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Show HN: Is the stock market going to crash?

isthestockmarketgoingtocrash.com

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Re: Show HN: Is the stock market going to crash?

#301

Post by fernly »

runako wrote: post #35

I've never seen market valuation expressed as market cap as % of GDP. I'm not an economist, so I'll leave the detailed arguments to them. But it would be at least useful to explain why you think this is a meaningful metric as compared to those typically used to measure market valuation (e.g. P/E ratios etc.). Your graph also ties your valuation metric to the 2000 peak and the 2008 peak. However, there were crashes in…

In particular, people's evaluation of a company are not (wholly) based on its current annual output, whereas the GDP is exactly the amalgam of all companies' output. People evaluate a company at least in part on the assets it holds, intellectual property, and future earning power, none of which are captured by the GDP.

Re: Show HN: Is the stock market going to crash?

#302

Post by int_19h »

JumpCrisscross wrote: post #281
int_19h wrote: post #269

Earlier quoted context omitted.

> Gold's value comes from its (a) millennia-long history of stably holding value across cultures and technological domains That's recursive - you're basically saying that gold has value because it has historically being valuable. Which begs the question of why it has been valuable. I'm not saying that this doesn't add some (most, in fact) value to gold. I'm just saying that this isn't a property that is enabled by an…

> this isn't a property that is enabled by anything specific to gold With money, you want five things: fungibility, durability, portability, cognizability and stability [1]. On fungibility, gold is an element. It can only be extracted, not produced in a conventional sense. In fact, before the 1669 discovery of phosphorous, humans had only purified, from oldest to newest, copper, lead, gold, silver, iron, carbon, tin,…

So what you're saying is that gold is JavaScript - it got significant early adoption because the alternatives (like VBScript) were worse, and then that just amplified until it boosted it into an unassailable position. ;)

Re: Show HN: Is the stock market going to crash?

#303

Post by hendzen »

PDoyle wrote: post #119
pdog wrote: post #69

If you're looking for The Single Greatest Predictor of Future Stock Market Returns[1], here it is: http://www.philosophicaleconomics.com/2013/12/the-single-gre... This is a long read, but it's worth it. The metric can be calculated in FRED[2], and as a predictor of future returns, it outperforms all of the most common stock market valuation metrics, including cyclically-adjusted price-earnings (CAPE) ratio[3]. (Basic…

Wow, really interesting read. Thanks for the link. Only trouble is that once people find patterns like this, they have a habit of disappearing. Hopefully this one is based on solid enough fundamental market forces that it persists after its publication. It was published in 2013 so we won't know for sure until after 2023.

You should read the author's next post where he pokes a bit of fun at his metric:

http://www.philosophicaleconomics.com/2013/12/valuation-and-...

Re: Show HN: Is the stock market going to crash?

#304

Post by sumedh »

stouset wrote: post #216
icedchai wrote: post #195

Earlier quoted context omitted.

2008 was great. Everything was on sale, and I doubled down on my stock investments...

With money from where? If your money wasn't in the market, you might have been lucky with timing but statistically if you replay that scenario, you're losing out on gains by not just parking your money in the market in the long run.

> With money from where?

Your salary, invest you savings in the market.

Re: Show HN: Is the stock market going to crash?

#305

Post by iends »

luckydude wrote: post #298
icedchai wrote: post #199

Earlier quoted context omitted.

So you pulled out in 2006... When did you get back in? Timing the market is hard...

Like I said, I'm not a financial wizard, so I'm mostly in cash and I've missed some upside. Not completely, have a pile of Apple stock that's done well, but I'm not the right guy to be managing money. So I've moved most of it to a guy at Morgan Stanley that a friend has been using for a long time.

Enjoying those fees?

Re: Show HN: Is the stock market going to crash?

#306

Post by icedchai »

luckydude wrote: post #298
icedchai wrote: post #199

Earlier quoted context omitted.

So you pulled out in 2006... When did you get back in? Timing the market is hard...

Like I said, I'm not a financial wizard, so I'm mostly in cash and I've missed some upside. Not completely, have a pile of Apple stock that's done well, but I'm not the right guy to be managing money. So I've moved most of it to a guy at Morgan Stanley that a friend has been using for a long time.

What are you paying, out of curiosity? 1% of AUM?

Re: Show HN: Is the stock market going to crash?

#307

Post by ThrustVectoring »

knewter wrote: post #19
SmellTheGlove wrote: post #15

Earlier quoted context omitted.

I wouldn't worry about student loan debt being a problem. It's very likely that they're going to get a bailout before a bubble bursts. Where on earth did I come up with this, you ask? Easy - I just paid my student loans off last week. It's only natural that everyone else will now get bailed out! Seriously, though, this is a real problem and we need to do something. Even if it doesn't have a direct effect any time soo…

> Seriously, though, this is a real problem and we need to do something the thing we have to do is not borrow money we can't repay. capitalism is a distributed system. borrowing money you can't repay is a broken local protocol. don't try to fix that with anything but fixing it locally.

