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How This Ends

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Re: How This Ends

#441

Post by wkyle »

largbae wrote: post #382
wkyle wrote: post #244

Earlier quoted context omitted.

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. https://en.wikipedia.org/wiki/Volatility_smile htt…

I wonder if this adjustment is enough... Spitznagel's fund did return 4,144% in Q1 2020. Maybe they found some other similar hole, but one seems to still exist. https://finance.yahoo.com/news/mark-spitznagel-univesa-cio-o...

It's certainly possible that even with the volatility smile markets still underprice unlikely events, but high returns from a tail-heding fund during a black swan event hardly provides any evidence. Regardless of pricing, the expectation of the strategy is infrequent high returns and frequent poor or negative returns. Whether the market accurately prices these events also depends on how bad returns are during years without anomalous market conditions, and the intervals between fat-tail events.

Re: How This Ends

#442

Post by kyrra »

zby wrote: post #409
fny wrote: post #24

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…

If they hike the rates too much then debt servicing would be costly. This is different from 1980, because back then US gov debt was about 30% of GDP and now it is 120% of GDP ( https://fred.stlouisfed.org/series/GFDEGDQ188S#0 ) What are the realistic values here? I have no clue, but a good analysis should cover this.

This is one one of the ways to fix the economy in times like this requires congress to reign in spending. It's not just on the Fed to try to fix things, both sides of the equation need fixing.

Re: How This Ends

#443

Post by idiotsecant »

bjornsing wrote: post #249

Are Americans this certain that the Fed will put an end to inflation? The economic incentives to let it rip are extraordinary… In Sweden there’s a lot of political debate around this, and many are arguing that it would be better to let inflation eat the debt burden.

> let inflation eat the debt burden.

Good news everyone! By destroying our economy we have successfully reduced the real cost of the debt by 80%! Unfortunately, we now need to print massive piles of money to incentivize economic activity again!

Ouroboros, meet tail.

Re: How This Ends

#444

Post by moneywoes »

kache_ wrote: post #329
mym1990 wrote: post #142

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…

what's the most expensive SaaS that other SaaS use out there? The first one to go? I'm thinking distributed tracing companies are going to get pwn'd

workflow management like Asana , Atalassian?

Re: How This Ends

#445

Post by unicornmama »

riku_iki wrote: post #120
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.

There are amazon, google, msft and apple, with almost $1trln annual revenue combined, they will continue paying to a plenty of workers.

Those companies are not immune from cutting cash burn to protect their stock price.

Re: How This Ends

#446

Post by credit_guy »

zby wrote: post #409
fny wrote: post #24

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…

If they hike the rates too much then debt servicing would be costly. This is different from 1980, because back then US gov debt was about 30% of GDP and now it is 120% of GDP ( https://fred.stlouisfed.org/series/GFDEGDQ188S#0 ) What are the realistic values here? I have no clue, but a good analysis should cover this.

> If they hike the rates too much then debt servicing would be costly.

The Fed doesn't care about the cost of servicing the debt. That's the US Treasury's job. By law, the Fed has the dual mandate to keep both inflation and unemployment low. That's it. Nothing to do with the cost of servicing the Government debt.

If the interest on the Government debt becomes too high, nobody will point the finger at the Fed. If however inflation is high (like now) or unemployment high, you can start hearing people accusing the Fed of gross negligence. In the extreme, the Chairman of the Fed may be sacked, then brought in front of various Congressional investigations, and may even find himself in contempt, or some other very unpleasant situation.

Bottom line: the Fed really cares about inflation, and doesn't give a damn about debt servicing.

Re: How This Ends

#447

Post by staticman2 »

nostrademons wrote: post #318
staticman2 wrote: post #270

Earlier quoted context omitted.

The 10 year breakeven inflation rate is less than 3 percent. Is it a perfect estimate of inflation? No. But I would trust it more than hot takes from non experts.

Luckily, this is completely tradable, so if you believe that inflation is going to average 3% over the next 10 years you can buy all those treasuries and I can short all those treasuries and one of us will be rich and the other broke. Events will tell who is who.

Nobody buys treasuries to get rich.

Re: How This Ends

#448

Post by ajsnigrutin »

wonderwonder wrote: post #432
ajsnigrutin wrote: post #427

Earlier quoted context omitted.

Covid is over, the excess deaths are low, or even zero. War in ukraine would be a nothingburger if americans were involved (like noone cares about yemen, syria, now somalia, and noone cared about afghanistan, iraq, and even serbia). Most of the current problems that we have are caused by the politicians directly, and not by covid/war/whatever, and sadly, they're the first that will have to go, if we want to return to…

Not sure you are correct here. Ukraine war is in Europe, America's sphere of influence and features America's traditional enemy. America was involved in Afghanistan and Iraq which you claimed no one cared about. Russia and Ukraine produce a significant portion of the worlds food, energy and fertilizer supply. The current situations are caused by politicians but politicians from dozens of countries. Politicians chose…

> Ukraine war is in Europe

so what... A country has a minority, minority wants to separate, the main country won't let them, and fights happen between the main country and the minority, a big player steps in and destroys the main country to "save the minority" (and gain whatever their geopolitical interest was). Kosovo, ukraine, same shit, different players.

> The current situations are caused by politicians but politicians from dozens of countries. Politicians chose to invade Ukraine. Politicians financed the making of vaccines which provided enough confidence for economies to open up again. Politicians chose China's zero covid policy. Politicians flooded the market with money which led to inflation but also prevented a collapse during covid and allowed the poorest among us to survive. Politicians do both good and cause harm. They also provide representation, without them your other options are dictatorships or anarchy.

Meh... you need just one large country to succeed in their "revolution" (or whatever it will be called), by pulling their politicians out from their high security buildings and removing them from power one way or another, a few more will follow, and the rest will get scared and start actually doing something good for the people. The hypocricy we've seen during the covid era should not ever be forgotten, and the human rights violations neither. Let's also not forget the people who fly to Brussles twice per week in private government planes and tell their people not to drive cars due to ecology.

> "they're the first that will have to go, if we want to return to somewhat normal future." how are you suggesting they "go"?

In serbia people stormed the government buildings until milosevic stepped down. In france, they used a bit stronger, headless approach. It all depends on what works.

> This is a normal future, there is very little going on right now that has not happened a dozen times before, its just people doing people things.

Not really... in the past, the politicians were "removed" one way or another many many times,... this current peaceful era is more of an anomaly.

Re: How This Ends

#449

Post by FooHentai »

coolspot wrote: post #286
spicyusername wrote: post #250

Earlier quoted context omitted.

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 nat…

> It will be as true 50 (or 1,000) years from now Ah! An optimist who believes humanity will exist 1,000 years from now!

Even if it's roaches fighting over twinkies, likely still true.

Re: How This Ends

#450

Post by kfarr »

kache_ wrote: post #329
mym1990 wrote: post #142

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…

what's the most expensive SaaS that other SaaS use out there? The first one to go? I'm thinking distributed tracing companies are going to get pwn'd

AWS & Salesforce are among the most expensive for saas, those aren’t going anywhere
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