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Show HN: Is the stock market going to crash?

isthestockmarketgoingtocrash.com

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

#321

Post by specialist »

StanislavPetrov wrote: post #255
wyager wrote: post #170

Earlier quoted context omitted.

> 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…

This is true in a theoretical free market where there is price discovery. In the "markets" that actually exist, though, we don't have true price discovery. We have a market with centrally controlled interest rates, central bank purchasing (in a variety of ways) and other institution-based interference that create inefficiencies that are not organic, and are therefore not self-correcting.

aka "policy". Also self correcting, but with a longer time scale.

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

#322

Post by uptown »

omegaham wrote: post #318
uptown wrote: post #278

Earlier quoted context omitted.

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…

True. Except it may be able to be used as a proxy for larger economic issues. If borrowers are defaulting on their car loans at a higher rate than usual, it begs the questions: "why" and "why now"?

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

#323

Post by shostack »

davidreiss wrote: post #115

Only 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.

That's a bold claim. Source?

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

#324

Post by wyager »

StanislavPetrov wrote: post #255
wyager wrote: post #170

Earlier quoted context omitted.

> 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…

This is true in a theoretical free market where there is price discovery. In the "markets" that actually exist, though, we don't have true price discovery. We have a market with centrally controlled interest rates, central bank purchasing (in a variety of ways) and other institution-based interference that create inefficiencies that are not organic, and are therefore not self-correcting.

None of the stuff you mentioned invalidates any of the mechanisms I described, although regulations may decrease their effectiveness (as with any other price-discovery mechanism) by introducing friction or breaking efficient instruments.

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

#325

Post by plaidfuji »

saimiam wrote: post #184

I was (sort of) there when the 2000 tech crash happened and was in the thick of it when the 2008 crash happened. This thread and a few offline conversations made me reexamine what I believe about the stock market and the nature of the 2000 and 2008 collapses. Of course, I'm not an econ nor do I have data to back up anything I'm saying. All manias, from tulips to tech IPOs to housing bubbles are born when the common p…

This is probably the most insightful comment here. When your grandma is buying some asset class, it's time to sell. I think the biggest complicating factor here is the US government debt and the massive amount of it that the federal reserve owns via its treasury bond buying program since 2008. Who's on the hook for this debt? The common person, via the value of the US dollar. The next crash will be precipitated by actions of the fed and creditors to the US government, not stock market investors. Incidentally, in this environment, cryptocurrencies could emerge as a safe haven.

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

#326

Post by eyraudj »

harryh wrote: post #288
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…

In the same blog as your reference [1] you can find one of the more thought provoking essays I have read in the last little while. It's a discussion about how easier stock market diversification should lead to permanently higher multiples on earnings. http://www.philosophicaleconomics.com/2017/04/diversificatio... Highly recommended.

"Unfortunately, when we flip the point around, and say that the universe of risk assets should grow more expensive in response to improvements, people get concerned, even though the exact same thing is being said."

Discredited the article to me..

Improvements of a market reduce its friction and make it more efficient: transaction costs disappear for instance. Cost and price aren't the same thing. The latter includes the former.

Price can be seen as formed by a supply-demand process. In this process investors and capital seekers are BOTH subject to the cost of an inefficient market. They're not two sides of a coin.

Maybe not so recommended.

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

#327

Post by module0000 »

philipodonnell wrote: post #299
module0000 wrote: post #262

Earlier quoted context omitted.

The more this strategy is automated, the more effective it becomes. This is a simple explanation for "trends", as people see liquidity consumption and enter on the side to further consume it - more people repeat the pattern. The net result is a "trend", which is a blunt way of saying "demand exceeded supply in direction". There is no sane way to automate this, since everyone's description of "enough" volume delta is…

This is most adaptive algorithms work, though. As your scenario gets played out over and over, the high threshold people will notice the decline in profitability and look for ways of improving the algorithm. They'll look at the various parameters and notice that the lower the volume delta the higher the return, so the volume delta parameter will come down. As everyone's volume delta comes down, the strategy will work…

I appreciate the comment, but it just doesn't work out that way. In theory yes, what you are saying holds up. In practice(I'm running these 24/7 and generating my income solely from them) this has not happened yet, and is showing zero progress towards happening.

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

#328

Post by icedchai »

luckydude wrote: post #319
icedchai wrote: post #306

Earlier quoted context omitted.

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.

If that works for you, that's fine... It's your money. You're probably paying this guy 1% in fees and expenses, minimum.

To be frank, 4% is not good. For comparison, my Vanguard account, which is mainly low cost ETFs and index funds, has had a 11.8% average annual return over the past 5 years.

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

#329

Post by [deleted] »

babaganoosh89 wrote: post #232
PDoyle wrote: post #119

Earlier quoted context omitted.

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.

I actually made an automatically updating chart for this using FRED data: http://financial-charts.effingapp.com TLDR: The correlation did go down a bit since publishing but still seems alright.

[deleted]

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

#330

Post by aagha »

luckydude wrote: post #297
graedus wrote: post #157

Earlier quoted context omitted.

> The problem is, it could be years before there is a collapse, or it could be tomorrow. That's a lot of yield you might be losing out on. A near similar argument could be made in 2014. You probably could have doubled or tripled your money in that period. All true. I think what makes sense then is not to get out of the market entirely, but depending on your risk tolerance, simply re-balance so that you own less stock…

Look into structured notes. You can get some gains with sort of an insurance policy.

I just started reading about structured notes.

How does one go about actually purchasing them? It doesn't seem they're available through typical online brokers like Etrade or Scottrade.

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