281–290 of 433 posts
Best time to buy is when there's blood in the streets :D
I just can't decide if there will be more blood, or if this is just the start...
As of right now, the S&P 500 is down a little over 2%, that's pretty normal. I'm not even sure this is a paper cut.
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Would you consider it less flawed if it hadn't rebounded after the drop? I thought being able to recover quickly from market shocks was considered a good thing.
I am considering it flawed in that we shouldn't have these drops, or gains,...this volatility, like we have today. The high frequency trading, the quarterly outlook, the amount of emotion, etc in the market is flawed. The average person should not have to worry about the market... ever. It shouldn't be the massive, speculative thing that it is today. Short term trading, as it is, needs to stop. Business does not work…
The point of a market is that the price signal reflects all publicly available information available at an instant in time. If more information becomes available, or if the information is uncertain and can be interpreted many ways, the price should jump around. That's what makes it an effective market.
The average person doesn't have to worry about the market - they can park their money in an index fund, buy when they have spare money, sell when they retire, and forget about the price in the intervening years.
A whole lot of aphorisms in this commentary about falling knives and dead cats, but very little actual information. If you're trying to time the bottom you may as well take your money to the blackjack table. The quants are probably going to make a bunch of money, but if you're just a regular person, you should probably just continue making your regularly scheduled 401k contributions and diversified investments. Histo…
Ah, but those quants are going to make a bunch of money... There's a cottage industry forming around finding market distortions caused by bad algos. You'd think that there wouldn't be a bunch of bots running around making stupid decisions, but there are a lot of bots that haven't been updated in some time and were put in place according to some idealized rule-based model in some esoteric area of finance that one guy…
There are other reasons why stupid decisions are being made by bots.
For example, response times matter. Often you have a tradeoff between making a bad decision quickly, or a good decision more slowly. It isn't clear that being smart is worthwhile...
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The crash (or correction) of 2015 might be because of student loans & labor participation rates of recent graduates. The load is such that many of them could not grow into the consumer role to the degree that the economy needed of them in order to grow. And reducing growth/recovery even further, stagnant wages further hold back consumption. 2008 and 2015 are economic events which feel to me like they're based in ineq…
New graduates are a relatively small slice off the overall workforce and they have a long time to pay of their loans. I don't see any mechanism there which would cause a crash. We've seen quite clearly that over-subsidising their debt burden simply causes them to take on larger loans - it doesn't help. The problem for those younger people entering the market is not that they don't consume - in fact, they consume read…
If they can't afford to buy a property, a whole cascade of secondary 'new place' purchases don't happen.. it's a symptom of not enough circulating money at the center of society to sustain the economy.
The crash part comes when investors look at falling activity in China, and falling commodity prices as strong indicators that global demand is falling.
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Honestly, I don't think you have a clue what you are talking about. You aren't wrong, per-say, you just list all things that have literally 0 to do with the actual problems. Its a very common political trick for an ideologue like yourself to grab a bunch of things they think are bad and argue they are the cause of all your ills. You are approaching things from a "this is good for people, it must be good for the count…
You guys are arguing the same point: the government blew it in 2007, and has been blowing it for the past 30 years. Granted, you definitely give a more in-depth account of how we got to the end points that OP cites, but still I don't see the need for such hostility.
Repeating the reasons people use to justify things like:
"If we just lowered taxes"
"If we just cut the deficit"
Isn't helping. Especially when they aren't the underlying cause.
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Thank you. This cognitive fallacy of "I knew" and "I was saying it long ago" etc... really irks me. Especially in something like stocks you are 100% right, put your money where your mouth is and spare us the story of your grand predictive prowesses.
I predicted the 2008 crisis in 2001. (Well an article on http://mises.org made it clear it would happen.) This was before the housing bubble started to inflate, and was easy to expect due to the changes in the CRA and the artificially low interest rates. I profited from the bubble quite well, decided the top had been hit when things got really wonky and got out of the market in 2007. I was a year early, but I'm not c…
Don't kick yourself for getting out a year early. It's way better than half a year too late.
However:
> the US government can't even sell bonds, it's selling them to itself with the Fed fabricating money to buy them.
That part is over, and has been for months. And yet US bond prices are still only at 2%. I've been watching that number pretty closely - US bond auctions failing would be a huge red light for me. But even without the Fed as a buyer, the US government is having very little trouble selling bonds at top prices.
People's investment philosophy will vary and tolerance for risk will play a major role in it all. My own view is this, and it is based on a lifetime of having made all the typical mistakes. Steady is the best way to go for your investable funds. That means, go with stocks for a decent segment of your investments but temper this with investments that will help preserve capital when things get rocky. Keep a ratio betwe…
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"'Greece/Argentina/Brazil/Japan/...'" ... were all just barely over 100% debt / GDP when things went bad? I don't recall that being the case. It is surely true that there can be unsustainable levels of debt. You have not made the case that those are anywhere near 100% GDP. I would be surprised if there were any fixed number of GDP where it goes from good to bad - it's going to at least depend on the cost of borrowing…
> were all just barely over 100% debt / GDP when things went bad? Indeed. It's amazing to me that people don't blink an eye at borrowing 8-10x their annual income to buy a home in California, but think the US economy, which can print its own currency, is going to fold with debt levels at 1x income and rates at historic lows.
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I'm struggling to think of what the Fed can even do in this situation. I guess they can either 1) dig themselves deeper into a hole and issue another round of QE to inject liquidity into the markets or 2) do absolutely nothing. Though they are probably loathe to do nothing as then it would seem like they don't have a solution. Whatever happens, it will be an interesting/exciting time in non-traditional monetary polic…
About all they have left is more QE. My guess is that the next step in this bubble they've blown (along with the rest of the world's central banks) is massive deflation.