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Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

hussmanfunds.com

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Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#21

Post by UncleMeat »

VMG wrote: post #14

Understanding Bitcoin is hard. Here is a response to some of the criticism: > Every time a block is validated, a single node in the network gets a reward, and everyone else’s computing time is completely wasted. This is a misunderstanding of what PoW is http://www.truthcoin.info/blog/pow-cheapest/ > The system already features a rather steep cost per transaction, and hardly any of those transactions are for the purch…

Only if "arbitrary number" doesn't include an arbitrary number of addresses. You still need a transaction to set up a channel. Lightning shifts a cap on transactions to a cap on users while assuming that most people transact repeatedly with the same person and that btc users will be happy to lose the trust guarantees that btc brings over traditional services.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#22

Post by rbcgerard »

pdog wrote: post #5

This guy expects a market loss of about -65%, which would send the S&P 500 back down to 900. He also expects negative total returns over the next 12 years. Of course, his Strategic Growth Fund has not only underperformed its benchmark (the S&P 500 index), the fund actually has negative returns over the past 1, 3, 5, and 10 year periods[1]. Losing money in this market is a truly remarkable feat. [1]: https://www.hussm…

that funds performance is abysmal. but comparing it to a long only fund is not the right benchmark, Long/Short or Market Neutral would be more apt, making the relevant returns less egregious (as they've had a tough run as well).

As of 9/30 the fund had a gross exposure of 149% and was 32% net long [1], so he's employing leverage as well.

[1]http://www.morningstar.com/funds/XNAS/HSGFX/quote.html

Edit: looks like some of that leverage is on the form of options so maybe the actual math is different.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#23

Post by junkscience2017 »

runako wrote: post #13
pdog wrote: post #5

This guy expects a market loss of about -65%, which would send the S&P 500 back down to 900. He also expects negative total returns over the next 12 years. Of course, his Strategic Growth Fund has not only underperformed its benchmark (the S&P 500 index), the fund actually has negative returns over the past 1, 3, 5, and 10 year periods[1]. Losing money in this market is a truly remarkable feat. [1]: https://www.hussm…

This company has ~$750mm under management, and has several funds that manage to have both a) high expense ratios and b) horrible performance over the short and long terms. Serious question, for those who work in finance: how do companies like this stay in business? Shouldn't the transparency of their poor performance have long since driven them out of business? Semi-serious question, also for those who work in financ…

with 5% fees, Hussman himself is making money!

it's only the clients that are losing money

he just has to produce doomsayer screeds that are convincing enough to fool the clients. he's basically being paid to write dystopian fiction

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#24

Post by philiphodgen »

I look beyond the “there’s a crash coming” sentiment. In that opinion, he is like all other pundits yammering on CNBC: entertaining rather than enlightening.

What I like about his article is the insight — new to me — about the nature of paper wealth vs real wealth. He described it in a way that is useful and enlightening to me. The assertion that a security (stock, bond) is not an addition to net wealth — just a zero sum transfer between individuals over time — is a provocative statement that I will ponder for some time.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#25

Post by Klathmon »

UncleMeat wrote: post #21
VMG wrote: post #14

Understanding Bitcoin is hard. Here is a response to some of the criticism: > Every time a block is validated, a single node in the network gets a reward, and everyone else’s computing time is completely wasted. This is a misunderstanding of what PoW is http://www.truthcoin.info/blog/pow-cheapest/ > The system already features a rather steep cost per transaction, and hardly any of those transactions are for the purch…

Only if "arbitrary number" doesn't include an arbitrary number of addresses. You still need a transaction to set up a channel. Lightning shifts a cap on transactions to a cap on users while assuming that most people transact repeatedly with the same person and that btc users will be happy to lose the trust guarantees that btc brings over traditional services.

You are missing the "network" part of lightning network.

A "payment channel" only allows unlimited "transactions" between 2 people, the "lightning network" allows you to chain those together similar to an IP network where you can transact with anyone that has a route to you through anyone else. So if I have a channel open with my friend, who has a channel open with coinbase, who has a channel open with gemini, who has a channel open with you, we can transact over LN without opening or closing a channel.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#26

Post by stevenmays »

f00_ wrote: post #16
junkscience2017 wrote: post #12

Earlier quoted context omitted.

right, lots of fund managers accept that crashes happen periodically...the permabears like Hussman assume they STAY low over a long period of time yet society retains enough order to let them fulfill their thesis if the market crashed that low for a decade, you would see massive regime change in every democratic nation and the rich would be stripped bare

actually, the corporate nanny state will just bail them out. See: Long Term Captial Management, S&L crisis/Continental Illinois under Reagan/Bush Sr, 2008 crisis They have an implicit subsidy, Too Big To Fail: access to cheap credit because creditors know the nanny state will bail them out. Why don't we call it welfare when we give money to the rich? Capitalism for the poor, socialism for the rich. We don't need mark…

The corporate nanny state is more then willing to let individual firms collapse (bear stearns). Your examples were a systemic risk, if those organizations collapsed there was going to be a lot of collateral damage.

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#28

Post by junkscience2017 »

f00_ wrote: post #16
junkscience2017 wrote: post #12

Earlier quoted context omitted.

right, lots of fund managers accept that crashes happen periodically...the permabears like Hussman assume they STAY low over a long period of time yet society retains enough order to let them fulfill their thesis if the market crashed that low for a decade, you would see massive regime change in every democratic nation and the rich would be stripped bare

actually, the corporate nanny state will just bail them out. See: Long Term Captial Management, S&L crisis/Continental Illinois under Reagan/Bush Sr, 2008 crisis They have an implicit subsidy, Too Big To Fail: access to cheap credit because creditors know the nanny state will bail them out. Why don't we call it welfare when we give money to the rich? Capitalism for the poor, socialism for the rich. We don't need mark…

Hussmans scenario is far worse than 2008...more like the Great Depression x2

we basically don't know what would happen, but it's safe to say the rich might not be assured of a safe bearish trading market in a civil society

Re: Three Delusions: Paper Wealth, a Booming Economy, and Bitcoin

#29

Post by rbcgerard »

runako wrote: post #13
pdog wrote: post #5

This guy expects a market loss of about -65%, which would send the S&P 500 back down to 900. He also expects negative total returns over the next 12 years. Of course, his Strategic Growth Fund has not only underperformed its benchmark (the S&P 500 index), the fund actually has negative returns over the past 1, 3, 5, and 10 year periods[1]. Losing money in this market is a truly remarkable feat. [1]: https://www.hussm…

This company has ~$750mm under management, and has several funds that manage to have both a) high expense ratios and b) horrible performance over the short and long terms. Serious question, for those who work in finance: how do companies like this stay in business? Shouldn't the transparency of their poor performance have long since driven them out of business? Semi-serious question, also for those who work in financ…

go on morningstar (or below) and look at the chart for the entire life of the fund, you'll see that he had periods of massive outperformance

http://quotes.morningstar.com/chart/fund/chart?t=HSGFX&regio...

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