241–250 of 338 posts
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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.
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Yes and no. It depends what type of technical analysis you are doing... If your technical analysis has no other inputs except the price(over any period(s) of time), then you may as well go buy a lottery ticket. If you are wondering which category you are in, if at any point during your "analysis" you find yourself looking for things with names like "evening star", "bullish engulfing", "head and shoulders", etc.... sa…
Could you suggest books that go deeper in the second type of technical analysis? Most of what I find online fits well in the first type you described.
Reading that and applying it was a huge turning point for me in my trading.
What we can say with some certainty, based on options activity, is that if a single day 3-4% drop in the S&P500 occurs it can trigger a massive unwind in short volatility positions:
https://www.reuters.com/article/us-usa-stocks-volatility-idU...
And with several political risk factors on the near term horizon, including the possibility of a government shutdown in late September due to the failure of Congress to extend the debt ceiling (yes, they are arguing over who is going to pay to fund the border wall with Mexico). It certainly should surprise no one if a coming tomorrow could be very different than the extraordinarily low-volatility landscape we face today.
The Case For Long Volatility by Eric Peters
https://www.linkedin.com/pulse/case-long-volatility-eric-pet...
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The crash came into existence in 2008 and Bitcoin began to rise in 2009. https://www.washingtonpost.com/news/the-switch/wp/2014/01/03...
> Bitcoin began to rise in 2009 Bitcoin came into existence in January of 2009. What was it supposed to do? Start stealing its owners' money and go negative? Also, everything rose in 2009. The S&P 500 was up 23%. Bonds were up, commodities were up...that's what happens after you scrape past a global financial meltdown. Sure, Bitcoin was up like five thousand percent, but that's the difference between a tens of millio…
Those who've hedged with crypto's as a trading vehicle are likely to win again during the next inevitable downturn.
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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.
> Hopefully this one is based on solid enough fundamental market forces that it persists after its publication. If you can find any way to predict the future price of things, you can make money by performing arbitrage across time (instead of space, which is how people usually think of arbitrage). This (nominally) describes all types of model-informed time-based investment. The thing with arbitrage is that there's a f…
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Gold having intrinsic value is a straw man argument for it being different than Fiat currencies. Consider this thought experiment. You are going to live by yourself in the forest for a month. Would you rather have A) a weeks worth of food or B) 1 oz of gold. I think this highlights there is no intrinsic value or at least much lower than what people claim. Obviously, there is place for gold in electronics and circuitr…
Gold's price is not supported by its instrinsic value, I'll give you that. But the "forest" test is absurd. By that definition computers, chemotherapy and candy have no instrinsic value. Gold's value comes from its (a) millennia-long history of stably holding value across cultures and technological domains and (b) its tangibility and physically-enforced scarcity. Its intrinsic value is a fraction of its market value,…
Your last point brings up an interesting tangent, if gold wasn't treated as a store of value, what would its price be? Would it be similar to diamonds where synthetic ones are half the price? Are you aware of any sources that try to answer this question?
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…
I believe that corresponds quite accurately with the assessment we are currently at the early to mid stages of a secular bull market in equities analogous to the runs during the 1950s and 1980s. But as others have pointed out, it doesn't say anything about the possibility of a correction in the near term. Be careful out there!
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> 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…
So I've had a fundamental complaint about Market Cap to GDP at least since 2005, which I've never gotten a good answer to: There's this expectation that the market returns 7-10%... a number much in excess of the actual rate of GDP growth (over any significantly long period, anyway) That can't continue forever. Especially in aggregate across the world. At some point the public market has captured substantially all the…
Yes, it can go on forever -- the rates of retun in the stock market are based, theoretically, on the changing expectations about the future and not based on current income.
Thought experment: 100 of us live in small society producing widgets, we each make a widget a day at the factory. GDP is 36500 widgets/day. We also spend some time researching a way to make widgets faster. Yesterday we found a breakthrough that made it 50% likely that in 5 years we'll each be making 10 widgets a day.
It would be reasonable for the valuation of our widget company to go up something like 40% on that news, right? But GDP next year is stlil going to be 36500 widgets/day.
Since the stock market bakes in all optimistic expectations, then in the eras it that it outpaces GDP it could be the case that there remains unrealized optimism for the future.
If the question is "but where is the capital coming from that flows into the stock market?" The answer is that it can be created via credit, or it could be created via appreciation in assets not captured in the stock market (like housing, the major one).
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…
If I'm reading this correctly, the indicator is currently at 0.42? Somewhat above the lifetime average of 0.35, and well below the 0.50 mark which would indicate stocks are overvalued relative to other assets? I believe that corresponds quite accurately with the assessment we are currently at the early to mid stages of a secular bull market in equities analogous to the runs during the 1950s and 1980s. But as others h…
I feel as though the "stock market" following the 2008 crisis has become further insulated from the larger economies fundamentals. wages can continue to not keep up with inflation, savings rate continues it's downward slide, household debt service payments consume an ever increasing slice of disposable income, etc... all the while the type of dramatic dislocation event similar to 1929, 1987 are unlikely to occur. the…
the stock market is so divorced from the actual economy that over half of Americans don't participate in any way at all whether through direct purchase, 401k, mutual funds, etc.. most of the action on the stock markets is companies rebuying their stock to generate earnings and hedge funds and the less than half of Americans who have access to retirement planning.