The Seneca Effect: Growth is slow but collapse is rapid (2017) [pdf]

This was not the case in 2000-2003 or 2021 -2022 in which the stock market fell in a gradual/orderly pattern. People who made tail-hedged volatility bets lost money due to the failure of volatility to spike. The gradual nature of the selling meant that the out-of-money puts did not profit as many assumed or hoped. Many bought into the Talab hype and lost money with this.

Re: The Seneca Effect: Growth is slow but collapse is rapid (2017) [pdf]

#6

Post by deathhand » Sat, Jan 06, 2024, 3:10 AM UTC

It's also just like any 4x strategy game. You can harvest resources and build and build but once those resources are depleted they deplete very fast because you have grown capacity for intake.

I'm glad we aren't worried about peak oil anymore but the climate and food scarity is going to be the next pitfall to avoid.

Re: The Seneca Effect: Growth is slow but collapse is rapid (2017) [pdf]

#7

Post by Beijinger » Sat, Jan 06, 2024, 3:15 AM UTC

Well, the book is copyrighted I guess, but at least his ideas are spread.

Ugo Bardi is a very cool person. This is his blog:

https://senecaeffect.substack.com/

Re: The Seneca Effect: Growth is slow but collapse is rapid (2017) [pdf]

#8

Post by refulgentis » Sat, Jan 06, 2024, 3:16 AM UTC

paulpauper wrote: post #5

parts of this seems like rehashed Taleb black swan. The collapse of the Dow Jones industrial index during the 2008 financial crisis. A Seneca Collapse if ever there was one (data from Dow Jones) from pg 68. This was not the case in 2000-2003 or 2021 -2022 in which the stock market fell in a gradual/orderly pattern. People who made tail-hedged volatility bets lost money due to the failure of volatility to spike. The g…

Does this shed any more light on whether it's valid for the author to name 2008 as a flash crisis?

The taleb comparison survives on the idea that talebs thesis (long tail events are underestimated) is the same as negative long tail events happen quickly. So I don't think that sheds much light.

On the financial side, those look like two arbitrarily long term periods where you couldn't 100x in O(weeks) by a long tail bet on the negative side - but alas, arbitrary. ex. stonks traded sideways in 2021 but I made an absolute fantastic amount of money in about 3 weeks in Feb/March 2020, as an accident, buying puts to poke fun at this new silly mistaken trend of thinking options were for retail investors (ah, I was so young and innocent)

Re: The Seneca Effect: Growth is slow but collapse is rapid (2017) [pdf]

#9

Post by anonporridge » Sat, Jan 06, 2024, 3:31 AM UTC

deathhand wrote: post #6

It's also just like any 4x strategy game. You can harvest resources and build and build but once those resources are depleted they deplete very fast because you have grown capacity for intake. I'm glad we aren't worried about peak oil anymore but the climate and food scarity is going to be the next pitfall to avoid.

When I look at this chart, I'm still pretty worried about peak fossil fuel happening too soon. https://ourworldindata.org/grapher/global-energy-substitutio...

Re: The Seneca Effect: Growth is slow but collapse is rapid (2017) [pdf]

#10

Post by patcon » Sat, Jan 06, 2024, 3:34 AM UTC

I thought this was talked about in high school biology...

S-curves for populations that settle. Sometimes a population goes above the carrying capacity and it crashed and oscillates until it stabilizes. Humans are in an exponential J-curve that seems to keep going, but it's just because our culture and technology continually raise the carrying capacity on an S-curve.

But if we "break" either culture or tech, then the carrying capacity immediately becomes lower. And then it crashes more and becomes even lower. Etc until society rescues itself from crash in carrying capacity. So the crash is potentially harrrrrd. I recall it being referred to a J-curve crash.

But maybe my high school teacher was just riffing a bit, and this isn't established understanding... When I search, I don't find this talked about online in the ways I recall from 2002 biology class haha :)