Stocks Off Sharply as Market Upheaval Grows • Hacker News Board

Re: Stocks Off Sharply as Market Upheaval Grows

#371

Post by mikeash » Mon, Aug 24, 2015, 10:14 PM UTC

brc wrote: post #363

mikeash wrote: post #122

Earlier quoted context omitted.

I think it's also important to understand that before the Communists took power, China had spent more than a century being trampled by various foreign powers, starting with the British and expanding from there, and finally ending with the Japanese rampaging through the country in the lead-up to WWII. Under the Communists, China put a stop to all of this and became a major power again. There are certainly problems in…

"Great Leap Forward"? Improvements only came when they abandoned communism, and came up with a fig leaf of 'mao was 80% correct' It is hard to rewrite history with a different set of rules, but I think it's fair to say that given the experience of Hong Kong, China would have been better off without 30-40 years of communist rule.

Well yes, I covered that in my last paragraph.

It may well be fair to say that. But it doesn't change the fact that the Chinese Communist Party presided over a period which took China from the world's punching bag to a strong, independent power. Maybe they made it happen, maybe it happened despite them, maybe it's a mix, but they get a lot of credit from the population for being the ones in control while it happened.

Re: Stocks Off Sharply as Market Upheaval Grows

#372

Post by adt2bt » Mon, Aug 24, 2015, 10:14 PM UTC

001sky wrote: post #352

adt2bt wrote: post #331

Earlier quoted context omitted.

This got me thinking - is it possible to develop a profitable long-term investment strategy that takes advantage of stock market dips? For example, say I have $1000 to invest every month. I'll take that $1000 and put $500 into an index fund and $500 into a savings account. Then, once the market dips 10% from its previous high, all the accumulated money in the savings accounts is invested over 4 weeks. I made a simple…

testing (a) trading strategy in a short window ... why?

It was a first stab in 15 minutes this morning between meetings. What would you do differently? I'm all ears (trying to learn here, too)!

Re: Stocks Off Sharply as Market Upheaval Grows

#373

Post by wutbrodo » Mon, Aug 24, 2015, 10:18 PM UTC

pnut wrote: post #360

MCRed wrote: post #84

Earlier quoted context omitted.

We have a democrat who is president, and who took over after a crisis during the term of a republican. (never mind that he was part of the cause of the crisis with his 1990s era "not lending to people who can't repay is racist" lawsuit against banks)... so the liberals of HN are highly motivated to believe that democrats are "responsible" and that they have "fixed the economy" after republicans "wrecked it". So when…

America is the greatest economic engine the world has ever known. It's not because we're situated on a mountain of rubies, or that we are intellectually superior to other countries. It's because of our system of government. This talk about the government being the problem, causing harm to the economy, really irritates me - the American economy owes its very existence to the American government and the private propert…

> America is the greatest economic engine the world has ever known. It's not because we're situated on a mountain of rubies, or that we are intellectually superior to other countries. It's because of our system of government.

I'm not taking any position against your overall point, and I do think there are many (relatively) uniquely American policies that historically have paid wonderful dividends; but you're vastly underestimating the exogenous geographic advantages of America (and I'm not sure if you're doing this, but most people tend to overestimate how long global American hegemony has existed).

We're sitting on 50% of the world's navigable internal waterways, overlaid over by the world's largest piece of contiguous farmland[1]. We've got ports that allow easy direct shipping access to most of the rest of the world's economy (Western Europe and China/Japan/India; We also have easy direct shipping access to South America and Africa, but those have naturally been less important). We've got enormous natural borders with the rest of the powers that were most recently useful in the fact that we've had the luxury of staying out of the incredibly catastrophic wars of the rest of the world more or less until we decided to enter[2] (and to the degree that we decide to enter). Those also enabled us to escape essentially 100% of the physical destruction of those wars.

[1] https://www.stratfor.com/analysis/geopolitics-united-states-... This is an excellent article with a lot more depth than the couple of stats I referenced; there's also a part 2 that I recommend reading.

