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Being Slow to Criticise

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Re: Being Slow to Criticise

#81

Post by JoshuaDavid »

grey-area wrote: post #27
mewpmewp2 wrote: post #23

Earlier quoted context omitted.

I think the same thing is going on with the commentary on economy currently. Whenever I browse around Reddit for example the comments that get upvoted are the cynical ones, "markets are irrational", "feds are pumping up the stocks" etc, but they do not put any real thought into what is happening with the markets and why.

Nobel prize winners in economics think the markets are irrational in important ways, this is not a fringe view, nor is it particularly cynical. https://press.princeton.edu/books/paperback/9780691173122/ir... I don't think starting from the EMH is correct either, I suspect nobody really knows why the US stock market doesn't reflect the deepest recession since the 1930s, though of course everyone has opinions. The mark…

If you think there's a significant chance the market is wrong in its assessment of risk, you can make a significant amount of money by betting against it. For example, as of the time of this writing, put options at $310 for December 31 on the S&P 500 (current price $293.94) cost $33.09. That means that if there is at least a 50% chance of a 17%[1] drop in value of the S&P 500 at any time between now and December 31, you can make money on average by buying those puts and selling them as soon as prices are down by 17%. The possibility of making this bet means that the market as a whole is 50% confident that stock prices of the S&P 500 will not drop by at least 17% before December 31.

Likewise, option prices imply:

- A 75% chance[2] prices won't drop by 26%+ (which would be back around the low from late March 2020) by the end of the year

- A 90% chance[3] prices won't drop by 48% or more (around the movement from when it became clear that something was deeply wrong in 2008 to the bottom)

- A 95% chance[4] the price won't drop by 58% or more (which is around the peak-to-trough movement from the 2008 financial crisis)

- A 99.5% chance[5] that the price won't drop by 90% or more (like the great depression).

While it's _possible_ that the market is wrong about its assessment of risk, that would also mean that it's wrong about its assessment of its assessment of risk, and people who are better at risk assessment could clean up.

-----

[1] Ok, technically a 50% chance of a drop of 17.05%. ($310 - ($293.5 * 0.8295)) / $41.75 == 1.9999 i.e. if you buy now and sell as soon as the price drops by $17.05, you make a 2x return on investment.

[2] $20.77 for $280 puts expiring Dec 31

[3] $4.62 for $200 puts expiring Dec 31

[4] $1.83 for $160 puts expiring Jan 15. I actually have a small position here, because "95% chance this isn't at least as bad as the 2008 financial crisis" seems a bit overly optimistic to me.

[5] $0.16 for $75 puts expiring Jan 15. Note that there is extremely low volume this far out on the tail.

Re: Being Slow to Criticise

#82

Post by grey-area »

JoshuaDavid wrote: post #81
grey-area wrote: post #27

Earlier quoted context omitted.

Nobel prize winners in economics think the markets are irrational in important ways, this is not a fringe view, nor is it particularly cynical. https://press.princeton.edu/books/paperback/9780691173122/ir... I don't think starting from the EMH is correct either, I suspect nobody really knows why the US stock market doesn't reflect the deepest recession since the 1930s, though of course everyone has opinions. The mark…

If you think there's a significant chance the market is wrong in its assessment of risk, you can make a significant amount of money by betting against it. For example, as of the time of this writing, put options at $310 for December 31 on the S&P 500 (current price $293.94) cost $33.09. That means that if there is at least a 50% chance of a 17%[1] drop in value of the S&P 500 at any time between now and December 31,…

The market is usually wrong, but it's very hard to know when it will stop being wrong in one direction and start being wrong in the other (as in the great depression say).

Re: Being Slow to Criticise

#83

Post by grey-area »

taffer wrote: post #55
grey-area wrote: post #51

Earlier quoted context omitted.

This lecture contains a similar graph on asset prices - he uses returns from the S&P for the period 1871-2013. The book really is worth a read too, it's more accessible than the lecture or slides might indicate. https://www.gurufocus.com/news/336523/speculative-asset-pric... https://www.nobelprize.org/uploads/2018/06/shiller-lecture-s... The comparison is between the actual stock prices against the constant discount…

> The comparison is between the actual stock prices against the constant discount rate of subsequent real dividends. The EMH states that the market incorporates all currently available information, but future dividends are known only in hindsight. Prices that fluctuate around future earnings therefore are not in conflict with efficient markets at all.

I'd recommend the book if you haven't read it, I don't think my poor summaries do it justice, and it does address some of your objections from memory, and also doesn't attempt to throw out EMH, just questions whether it fully explains market behaviour.

Yes the chart compares measured return (divs) against projected return (prices) so it is not a prediction machine but I think it does illustrate well that market prices are usually far from true value.

Re: Being Slow to Criticise

#84

Post by JoshuaDavid »

grey-area wrote: post #82
JoshuaDavid wrote: post #81

Earlier quoted context omitted.

If you think there's a significant chance the market is wrong in its assessment of risk, you can make a significant amount of money by betting against it. For example, as of the time of this writing, put options at $310 for December 31 on the S&P 500 (current price $293.94) cost $33.09. That means that if there is at least a 50% chance of a 17%[1] drop in value of the S&P 500 at any time between now and December 31,…

The market is usually wrong, but it's very hard to know when it will stop being wrong in one direction and start being wrong in the other (as in the great depression say).

