Show HN: Is the stock market going to crash? • Hacker News Board

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

#311

Post by chrisweekly » Tue, Aug 08, 2017, 4:32 AM UTC

chrisweekly wrote: post #310

jxramos wrote: post #292

Earlier quoted context omitted.

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 conve…

PS The sinister "people are disappearing" interpretation was the 1st way I read it.

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

#312

Post by pishpash » Tue, Aug 08, 2017, 5:11 AM UTC

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…

After being receptive to this article at the outset, I've become much more skeptical after thinking about it some more, to wit:

1. Why 10 years as the forward return period -- would be nice to see the situation for other return periods, even close to 10 years. Granted, it is a round number and doesn't appear to be cherry-picked, but still.

2. Why 1952 as the starting point -- presumably because the data from FRED starts there, but can this not be extended further back?

3. Why an implausibly linear relationship between the equity allocation percentage, which is bounded (0%-100%) vs. the returns, which is unbounded on either side, over such a large range of values? What is the mechanism to explain this? In other words, what is the proposed model that transmits allocation percentage into a return, even if the directionality of correlation is at least likely? What happens around 0% and 100% allocation -- do the extreme cases make sense?

I'd like to run my own data before I believe this.

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

#313

Post by ata6187 » Tue, Aug 08, 2017, 5:30 AM UTC

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…

That "predictor" or monetary stock and flow theory that blog post describes is well over 100 years old now and very well known (pre-Keynesian and going back to at least Irving Fisher). It has also been studied in detail in academia for decades if anyone wants to look up proper research studies about it. The blog author maybe should have mentioned that this is already a well known and tested predictor, and if the author hadn't heard of before writing that blog post I would question that entire site.

There are also several companies that specialize in providing this exact cash/equity data research to financial firms to help them manage their trading strategies and offering more practical details in their data than FRED data offers. For example TrimTabs [1] (no affiliation) has been around since 1990 according to their website [1] trimtabs.com

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

#314

Post by pterhx » Tue, Aug 08, 2017, 6:43 AM UTC

where_do_i_live wrote: post #79

Your volatility section seems to be a very poor indicator of a future crash in the manner you are using it. Volatility is not a predictor, but instead a descriptor. An analogy I think is the weather stick - Is this stick wet? Then it is raining. It is a very poor item to use in your context. Further, sustained periods of low volatility often are sometimes indicators of complacency among investors and indicators of hi…

Matt Levine wrote an article (with charts!) on VIX[0] back in 2014 that basically says the same thing: VIX is more of a measure of past volatility than an indicator of future volatility.

[0] https://www.bloomberg.com/view/articles/2014-06-09/the-vix-i...

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

#315

Post by amelius » Tue, Aug 08, 2017, 7:07 AM UTC

peller wrote: post #275

amelius wrote: post #268

Earlier quoted context omitted.

Can anybody explain the fundamental reason behind "resistance/support lines" in technical analysis? I'm guessing it is a self-fulfilling prophecy (everybody believes in it, so it becomes true), but perhaps there is a logical explanation that I'm totally missing.

Quoting from Bruce Kamich's How Technical Analysis Works : Support and resistance areas form because market participants remember price levels, and they tend to react as a group when a stock returns to those prices. A simple example will make the concept easy to understand. Let's imagine that you and other investors bought a stock at its initial public offering price of $20. People who did not buy the stock at the of…

Thanks. I think this only explains resistance/support lines which are horizontal, but in technical analysis these lines may also have a slope.

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

#316

Post by shrimpx » Tue, Aug 08, 2017, 8:07 AM UTC

hervature wrote: post #165

velodrome wrote: post #154

Earlier quoted context omitted.

> Bitcoin is legitimately seen as an alternative to gold. Bitcoin may be an alternative to gold but it is not the same. 1) Gold has intrinsic value. 2) Gold is a tangible asset.

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…

What if trade is essential to survival, and gold checks all the marks as the medium for trade? Of course this could only be the case in a primitive society. If you believe contemporary society could revert to a primitive one, then you would be compelled to hold gold as a hedge.

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

#317

Post by RobertoG » Tue, Aug 08, 2017, 8:44 AM UTC

qubex wrote: post #228

RobertoG wrote: post #175

Earlier quoted context omitted.

I think he is talking about Modern Monetary Theory, where one of the conclusions they arrive, after studying how modern economies work, is that private sector debt grow when there is not enough government deficit. https://en.wikipedia.org/wiki/Sectoral_balances Another of the conclusions is that the national debt, for countries with a floating sovereign currency, is just a number without real meaning. https://www.nak…

Ah. I'm dyslexic and ashamed and I'm going to put myself to bed and try to forget this before the morning comes.

I don't think you are at fault. We abuse acronyms.

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

#318

Post by omegaham » Tue, Aug 08, 2017, 11:47 AM UTC

uptown wrote: post #278

rtx wrote: post #135

Earlier quoted context omitted.

What looks risky now?

Subprime auto loans.

I see this as fundamentally different, mostly because it is far easier to repo a car and auction it off than it is to foreclose on a house and sell it to someone else.

Another thing is that no one is wildly pricing cars; the fact that lots of subprime people are buying cars does not drive up the price of cars for everyone else. Thus, if a whole bunch of subprime borrowers default, the rest of us aren't sitting there with a car that's actually worth a quarter of what we thought it would be worth.

We also don't keep an enormous share of our equity in cars the way that we do in housing.

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

#319

Post by luckydude » Tue, Aug 08, 2017, 2:52 PM UTC

icedchai wrote: post #306

luckydude wrote: post #298

Earlier quoted context omitted.

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?

It varies based on what gets traded. And I don't really know because I stopped thinking about what I was paying and started thinking about what I'm earning. I really don't care what his cut is if I'm netting 3.75-4.0% on average.

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

#320

Post by luckydude » Tue, Aug 08, 2017, 2:53 PM UTC

ajmarsh wrote: post #205

luckydude wrote: post #84

Earlier 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…

Are you in the market presently or have you pulled out again?

Mostly in cash but I would not base decisions off of where I am. Investing is complicated, I've decided I suck at it and have handed it off to someone with a good track record.