[2] Obviously less true for Pearl Harbor, but still true to an extent: consider the impact of a surprise attack for Germany -> France as opposed to for Japan -> US. Crossing the Pacific is infinitely harder than crossing Belgium.

Re: Stocks Off Sharply as Market Upheaval Grows

#374

Post by wutbrodo » Mon, Aug 24, 2015, 10:25 PM UTC

plg wrote: post #269

Unless you need to take your money out in the next couple of months (or unless you are facing a margin call) why not consider this as a fire sale? Your favourite stocks and mutual funds, ON SALE!

Exactly, I feel like this hits a good balance of prudence and pragmatism. It's kind of a double-edged sword for me since I happen to be heavily into liquid cash at the moment...but I also have higher cash needs because I quit my job a month ago and am planning on taking 6 mos to a year off.

Either way, beyond a bit of an "emergency fund" on steroids, this is actually how I'm taking it: a good starting point for some conservative DCA.

Re: Stocks Off Sharply as Market Upheaval Grows

#375

Post by jazzyk » Mon, Aug 24, 2015, 10:27 PM UTC

smitherfield wrote: post #325

forgetsusername wrote: post #170

Earlier quoted context omitted.

> "Artificially low interest rates is the main cause of most malinvestment and inflating assets." Rates aren't "artificial" (there is huge demand for treasuries) and malinvestment occurs at any time. Sure, it makes it "cheaper" to spend money stupidly, but it's also cheaper to spend money "smartly" -- to take risks and chances to do big things. You know, what places like SV are all about. I'm agnostic as to what the…

>Rates aren't "artificial" (there is huge demand for treasuries) Of course they're "artificial." There may be huge demand for treasuries, but not enough to maintain a constant ~0% interest rate - that's the Fed's doing. The Fed certainly is not allowing treasuries to drop to their true market value, as Volcker did.

You are mixing up interest rates and government debt yields.

Interest rates are set artificially by the Fed. Because they are set almost at zero, this causes run on government debt as the only "safe" source of interest income, lowering yields thus making it inexpensive for the government to acquire even more debt.

The result (in the US) is skyrocketing government debt (from 64% of GDP in 2008 to 103% in 2015)

We. Are. So. Fucked.

Re: Stocks Off Sharply as Market Upheaval Grows

#376

Post by ArkyBeagle » Mon, Aug 24, 2015, 10:36 PM UTC

rsmckinney wrote: post #320

ArkyBeagle wrote: post #259

Earlier quoted context omitted.

The $xxxxB sat in banks as excess reserves that the Fed paid interest on. None of it hit the real economy.

This is my favorite part. This is how most keynesians react when confronted with the harsh realities of QE. This and "the consumers just aren't spending enough." Ofc it's never enough QE and never enough spending. Meanwhile that creaking sound....

I'm a Market Monetarist, not a Keynesian.

Re: Stocks Off Sharply as Market Upheaval Grows

#377

Post by ArkyBeagle » Mon, Aug 24, 2015, 10:44 PM UTC

6stringmerc wrote: post #299

ArkyBeagle wrote: post #256

Earlier quoted context omitted.

We will retire and the Fed will end up bailing out the IOUs on the SS trust fund. This is not a problem so long as it's done once. All SS money ends up strengthening the metric formerly known as M3, so it'll work out just fine. The problem is the closely-held belief that There Must Be Suffering or we're not being responsible adults. The economy has been liquidity constrained ( outside of bubbles ) since 1980, with th…

Look, even if the Baby Boomer cohort does retire and even if Social Security was funded properly, that leaves the stunning inflation of medical costs and significantly longer-than-forecasted life span of that population as yet one more entitlement economic choke-point that creates problems. There's also the closely held belief that "I paid into this system and I'm going to get everything I deserve!" which doesn't jib…

The medical thing will resolve itself. The business model to handle it hasn't emerged yet. No manner of price jiggering is gonna add capacity to the medical system, so alternatives will be found.