"The market is wrong but not in any way that's possible to make concrete predictions about ahead of time" and "the market is correct relative to available information" seem like functionally identical statements to me.

Unless you mean something stronger than "today's price usually isn't the same as next year's price after taking into account the discount rate" by "the market is usually wrong".

Re: Being Slow to Criticise

#85

Post by grey-area »

JoshuaDavid wrote: post #84
grey-area wrote: post #82

Earlier quoted context omitted.

The market is usually wrong, but it's very hard to know when it will stop being wrong in one direction and start being wrong in the other (as in the great depression say).

"The market is wrong but not in any way that's possible to make concrete predictions about ahead of time" and "the market is correct relative to available information" seem like functionally identical statements to me. Unless you mean something stronger than "today's price usually isn't the same as next year's price after taking into account the discount rate" by "the market is usually wrong".

Just because you can't predict it in the short term doesn't make it correct or efficient in the short term, it is only correct in some sense in the very long term.

Re: Being Slow to Criticise

#86

Post by fomine3 »

balnaphone wrote: post #43
chrismsimpson wrote: post #4

Being slow to criticise, particularly with colleagues you have to work day in and day out with, is critically important. That said, much of the FOSS currently available is either itself crap, or built on libraries and/or toolkits that are crap. I cite specifically anything of the GTK flavour, many popular things built in C/C++, and to a lesser degree QT. Why is this? Writing capstone technology (compilers and languag…

I'm guessing you mean something other than FOSS (free / open source software) in your critique of FOSS. Reason being, Swift is FOSS ( https://github.com/apple/swift ), both the compiler and the standard library. Likewise, the Microsoft C# compiler is also FOSS ( https://github.com/dotnet/roslyn ). You seem to enjoy closed-source platform libraries (WinForms, AppKit), and want to promote developing software that relie…

BTW WinForms (and WPF) is now open sourced. https://github.com/dotnet/winforms

Re: Being Slow to Criticise

#87

Post by 6510 »

goto11 wrote: post #77
6510 wrote: post #71

Earlier quoted context omitted.

This is really about maturity I think? With children we do something like: thoughts > filter > communication > thoughts With grown ups it should work like: thoughts > communication > filter > thoughts You want the full spectrum of gradients of terribility. If I wrote a "steaming pile of crap" I don't want to hear "it is not very good". "not very good" is reserved for things that are "not very good". food half frozen…

> If I wrote a "steaming pile of crap" I don't want to hear "it is not very good". I don't see how either statement is of any use for you?

With the first I want to know why immediately with the later I will eventually ask for clarification. It is also an invitation for critical examination.

I do some accounting for who says what. How much they normally complaint? How often are they right? How do they deal with similar feedback?

There is this hilarious place few get to visit where everyone is complaining about everything all of the time while the mood is just wonderful. The work delivered is of exceptional quality.

Re: Being Slow to Criticise

#88

Post by ohvirginia »

DoreenMichele wrote: post #19

Social stuff has gotten complicated by living in a world with a global internet. We each individually bring our personal experiences and prejudices to the table and often have no idea what the context is. I got my first experience as a moderator on an email list with about 300 members and they were all "gifted." It was a parenting list for people with gifted kids, basically, and every single person there was used to…

Good. You atone and reform by deletion

http://archive.is/KxZff

My reply is

Judging? You project and are unqualified.

Victim blaming? OK when I'm a man? The bullied often bully, you hated men for years. Think on wrong you've done to men, you felt was justified by hatred. Yet it wasn't. I have nought for which to atone. Looks like you need to atone and reform. I have faith in you that you will and very soon.

And you did.

Re: Being Slow to Criticise

#89

Post by ohvirginia »

pm wrote: post #11
ohvirginia wrote: post #10

I see Colin is atoning and reforming from even 1 day ago https://news.ycombinator.com/item?id=23125032 This is good

Colin is talking about criticising implementation decisions in software, in particular unconstructive criticism bereft of context. Colin is criticising your idea, but is also trying to understand how you formed that idea in the first place, in an effort to hedge against the possibility it has good reasons he can't see. He's not just saying, "your idea is garbage".

Weather good in SA yesterday, Adelaidian, also in QLD/ACT. Go out to enjoy it. Better than texting pulled into what you don't know. Yet, maybe you comment here to defend your hypocrisy, not Colin's.

Re: Being Slow to Criticise

#90

Post by ohvirginia »

ColinWright wrote: post #28
ohvirginia wrote: post #10

I see Colin is atoning and reforming from even 1 day ago https://news.ycombinator.com/item?id=23125032 This is good

This comment was flagged dead, and I have vouched for it. Please don't downvote it ... it clearly shows an underlying misunderstanding, and as such deserves to be answered. My comment that you reference was an attempt to find the merit in the idea that I couldn't see, but I assumed would be there because I was assuming the proposer thought it was a good one. I was starting from a position of "Well, this person thinks…

Maybe if you had said exactly what now you say your intent was, it would have been clear.
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