461–470 of 698 posts
> I would be planning to ride this thing out for at least eighteen months or more. I'm betting more like three to five years. I was talking to a friend (another old guy, like me, but really rich, unlike me). We've both been through at least two recessions (big, nasty ones, with teeth and claws). We realized that there's an entire generation of folks; many running companies, that have never seen a real bear market. It…
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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…
Literally nothing in this comment is true.
> 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
I'm not seeing the contradiction there? "Most of the damage" suggests some still to come.
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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.
The problem is that there are many companies where, if you believed in them then, you would've done very poorly.
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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.
If you bought in at the 2000 peak, it took about ten years to break even, and you'd have to have kept holding it through the 2008 crisis when you might have been losing your house. Also, there were a lot of other companies that people believed in that didn't fare so well.
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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 wa…
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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 howe…
Say demand quiets but the price of inelastic goods (gas and food) continues to skyrocket due to greater demand from developing nations who demand more resources to have a better standard of living. How will hiking to 10% fix anything?
Sure you'll kill demand, but you'll also kill financing supply which will only exacerbates the issue over the long run. We need more drilling, more refining, more farming now that Russia is out of the picture and the Saudis are playing games.
Hiking too far is actually a horrible policy choice, and Powell can make a cogent argument about it: he already has mentioned this in hearings. You can't address supply related constraints with higher rates. At some point, they might justify capping rates to finance the needed supply, and that argument smells like the yield curve control of the 1940s. I suspect this argument will become more palatable if we have high unemployment and high inflation. [0]
I have a feeling whatever policy rate they pick will aim to be slightly sub neutral (negative real rates) as they pray inflation resolves itself, while constantly pointing out they have no control over whether Brazil has a successful wheat harvest.
[0]: https://libertystreeteconomics.newyorkfed.org/2020/04/how-th...
> 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
I'm not seeing the contradiction there? "Most of the damage" suggests some still to come.
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?
Here it’s entirely about the source. Fred Wilson is an unusually smart and honest investor, and has experienced more market corrections than I have. So I weight his opinion higher than mine. I also weight his opinion higher than my favorite financial columnists because he’s the man in the arena, and focused on the part of the economy I care about — startups — while columnists have to think about housing prices and ot…
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 inflation continues and the fed becomes aggressive with hiking, all assets are dead." This sounds incredibly short-term-oriented and alarmist. Dead is a word to describe the end of something's existence. Market turbulence is not a novel occurrence, nor are unsustainably inflated economies driven by cheap money and speculation.
The ramifications of reaching a point like that would be devastating, so yes, I think dead is not alarmist but appropriate.