneself that one can actually maintain even under the emotions that come with a crisis.
> [@Bonds for a Swiss investor in 2020](https://forum.mustachianpost.com/t/bonds-for-a-swiss-investor-in-2020/3202/17):
>
> I agree with a lot of what has been said but would like to add that it is important to distinguish between risk capacity and risk tolerance, and that these two vary from person for person (this is why financial advisors are required to care about the suitability of the advice given to each client). Even if a person has the capacity at 25 to go all into stocks, because they would objectively not need this money, it may nevertheless be a mistake to do so if this person does not have the risk tole…
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### Author:  [@ProvidentRetriever](https://forum.mustachianpost.com/u/ProvidentRetriever)
#### Post date: [July 16, 2026, 7:03pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/855 "2026-07-16T19:03:56Z")
> [@nabalzbhf](#):
>
> Also the actual theory kinda says you’re taking uncompensated risk (compared to levaraging a portfolio at the efficient frontier).
The leverage at the efficient frontier is half of the story. The line that connects risk free returns to the efficient frontier also contains points that are an unleveraged mixture of risk free and efficient frontier, on the left of the tangent point.
The idea of an efficient portfolio is to maximize return at constant risk, or to minimize risk at constant returns and each investor picks their comfort zone. This is very different from maximizing returns in absolute.
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [July 16, 2026, 7:17pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/856 "2026-07-16T19:17:02Z")
> [@ProvidentRetriever](#):
>
> The idea of an efficient portfolio is to maximize return at constant risk, or to minimize risk at constant returns and each investor picks their comfort zone.
I thought the general idea was to pick the allocation with the highest risk/return (sharpe ratio typically?) and then leverage (or deleverage) to reach the desired volatility target.
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### Author:  [@ProvidentRetriever](https://forum.mustachianpost.com/u/ProvidentRetriever)
#### Post date: [July 16, 2026, 7:21pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/857 "2026-07-16T19:21:04Z")
There are several approaches to that because modern portfolio theory remains theoretical and more difficult to implement in practice, but the important part in what you said is this:
> leverage (or **deleverage)**
The desired volatility target can be on the deleverage side, too.
Leveraging or deleveraging is done by walking left or right on a line going through the risk free point and some chosen point on the efficient frontier. If that line is chosen to be tangent to the efficient frontier, then every point on that line maximizes the return (y axis) for the chosen volatility level (x axis). On the left of the tangent point this is without leverage (mixture with positive weights), on the right of the tangent point this is with leverage.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [July 16, 2026, 7:34pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/858 "2026-07-16T19:34:51Z")
You normally don’t have access to the risk free rate for leverage. Quite a lot of different things have risk premia, but only few of them manage to jump the hurdle of:
- product fees,
- excess financing rates
- taxes from owning assets that have more non-capital-gains (e.g. anything containing USD treasuries)
You can put your tangent on the efficient frontier but not at the risk free rate and not on gross return products. This shifts the calculus towards more stocks, because their risk premium can jump it. There is more than stocks, but it is not thaaaat simple.
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### Author:  [@ProvidentRetriever](https://forum.mustachianpost.com/u/ProvidentRetriever)
#### Post date: [July 16, 2026, 7:39pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/859 "2026-07-16T19:39:21Z")
You’re right to point out the difference between theory and implementation. I think of the risk free point as the interests of a savings account with a bank that has state guarantee, but that only implements what’s on the left of the tangent point.
There’s another aspect to consider with the efficient frontier: it fluctuates a lot when you change the period of the data, making it very challenging to actually implement.
Getting leverage (the part of the line on the right of the tangent point) with the same rate is not realistic for the rest of us. But since even the tangent point is too risky for most investors, it’s also not recommended to venture to even riskier leveraged allocations.
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### Author:  [@Helix](https://forum.mustachianpost.com/u/Helix)
#### Post date: [July 16, 2026, 7:47pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/860 "2026-07-16T19:47:27Z")
> [@ProvidentRetriever](#):
>
> I think of the risk free point as the interests of a savings account with a bank that has state guarantee
I wish. At the bank you get risk free minus some significant spread. In Switzerland the banks have a structural problems with the risk free rate at or below zero. Many people are going to take the money out and put it under the mattress if they apply the spreads like they normally do. So they just charge all kinds of fees instead.
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### Author:  [@ProvidentRetriever](https://forum.mustachianpost.com/u/ProvidentRetriever)
#### Post date: [July 16, 2026, 7:48pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/861 "2026-07-16T19:48:16Z")
I agree!
Anyhow, the reason I mentioned this is that the original discussion was referring to what the theory says 😃
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### Author:  [@Mirager](https://forum.mustachianpost.com/u/Mirager)
#### Post date: [July 16, 2026, 9:30pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/862 "2026-07-16T21:30:46Z")
What happened and SCHD is +2.3% today?
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### Author:  [@ma0](https://forum.mustachianpost.com/u/ma0)
#### Post date: [July 30, 2026, 2:12pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/863 "2026-07-30T14:12:16Z")
Microsoft +14% ?
Bonkers.
