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How This Ends

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Re: How This Ends

#231

Post by jqgatsby »

nostrademons wrote: post #133
staticman2 wrote: post #61

Earlier quoted context omitted.

You are comparing treasury rates a bond will pay out over the next 10 years with inflation over the last year. This is apples and oranges.

Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…

your point cannot be overstated. my biggest fears around the pandemic shutdowns came from my own experience managing production systems, and I think our policymakers were frighteningly naive as to what it meant to shut down the economy. and here we are.

Re: How This Ends

#232

Post by TekMol »

senthil_rajasek wrote: post #208
TekMol wrote: post #191

Earlier quoted context omitted.

there is a risk free alternative to stocks How is holding a bond risk free? It is a promise to give you a certain amount of money at a certain time in the future. The value of that money depends on how scarce it is. The government constantly raises and lowers that scarcity at will. Sometimes the government decides to double the supply in just a few years: https://fred.stlouisfed.org/series/BOGMBASE So it seems highly…

>How is holding a bond risk free? No asset is risk free. Bonds are a relatively less risky asset. >The government constantly raises and lowers that scarcity at will. Nope. Notes, Bills, Bonds are auctioned.

The FED can buy bonds in an auction at will. Because it prints the money to do so. It's not like the FED goes "Uh oh, those bonds are too expensive for me".

Re: How This Ends

#233

Post by tenpies »

nostrademons wrote: post #133
staticman2 wrote: post #61

Earlier quoted context omitted.

You are comparing treasury rates a bond will pay out over the next 10 years with inflation over the last year. This is apples and oranges.

Assuming you're expecting inflation to moderate over 10 years. I think people who expect we're going to go back to pre-pandemic supply chains are vastly underestimating the difficulty of bringing a complex system like the economy up from a cold start. In my experience with complex systems that are much less complex than the economy (merely a few hundred million lines of code), it can't be done . You have to increment…

I don't think there's even going back to pre-pandemic supply chains solely because how the West's cancel culture effectively ended globalization when Russia invaded Ukraine.

There will be no global supply chain any more. Any country with a brain now knows they have to be completely independent of the West in every aspect. Sovereign assets must be within their borders. Currency reserves? Held at domestic banks as much as possible. Even within the West there needs to be some level of distrust because history shows that there are no perpetual alliances.

We are going to have several hundred supply chains that often don't interact, even if it would make economic sense for them to do so. This is tremendously inflationary and it's only just begun.

Re: How This Ends

#235

Post by TekMol »

proteal wrote: post #229
TekMol wrote: post #191

Earlier quoted context omitted.

there is a risk free alternative to stocks How is holding a bond risk free? It is a promise to give you a certain amount of money at a certain time in the future. The value of that money depends on how scarce it is. The government constantly raises and lowers that scarcity at will. Sometimes the government decides to double the supply in just a few years: https://fred.stlouisfed.org/series/BOGMBASE So it seems highly…

Risk in this context means uncertainty - since the government can print money it is always able to pay its debts. You might not get a great return on your investment, but the government always has the capability to pay you back. There’s little reward with no risk.

I disagree.

When I lend 2022 dollars to the government, I give away a certain amount of buying power.

I don't know if I will get that buying power back when I get my 2032 dollars.

The government does not always have the capability to pay me back my buying power. It cannot create value at will. It can create money at will. But the more money it creates, the less value it has. So it cannot create value at will.

Re: How This Ends

#236

Post by datalopers »

pcbro141 wrote: post #131
datalopers wrote: post #116

Earlier quoted context omitted.

You’re forgetting about the overpaid tech workers who are soon to be laid off, possibly underwater on their mortgages, and decide it’s time to downsize.

Overpaid based on what?

Overpaid in the same way publicly traded tech stocks and VC/PE valuations were grossly inflated. Salaries are going to come down just like valuations. As people generally won’t accept paycuts, it’ll come in the form of laying off 2 engineers and backfilling 1 of them at half the prior salary rate.

VC backed companies will start dropping like flies and the market will flood and salary requirements will drop fast.

Re: How This Ends

#237

Post by shakezula »

throwaway_1928 wrote: post #89
natly wrote: post #71

Getting really annoying to have to keep track of macro events affecting my life year after year instead of just being able to live a normal peaceful life.

Monkeypox is just getting started. Hang in there. https://www.washingtonpost.com/politics/2022/05/22/biden-mon...

This is fear-mongering. You cannot predict the future and the CDC tracks dozens of novel virus outbreaks each year that never go anywhere. It’s less transmissible, and responds to vaccines that we already have.

Re: How This Ends

#238

Post by spicyusername »

ptero wrote: post #210
vintagedave wrote: post #171

Earlier quoted context omitted.

So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile? (Note: I am in the EU not US.)

If you think that there is some major economic turmoil ahead with dropping asset values across the board (and I personally this is fairly likely), the general advice is to aim for a positive alpha. That is, if you are moderately well off or better, invest to "go down less than your neighbors". Assets across the board lose value, but if at the end of the fall you preserved a higher fraction of your money to invest tha…

I think this is probably the most useful wisdom for the average person:

> do not invest money you need within 5-10 years and do not make rash decisions; it is better to ride this train down and then hopefully back up than jump randomly.

Gaming the market successfully requires a ton of skill and knowledge, and even then you are not guaranteed success.

Most people are better off focusing on asset-class diversification (i.e. spreading money across many different kinds of asset classes - i.e. physical assets, securities, commodities, cash, etc) than playing just the stock market.

And even when playing the stock market, most people are better off focusing on "time-in-the-market" vs "timing the market".

Re: How This Ends

#239

Post by ryanSrich »

abhayhegde wrote: post #21
voisin wrote: post #3

Earlier quoted context omitted.

Be wary of anyone making firm statements about the future of anything. This article doesn’t do that. This article is merely drawing similarities with past events and concludes: > First, we need to see the economy slow down and inflation slow down. We need to see stocks bottom out and hang out there for a while. And we need to be patient. None of this is going to happen fast. This seems reasonable. Wait and see based…

> Be wary of anyone making firm statements about the future of anything. This article doesn’t do that. Although the article does not state anything firmly, the last line of the article, as quoted below, is still an indication it predicts something: > I would be planning to ride this thing out for at least eighteen months or more.

Eh, not really. Having a plan to ride it out if things get bad is never a terrible idea. Personally you should have a rainy day fund that can sustain you and your family for 12 months. You should have the same as a business, but that fund should really be like 24 months instead of 12.

Re: How This Ends

#240

Post by jbay808 »

88913527 wrote: post #145
hn_throwaway_99 wrote: post #95

Earlier quoted context omitted.

Do you really though? If you are a long term investor, just picking a couple of core asset classes and then rebalancing regularly (rebalancing is key because it is an automatic way of selling thing when prices are higher and buying when they are lower), and never paying attention to the news, it's a winning strategy.

When you buy a home -- the largest single purchase one makes in the middle class -- you lock in the purchase price, but not the interest rate. Housing prices still haven't recovered in Japan to their 1990 highs. So if you don't pay attention to the macro environment, you could be costing yourself a great deal. Fortunately, other asset purchases like mutual funds in retirement accounts are DCA'ed in by the paycheck, a…

(This situation might not be familiar to US commenters, who can lock in an interest rate for their entire mortgage).
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