That just drives down the price of borrowing money until a borrower is found and the market clears. You could just as well place the blame on aging savers driving the price of borrowing down until taking on massive amounts of debt to get ahead in life through college looked reasonable.

Re: Show HN: Is the stock market going to crash?

#308

Post by justin66 »

Sohcahtoa82 wrote: post #294
justin66 wrote: post #64

Earlier quoted context omitted.

> the thing we have to do is not borrow money we can't repay. Literally nobody takes student loans that they are capable of repaying. Why would you, unless you could get a 0% APR? It'd be nice if young people - possessors of great foresight and fonts of wisdom, all - could predict whether they will be able to repay the very substantial loans they're likely to rack up in college. We are not living in a world, or an ec…

> Literally nobody takes student loans that they are capable of repaying. Probably one of the most incorrect sweeping generalizations I have ever seen. I finished my BS in CS about 3 1/2 years ago with about $44,000 in student loan debt. I'm currently on track to pay them off within the next 3 years. It'd probably be only 1 or 2 years if I didn't buy a car.

> Probably one of the most incorrect sweeping generalizations I have ever seen.

Not really, you simply didn't read my comment and the comment I responded to very thoughtfully.

The point of my reply is twofold. First, the obvious: you wouldn't take that loan unless you needed the money for your education (or wanted to gamble on the stock market, apparently, as one poster mentioned, but let's put that aside). If you can pay for your education without it, with saved money or through scholarships or grants, you'll do it. If you can't pay for your education, you take the loan. In that sense it wasn't a deep point, it was basically a tautology to point out how vapid the grandparent's comment was: "the thing we have to do is not borrow money we can't repay," "borrowing money you can't repay is a broken local protocol." As if arranging student loan financing were in some way similar to extending credit to a successful business that needs a little extra cash on hand until the end of the month. Ridiculous.

Second, and on to the more important point that I made in the second paragraph: if we assume the grandparent really means "will not be able to repay after several years of college" the problem with this whole line of thinking becomes obvious. The average student embarking on college has no idea whether they'll graduate successfully. They have no idea whether they'll be able to find a job in their field and they certainly have no idea how much they will be paid. In short, they have no idea whether they'll be able to repay that loan. In terms of policy, saying they should not take a student loan which they will be unable to repay is not an answer to anything since at best they're making an educated guess. In a situation like that, where people are guessing, the expected outcome is that a lot of people will guess incorrectly.

Re: Show HN: Is the stock market going to crash?

#309

Post by [deleted] »

chrisweekly wrote: post #286
PDoyle wrote: post #119

Earlier quoted context omitted.

Wow, really interesting read. Thanks for the link. Only trouble is that once people find patterns like this, they have a habit of disappearing. Hopefully this one is based on solid enough fundamental market forces that it persists after its publication. It was published in 2013 so we won't know for sure until after 2023.

> "... once people find patterns like this, they have a habit of disappearing." Hah! Grammatically, "they" refers to the people (not the pattern). IMHO, sometimes these details matter, as in: "Let's eat grandma!" vs "Let's eat, grandma!" or "know your shit" vs "know you're shit" :)

[deleted]

Re: Show HN: Is the stock market going to crash?

#310

Post by chrisweekly »

jxramos wrote: post #292
chrisweekly wrote: post #286

Earlier quoted context omitted.

> "... once people find patterns like this, they have a habit of disappearing." Hah! Grammatically, "they" refers to the people (not the pattern). IMHO, sometimes these details matter, as in: "Let's eat grandma!" vs "Let's eat, grandma!" or "know your shit" vs "know you're shit" :)

what makes his sentence not an amphiboly? What's the grammatical rule that fixes the "they" to apply to the people not the pattern?

Thanks jxramos, good questions. FTR I had to look up "amphiboly":

  > "Linguistically, an amphiboly is an ambiguity which results from ambiguous grammar, as opposed to one that results from the ambiguity of words or phrases—that is, Equivocation."
Your reply - and a handful of rare / unexpected downvotes led me to re-read my comment, and in retrospect I realize I did a poor job communicating. I intended simply to convey my amusement at the ambiguity. I think for all intents and purposes his sentence was an amphiboly.

"Fixing" it would probably involve rephrasing to reverse the order of "people" and "pattern" in the sentence or just put all the emphasis on the pattern:

"... these patterns, when discovered, have a habit of disappearing"

Strict correctness regarding subject:verb agreement can, like other grammatical constructs, lead to non-idiomatic, awkward phrasing. Formal "rules" about prepositions are the first related example I can think of. ("... of which I can think" is awful, right?). My point was just to laugh at the ambiguity. (shrug)

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