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### Author:  [@dbu](https://forum.mustachianpost.com/u/dbu)
#### Post date: [July 30, 2026, 2:34pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/864 "2026-07-30T14:34:48Z")
Agree, Win11 is a disaster 😅
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [August 19, 2026, 2:36pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/865 "2026-08-19T14:36:02Z")
One of the best days for my portfolio as all my sectors did well:
- SaaS
- Energy
- Gold
Obviously should have bought more gold yesterday…
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### Author:  [@user137](https://forum.mustachianpost.com/u/user137)
#### Post date: [August 19, 2026, 3:39pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/866 "2026-08-19T15:39:19Z")
> [@PhilMongoose](#):
>
> One of the best days for my portfolio as all my sectors did well:
are we measuring portfolio performance in days now, or did you just need a silver lining already? 🙂
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### Author:  [@Wolverine](https://forum.mustachianpost.com/u/Wolverine)
#### Post date: [August 20, 2026, 7:58pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/867 "2026-08-20T19:58:29Z")
Pretty sure either I or Bessent don’t understand economics.
You can do stocks buybacks using debt or free cashflow.
You can do bonds buybacks using free cashflow or issuing equity.
You cannot do bonds buybacks while running a deficit for more than a while (while you have some cash available), at which point in time you then have to issue more debt and it presumably backfires?
Of course, he could issue short term debt to buy back long term debt but that would be trading rates probably issued when they were lower for rates that are now higher in a bet that they’ll go lower in the future while every single policy the US administration is currently pursuing spells rates going higher in the future?
> **[Treasury’s Bessent ready to boost bond buybacks beyond $4B to push down...](https://finance.yahoo.com/economy/article/one-day-after-doubling-treasury-buybacks-bessent-says-hes-ready-to-boost-them-further-to-push-down-long-term-yields-181218236.html)**
>
> Bessent said the Treasury's buyback program of government debt could surpass the $4 billion announced on Wednesday.
**Edit:** also, the US debt has reached $40T. They’re likely to hit their debt ceiling of $41.1T during or before summer next year. Good luck with that…
**Edit2:** of course, at this point, $4B is really small potatoes but just as such, it’s very unlikely to really make a dent.
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### Author:  [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [August 20, 2026, 8:08pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/868 "2026-08-20T20:08:56Z")
> [@Wolverine](#):
>
> Of course, he could issue short term debt to buy back long term debt but that would be trading rates probably issued when they were lower for rates that are now higher in a bet that they’ll go lower in the future
Isn’t it clearly what’s happening. I think they’ve kept issuing short term rather than long term debt when long term debt came up for renewal. That’s just accelerating the process.
Alternatively BOJ was doing Intervention all along the yield curve in the past decade, I guess US could try this experiment (but here it’s treasury, not fed so I don’t think that’s what’s happening)
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### Author:  [@Wolverine](https://forum.mustachianpost.com/u/Wolverine)
#### Post date: [August 20, 2026, 8:10pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/869 "2026-08-20T20:10:15Z")
> [@nabalzbhf](#):
>
> (but here it’s treasury, not fed so I don’t think that’s what’s happening)
This. The Treasury doesn’t have the tools the Fed has.
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [August 20, 2026, 8:52pm UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/870 "2026-08-20T20:52:44Z")
[ ](https://www.youtube.com/watch?v=md-k3_D08cg&t=14)
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### Author:  [@Wolverine](https://forum.mustachianpost.com/u/Wolverine)
#### Post date: [August 21, 2026, 2:21am UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/871 "2026-08-21T02:21:52Z")
It might be me. If rates are up on lower coupon bonds, that means they’re trading below par. Depending on how they account for them, he might have near infinite liquidity to buy bonds below par while issuing debt at par (so potentially less debt on the books).
I’ll have to dig deeper on how the Treasury does its accounting and what the US debt really is.
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### Author:  [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)
#### Post date: [August 21, 2026, 7:11am UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/872 "2026-08-21T07:11:05Z")
[Impact of Bessent’s jaw-boning fading fast](https://archive.ph/20260821063142/https://www.ft.com/content/f01ff762-3e68-4bac-bb73-6f35a6bf2771). Maybe it did more harm than good: failed to manage the long term rates, but re-ignited the debasement trade.
> It’s a finger in the dike, but you’re in a world of rising interest rates, fiscal profligacy and above-target inflation, and frankly the US has been an outperformer compared with other countries’ bond markets
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### Author:  [@xmj](https://forum.mustachianpost.com/u/xmj)
#### Post date: [August 21, 2026, 7:14am UTC](https://forum.mustachianpost.com/t/chronicles-of-2026-the-next-chapter/17935/873 "2026-08-21T07:14:16Z")
> [@PhilMongoose](#):
>
> [Impact of Bessent’s jaw-boning fading fast](https://archive.ph/20260821063142/https://www.ft.com/content/f01ff762-3e68-4bac-bb73-6f35a6bf2771). Maybe it did more harm than good: failed to manage the long term rates, but re-ignited the debasement trade.
You say it’s “fading fast” but USDCHF (and, by extension, my spreadsheet) is still down a bunch over the last five days!
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