If nothing else, I like how this might stir some interesting discussions about the state of the economy.
One thing I'd like is a link to the cited data to make it a little more serious and conducive to debates.
Show HN: Is the stock market going to crash?
111–120 of 338 posts
Re: Show HN: Is the stock market going to crash?
#112Earlier quoted context omitted.
"occurrences that nobody was aware of and that were only understood afterwards" Umm, I'm no genius but I was managing my mother's money at the time of the 2008 crash. It was very obvious to me that there was going to be a crash, I pulled out of the market in late 2006 and didn't lose a dime in the crash. I think the better statement is "The 2008 crash was obvious but many people were in denial". Again, I'm not a fina…
Predicting a crash is easy but timing it with accuracy is extremely difficult. In fact you were two years too early and lost out on a lot of potential return. There will always be a crash/correction. Easy. But when?
Completely agree. Yeah luckydude I can say with 100% certainty that if you took all of your money out right at this moment, you won't lose any money in the next crash. Give me the nobel prize in economics guys.
Re: Show HN: Is the stock market going to crash?
#113Earlier quoted context omitted.
> market valuation expressed as market cap as % of GDP This metric makes little sense for this use case. Consider two countries. They are identical in every way except in Country A 90% of the companies are publicly-traded while in Country B 10% are. Country A will have a market cap to GDP 9x Country B's. Does that mean Country A is 9 times overvalued relative to Country B? The objection works in-country, too. Saudi A…
Nit pick: only about 5% of Saudi Aramco is going public, the total company is worth $1-2T (although this is a matter of some debate, as you might imagine), so aggregate market cap will only increase by $50B. [0] https://www.cnbc.com/2017/04/24/saudi-aramcos-valuation-repo...
> aggregate market cap will only increase by $50B
If you list 5% of a $1 trillion company on a stock exchange, the aggregate market capitalisation goes up by $1 trillion. (Float goes up by $50bn.)
Market capitalisation is price per share times shares outstanding [1]. Float is price per share times publicly-trading shares [2].
[1] https://www.fool.com/investing/small-cap/2005/04/29/quotouts...
Re: Show HN: Is the stock market going to crash?
#114Earlier quoted context omitted.
When the yield curve begins to dip, a flight to quality will begin into crypto's.
Good luck with that. Usually there's a exodus from speculation the minute things get hairy in the market. Nobody speculated in crypto right?
Like there was in 2008/09 when most people in the world lost confidence in banking systems followed by the bailouts and Quantitative Easing.
Re: Show HN: Is the stock market going to crash?
#115Only the elite know. It's so funny how people think that recessions, depressions, stock market crashes, etc are some "natural" event.
A stock market crash happens when the elite decide there should be a market crash. When they pull money out of the market.
Re: Show HN: Is the stock market going to crash?
#116Normalizing household debt against the GDP makes the assumption that we are comparing the debt with the ability to pay for it. But according to graphs like this, even though the GDP has been rising, median households have not been getting a corresponding increase in income: https://en.wikipedia.org/wiki/Household_income_in_the_United... So the income we are adjusting against is not necessarily going to the people tha…
Household debt to GDP tells you the state of the society. Household debt to income tells you households' ability to repay. If Debt/GDP is fine but Debt/Income is not, you're looking at (a) default (lenders eat dust), (b) inflation (savers eat dust) or (c) public assistance (non-borrowing taxpayers eat dust). That's a political question. If Debt/GDP isn't fine, option (c) flies off the table.
Re: Show HN: Is the stock market going to crash?
#117Earlier quoted context omitted.
Predicting a crash is easy but timing it with accuracy is extremely difficult. In fact you were two years too early and lost out on a lot of potential return. There will always be a crash/correction. Easy. But when?
Completely agree. Yeah luckydude I can say with 100% certainty that if you took all of your money out right at this moment, you won't lose any money in the next crash. Give me the nobel prize in economics guys.
unless the 'next crash' is runaway hyper inflation.
Re: Show HN: Is the stock market going to crash?
#118For market overvaluation, it says: 9.1 / 10 "DEFCON 4" DEFCON 5 is peacetime, DEFCON 1 is imminent nuclear war. For example, during the Cuban Missile Crisis, the US reached DEFCON 2. Should this say DEFCON 2 instead? Or is "above" normal readiness the intended meaning?
Yeah was trying to communicate "moderate risk", but it's kinda tongue in cheek.
We got the tongue in cheek point of the comment. However what is being discussed is the ordering. Defcon 1 is more serious than Defcon 5. ie it counts backwards from 5 to 1 as situations become more serious. So your comment should be Defcon 2.
Pedantics aside, I did enjoy those little comments you put alongside the threat level.
Re: Show HN: Is the stock market going to crash?
#119If 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.
Re: Show HN: Is the stock market going to crash?
#120Can someone with an actual economics degree explain to me whether it's a valid criticism of the "Market cap as % of GDP" metric that many US companies derive value from multinational labor and consumption, and if not, why not? Thanks in advance.
SB in economics here and current business school student (I know, I know: burn the future MBA at the stake!). Indeed, it is a valid criticism. The market cap/GDP measure is mismatched, since market cap theoretically reflects investors' expectation of future cash flows globally while GDP is a measure for only one country. Also, GDP is problematic for a bunch of reasons, so even if all companies were only operating in…
Plus, as you mentioned yourself mcap corresponds to the present value of all future cashflows and GDP to one years output. The only way this would make sense is you were comparing changes in GNP to changes in mcap.