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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

#131

Post by icebraining »

emodendroket wrote: post #124
icebraining wrote: post #120

Earlier quoted context omitted.

I guess it depends on how you see it. In the past, the system may have fluctuated less, but the bottoms went very low; the current economy (which is broader than "the market") may fluctuate more, but it's also better at providing a predictable baseline. In my European country, even less than a century ago, it was unpredictable for large swaths of the population whether they'd have enough to eat to survive next year.…

Even in the US, apparently, up to 12% of the population[1] is sometimes in a position where they have to skip meals, so even there, I'd say the depths someone can fall to are, potentially, very low. And a lot of what makes our current system at least somewhat predictable is controls restricting the unfettered operation of the market. A truly unrestricted market would be very unpredictable. All in all, I don't see pre…

You keep arguing about the market, when the topic was the economy as a whole, as I've pointed out in my last post. A multitude of markets are certainly part of the economy, but they're not "the economy".

And those 12% are certainly terrible (although only 5% were significantly affected, if you read a bit bellow), but I'd say it pales in comparison to what people went through in a year of bad harvest in the past. That people having to skip a few meals is obscene nowadays is a sign of progress.

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

#132

Post by olegkikin »

sdy wrote: post #84

I believe the man is essentially saying that past performance does not indicate future performance. Ironically, most of the comments here are saying he is wrong, because of his past performance. Can we instead talk about his specific points and why they are wrong instead of just focusing on his past performance? Also, it looks to me that his performance was good during the great recession. So if another recession is…

Most people think he is unreliable as a source of market prediction, because he has been absolutely horrible at it, which is somehow his main occupation.

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

#133

Post by jjeaff »

sdy wrote: post #84

I believe the man is essentially saying that past performance does not indicate future performance. Ironically, most of the comments here are saying he is wrong, because of his past performance. Can we instead talk about his specific points and why they are wrong instead of just focusing on his past performance? Also, it looks to me that his performance was good during the great recession. So if another recession is…

Seeing as the market always recovers and then some, you are going to need to make very, very good returns in the downturns to make up for all the list potential on the upside.

In other words, the overall return of the markets over their entire lifetime is positive, not negative.

It would be great to ride the bull and then switch to the bear in a down market. But that would require timing the market.

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

#134

Post by emodendroket »

icebraining wrote: post #131
emodendroket wrote: post #124

Earlier quoted context omitted.

Even in the US, apparently, up to 12% of the population[1] is sometimes in a position where they have to skip meals, so even there, I'd say the depths someone can fall to are, potentially, very low. And a lot of what makes our current system at least somewhat predictable is controls restricting the unfettered operation of the market. A truly unrestricted market would be very unpredictable. All in all, I don't see pre…

You keep arguing about the market, when the topic was the economy as a whole, as I've pointed out in my last post. A multitude of markets are certainly part of the economy, but they're not "the economy". And those 12% are certainly terrible (although only 5% were significantly affected, if you read a bit bellow), but I'd say it pales in comparison to what people went through in a year of bad harvest in the past. That…

OK, fair enough. I had gotten some of the prior posts jumbled in my head, I guess. Still, we live under a market economy, which does not maximize for "a stable environment in which to raise one's children," although in aggregate it has made our society wealthy.

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

#135

Post by VMG »

smogcutter wrote: post #83
VMG wrote: post #47

Earlier quoted context omitted.

You need opportunity cost in order to secure the network. Without that, there is no incentive to keep the network secure. There is no cheaper solution to solve this problem, therefore there is no waste.

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

Waste is something that is unnecessary. Competing for PoW solution is critical. There is no waste. If you know a different way of solving the consensus problem, tell us.

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

#136

Post by lmm »

dpiers wrote: post #123
lmm wrote: post #75

Earlier quoted context omitted.

Trade is a wealth creation mechanism, because different people assign different values to things. When a baker exchanges some loaves of bread with a carpenter for a table, wealth is created: they're both rational actors who know that the thing they're getting is worth more (to them) than the thing they're giving away. The same is true when the baker sells bread for money. The same is true when they issue a bond for t…

Correct, but the article specifically referred to securities as zero-sum transfers. A security is linked to something that has value, and exchanging the security doesn’t alter the value of what the security is linked to.

A particular stream of payments with a particular risk profile is an asset that has different (present) value to different entities like any other.

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

#137

Post by shostack »

lmm wrote: post #136
dpiers wrote: post #123

Earlier quoted context omitted.

Correct, but the article specifically referred to securities as zero-sum transfers. A security is linked to something that has value, and exchanging the security doesn’t alter the value of what the security is linked to.

A particular stream of payments with a particular risk profile is an asset that has different (present) value to different entities like any other.

I may not be using the proper terminology here, but would I be correct in restating this as:

The underlying value of the asset is just one component, but the vehicle the asset is traded through can change that value equation by adding or removing its own value.

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

#138

Post by kgwgk »

b4lancesh33t wrote: post #110
aaavl2821 wrote: post #67

Earlier quoted context omitted.

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.

Losing 9% instead of 37% is quite some outperformance. Let’s say you started with $100: ending with $91 is 44% more than ending with $63.

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

#140

Post by f00_ »

stevenmays wrote: post #26
f00_ wrote: post #16

Earlier quoted context omitted.

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.

they could of nationalized the banks, but no instead they just give them handouts

but yeah, I wonder why they didn't decide to save bear stearns, maybe it collapsed and that was the reason they decided to save the rest

best source about the 2008 crisis? I really like noam chomsky and michael lewis' work

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