You are switching topics. The point is that there will be plenty of funds inflow to support housing market.
Would you like to place a wager? I bet that the median home price in tech-centric metro areas (seattle, sf/bay, la, nyc) will decline by 10% or more in July 2023 versus July 2022.
For many in tech metros their homes could decrease in value by 25% or more from their current values and the home would still be worth more than they paid for.
In any case they won’t want to sell for a mortgage that effectively costs the same over a 30 year loan with a higher interest rate.
This sounds a bit like doom and gloom. While I don't disagree, it is important to look at AMZN after the dot com bubble burst. Traders fled, but people who believed in the company did very well.
> Traders fled, but people who believed in the company did very well. Yep, I did well, and I loved to show people AMZN stock price graph, like “can you identify the dot-com crash here?”. But I believed in the company then . Big question is: should I believe in the AMZN now ? Personally, I’ve stopped using Amazon when they started to support censorship - I’ve grown up in a totalitarian country and things likes censors…
I believe Amazon's retail business will remain on top, or highly competitive, for the foreseeable future.
AWS, in my not-quite-amateur opinion, will remain dominant in the industry. The best IAM of the big three, incredible availability and they aren't undercut on price by their kitchen sink adversaries.
Azure has Office and AD integrations, GCP has some ML advantages. But AWS is strong long term. They're peak IBM.
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…
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.)
As others have said, portfolio diversification (i.e. spreading your money around between lots of different asset classes) is more important than playing the stock market well.
Most people cannot play the stock market well, and even those who make it their day-job often don't end up playing it well. The reality is that the stock market is just too random to game reliably.
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?
Buy an index fund and when the market is down try and buy more. If you do wish to do something to actively manage things, try giving Nassim Taleb books a read, or just read about his or Mark Spitznagel's investment strategy. They also keep 97% of their money in an index fund, but the other 3% are slowly wasted away buying far out-of-the-money PUT options on boring stocks that are very cheap to buy because they'll "ne…
To give a brief counter to the Taleb/Spitznagel Empirica Kurtosis strategy, the pricing of deep out of the money options is systematically overvalued in relation to the Black-Scholes model, suggesting that the market correctly prices in fat tails.
The volatility smile pattern describes the 'overvalued' nature of these options, and the SKEW index tracks their pricing.
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…
You get a guaranteed return depending on how long you lock up your cash. You may or may not beat inflation, but it still protects you on some level.
You don't get a guaranteed return because the borrower can default.
>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".
It's a recent phenomenon. During the covid crisis the fed became a buyer of last resort. It's not usual.
My view is that capital and investment will dry up and companies that are operating at a loss(many in tech right now) will either have to downsize or close up completely. This will cause a domino effect. People will lose jobs, and some of those people will have bought a million dollar shack in the past 2 years and they might have to sell at a loss or foreclose. Generally I think we have yet to see any real macroecono…
That could be true but the impact would still be limited compared to 2008. Credit/bank failures are far worse for the general economy than some tech startups failing.
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.
imagine being like 85 and having lived in China through WW2, revolution, famine, cultural revolution, and then the last 30 years of growth and prosperity. a lot of places have to worry about global macro and history, anyone who doesn't is living a charmed life and maybe a fool's paradise.
My grandfather was born in 1909 in China. When he was 3 years old, the Emperor fell. When he was 7, the Warlord Period began. When he was 17, the country was unified under Chiang Kai-Shek; when he was 18, it fell apart again and the Chinese Civil War began. When he was 22, the Japanese invaded, and he emigrated to the Philippines. When he was 32 (and my dad was 2), the Japanese invaded the Philippines too. When he was 35 (my dad was 5), the Americans invaded, and his house was bombed, and he had to move up to a camp in the mountains and shit in the river. A year later the Americans had won and he made a fortune off occupying G.I.s, opening the only restaurant with a slot machine in the city. When he was 40 the Nationalist government that had been, well, "the government" when he grew up fell to the Communists, and he was left stateless. He ended up sending his kids to North America, one by one, and finally emigrated in the early 80s and lived out his last years in peace, but my dad's obsession with geopolitics is in retrospect pretty justified by world events.
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.
The reality is that, regardless of time and place, there is always some shit going on. It will be as true 50 (or 1,000) years from now as it was 50 (or 1,000) years ago.
> live a normal peaceful life.
Being able to blindly live a normal peaceful life, if it really has even ever been possible for anyone, is the exception, not the rule.
Most time periods for most people are fraught with risk and conflict. It is the nature of being.