Medicare will be a second-tier service. That's nearly inevitable. But nobody will do anything about this until they have to.

And frankly, longevity of Baby Boomers doesn't seem as likely to work out as it did for the WWII and Silent Generations.

I agree wholeheartedly about "mismanaged the finances" but this is the world we live in.

Re: Stocks Off Sharply as Market Upheaval Grows

#378

Post by eli_gottlieb » Mon, Aug 24, 2015, 11:13 PM UTC

jusben1369 wrote: post #322

dataker wrote: post #132

Earlier quoted context omitted.

Regardless of your ideological background, you cannot possibly assert the U.S economy is healthy. 0% interest rate for several years is not healthy. QE is not healthy. 100+ % debt:GDP ration is not healthy. Inflating assets is not healthy. A vanishing middle-class is not healthy.

> 0% interest rate for several years is not healthy That's not healthy or unhealthy. It's just a thing. > QE is not healthy Ask Europe that didn't do quantitative easing (or did too little too late) which economy they'd rather have right now. And it's no longer a thing - because it ran its course and largely worked. >Inflating assets is not healthy Some classes of assets are inflating. Some are deflating. Again it's…

>Ask Europe that didn't do quantitative easing (or did too little too late) which economy they'd rather have right now. And it's no longer a thing - because it ran its course and largely worked.

This isn't an excluded-middle sort of question. QE is indeed very unhealthy, precisely because it's a solely monetary stimulus, pumping up finance while households and public services starve. Fiscal stimulus works far better when you actually want a stimulus (but requires that Congress be willing to act).

Re: Stocks Off Sharply as Market Upheaval Grows

#379

Post by eli_gottlieb » Mon, Aug 24, 2015, 11:19 PM UTC

CWuestefeld wrote: post #362

enraged_camel wrote: post #347

Earlier quoted context omitted.

>>In fact, the VAST majority of Americans are better off than they ever have been. Check out this [1], for example, based on US census data. Yes, the middle class has been disappearing, but they haven’t fallen into the lower class, they’ve risen into the upper class http://www.aei.org/publication/yes-the-middle-class-has-been... -- You need to pick your sources a little more carefully. The organization whose article…

You need to pick your sources a little more carefully. I'm always annoyed at the invocation of the logical fallacy that the source of an argument renders it inadmissible. Not only is it a fallacy, but it's typically (but not in your case, especially since you're offering a specific criticism!) invoked by someone simply assuming that their own source is sacrosanct. That said... You may have a point, but it's not fatal…

>Why would you think that women entering the workforce must be treated exogenously? I think it's proper to consider this part of the overall improvement.

Because "improvement" normally refers to something like growth in productivity, or growth in income-per-labor-hour. Doubling the family's income by just doubling the total hours worked isn't actually an improvement at all, especially when it just results in doubled competition for certain zero-sum assets[1].

[1] -- http://slatestarcodex.com/2014/06/28/book-review-the-two-inc...

Re: Stocks Off Sharply as Market Upheaval Grows

#380

Post by thecage411 » Mon, Aug 24, 2015, 11:27 PM UTC

dllthomas wrote: post #166

dataker wrote: post #156

Earlier quoted context omitted.

QE is 'over'(for now), but it has shaped today's economy. There may have QE4. Artificially low interest rates is the main cause of most malinvestment and inflating assets. Usually ends with a pretty rough recession. For debt, I could just say 'Greece/Argentina/Brazil/Japan/...', but(yes) these aren't the world's reserve currency. U.S could just pay its debt to China by 'printing money' Still, it also severely hurt Am…

"'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…

Not only that, but cause and effect isn't obvious either. Let's say there's some correlation between high ratios of debt / gdp (our proxy for "unsutainable levels of debt") and low growth. Is the low growth caused by the high debt or did the country get into high debt because they've had low growth (and thus lower than expected revenues)?