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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

#101

Post by junkscience2017 »

hux_ wrote: post #20
junkscience2017 wrote: post #3

Lots of permabears will go long when it's obvious markets are headed up, not Hussman. https://www.hussmanfunds.com/strategic-growth-fund/ As always, Hussman manages the near impossible feat of reliably losing money in virtually any market environment The Dow has risen 5k in a year and Hussman still manages to be in the red....I'm sure his clients are thrilled on top of the how-is-that-possible string of losses in eve…

That's what the British thought about the East India Company. Then what happened?

then everyone who lost some money in the East India Company invested in everything else rising as the British Empire expanded and made fortunes, that's what

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

#102

Post by wefwefwf2131234 »

spookthesunset wrote: post #95
smogcutter wrote: post #83

Earlier quoted context omitted.

"Bitcoin is inherently wasteful, therefore it's not wasteful." What?

Welcome to Bitcoin advocate logic. Clearly using more energy than a moderate sized european country in order to process 3 or 4 transactions per second isn't wasteful. Right? I mean in absolute numbers, says the bitcoin advocate, the fiat banking system has to use more, right?.... ....nevermind the fact they do something that is not driven by pure speculation and do it at thousands of times larger scales. Bitcoin -- t…

Adam Smith warned of the division of labor creating blind, ignorant humans, in a conviction driven, not reason driven, society.

Society is coasting on fumes of a generations long confirmation bias.

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

#103

Post by FabHK »

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…

His own metric is performance vis-a-vis the market over full cycles (top to top). In the past, he did well on that, but during this cycle he's so deep down the hole that it'll be difficult to catch up. Nevertheless, it'll be worth revisiting his performance after the next crash.

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

#106

Post by FabHK »

Yen wrote: post #96

His chart "Nonfarm business sector: Real output per person" shows a notable _slowing_ of the growth rate of per-capita productivity, consistently, over the last 70 years. I was under the impression that the opposite has occurred - we've achieved mind-boggling amounts of per-person productivity, and rapid rates of growth in productivity, fueled by advances in automation and communication technologies. Is this chart wr…

I'd say yes, your impression is wrong, but you're not alone.

Productivity growth in the 50s and 60s was consistently higher than it is now. Then it did slow down while IT was taking off, which is known and studied as the productivity paradox [1]: "Academic studies of aggregate U.S. data from the 1970s and 1980s failed to find evidence that IT significantly increased overall productivity."

There are many attempts to explain it, including

* lag: productivity started to pick up in the 90's (which you can see in Hussman's graph, but it's fallen back now...)

* "hedonistic" improvements: IT makes many things better, but they do not show up in GDP measurements

Bottom line, though, that arguably earlier technical advances (electricity & machinery, assembly lines & mass production, etc.) had much bigger impact than yet another Tinder for dogs.

[1] https://en.wikipedia.org/wiki/Productivity_paradox

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

#107

Post by FabHK »

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…

> I'm also stunned that anyone running any kind of "growth" fund could manage to lose money the last few years.

Well, he's bearish, so he's only moderately long, if at all, and spends money on downside protection. That bleeds.

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

#108

Post by FabHK »

BenoitEssiambre wrote: post #94
psyc wrote: post #57

Earlier quoted context omitted.

It’s zero sum for the individual buyer and seller, but in aggregate it’s how the economy decides what work to do.

I think I understand what you are saying but in macroeconomics it's usually stated the other way. On the aggregate debt and financial instruments net to zero. One person's debt is another person's saving and if you add all financials up, you get zero (or depending on what you are counting, you get the value of the physical assets behind the financial assets such as stuff, factories etc. On the other hand, for sub par…

Correct me if I'm wrong though: equity is issued in net positive supply. And while the company has equity on the book as a liability, that liability does not go up when the stock price goes up, right.

Thus, when stock price doubles, it is wealth creation for the shareholders (and if they'd sell to someone else, it would be realised).

Edit to add: unlike derivatives (like call options), which are in net zero supply, thus their payouts are always zero-sum.

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

#109

Post by rovolo »

Yen wrote: post #96

His chart "Nonfarm business sector: Real output per person" shows a notable _slowing_ of the growth rate of per-capita productivity, consistently, over the last 70 years. I was under the impression that the opposite has occurred - we've achieved mind-boggling amounts of per-person productivity, and rapid rates of growth in productivity, fueled by advances in automation and communication technologies. Is this chart wr…

You're referring to the 'Productivity Paradox'[0] as summarized by Robert Solow in 1987: "You can see the computer age everywhere but in the productivity statistics."

Summary of possible explanations from the wikipedia article: 1. Computers made the biggest productivity gains early in their life (50s-70s) when they were used by banks and airlines. 2. Industrialization was a far bigger revolution. 3. Computers demand more training and attention than dumb machines which reduces their benefits.

[0] https://en.wikipedia.org/wiki/Productivity_paradox

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

#110

Post by b4lancesh33t »

aaavl2821 wrote: post #67
runako wrote: post #13

Earlier quoted context omitted.

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…

Funds like this tend to outperform in bad to normal markets and underperform in highly bullish markets as they have more discipline around valuation. Warren Buffett famously underperforms in very bullish markets as well The pitch of funds like this is that for a few years out of 10, they'll underperform, and then massively outperform when everyone else is sucking. People invest in funds like this (note I don't know t…

But it didn't outperform in 2008. At least not by much.
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