41–50 of 698 posts
> Markets have already corrected and I think that public tech stocks have already seen most of the damage they are going to see. but then (and in the very next sentence no less): > I don’t know if we have hit bottom
Earlier quoted context omitted.
"I really don’t think anyone really sat down and thought through these issues when the lockdowns were announced." People clearly thought very hard about this. Different parts of the world came to different conclusions about it. Nobody thought that the lockdowns wouldn't cause immense amounts of economical and societal damage. The calculation was whether they would have a worse impact than letting huge numbers of peop…
Most of those deaths probably had a positive or null effect, since they primarily occurred in the 65+ demographic. edit: It is interesting to contemplate the possibility that the death of so many seniors exacerbated the inflation problem. That's a lot of assets that were previously tied up in retirement accounts and real estate that suddenly flowed into the hands of middle aged people.
Earlier quoted context omitted.
"I really don’t think anyone really sat down and thought through these issues when the lockdowns were announced." People clearly thought very hard about this. Different parts of the world came to different conclusions about it. Nobody thought that the lockdowns wouldn't cause immense amounts of economical and societal damage. The calculation was whether they would have a worse impact than letting huge numbers of peop…
Most of those deaths probably had a positive or null effect, since they primarily occurred in the 65+ demographic. edit: It is interesting to contemplate the possibility that the death of so many seniors exacerbated the inflation problem. That's a lot of assets that were previously tied up in retirement accounts and real estate that suddenly flowed into the hands of middle aged people.
For the non 65+ that died, that's a negative for the economy. Loss of productive years, etc.
I don’t have any good mental tools to distinguish between useful and useless economic predictions like this. How does HN navigate this kind of thing?
We have all seen those recently: "This is going to be worse that dot com", "This is nowhere near the bottom" and basically bold but unsupported predictions of that flavor.
This, however, seems like a reasonably balanced take. Tries to take cues from the historical events, which doesn't always work imo but still is _something_ to base your arguments on.
This article points out a similarity between the early 80s and now. So I think it's appropriate to point out a major difference as well.
Consider this chart[1] which shows both the short term interest rate (Federal Funds rate) and long term interest rate (10-year Treasury yield) since 1962. Before rates started rising in the late 70s, the market was used to an interest rate between 5-10% (both long and short term), after which it rose to 15% (long term) and 20% (short term). Compare this with the current situation. Markets now have been used to 0% short term interest rates and 2-3% long term interest rates for over 10 years. The little blip you see to the far right of the chart is how much interest rates have risen so far (to 0.83% short term and 2.85% long term). If such a tiny blip (historically speaking) is the cause of the current correction, then it seems reasonable to expect that this is only a tiny part of a much greater correction that comes if interest rates get even close to the levels seen in the start 80s.
I wonder how much irreparable damage the lockdowns did to the economy as we knew it before the pandemic. The more subjective aspects of the economy are hard to map - are people motivated enough to work? Do they feel invested enough in the future to work? Have they been burnt out by the yoyo cycle of work/lockdowns? Was their industry severely damaged and they pivoted to other careers? Like there’s a massive pilot sho…
US is mainly a services driven economy, which means people can work from anywhere. Offices and adjacent sectors will suffer irreparable damage, but the gain in productivity in other sectors will more than compensate for it. I think we will come out with a stronger and more efficient economy after this recession.
I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…
Very clearly explained recent history. Thank you. > Then in December, the megacaps we're squeezed further until the S&P 500 had a negative return relative to price! What does this mean? What is negative return relative to price ?
I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…
> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.
I agree we are working through an asset bubble in tech and housing - P/E's went quite a ways above the historical line, as did housing prices. But think about the chip shortage (automotive, consumer electronics) - raising interest rates does not "fix" supply and make prices lower. Think about oil & gas markets. Think about labor shortages. When supply is broken, it's not only a monetary policy problem. Most of these…
The “chip shortage” was fake. The actual issue was inflation since the start.