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The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

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Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#131

Post by AnimalMuppet »

crystalmeph wrote: post #46
psunavy03 wrote: post #25

Earlier quoted context omitted.

Interest rates have been all over the map over the last 60 years, including double digits in the 80s, and yet low-cost index funds have been a reliable driver of wealth that entire time.

https://fred.stlouisfed.org/series/DGS10/ Zoom out to "Max" to get the full 60 year history. You can clearly see a full four decades of declining interest rates running from 1981-2020. That very neatly corresponds with the amazing stock market growth most HN readers, myself included, have grown up with. The stock market growth is neatly correlated with declining interest rates, not with the actual value of the intere…

But if interest rates rise, bonds lose too. That is, the bonds you hold today lose market value (the value you could get if you sold them today). The longer the duration of the bond, the more they lose. So if you expect interest rates to rise, I'm not sure holding bonds (especially long bonds) is the protection you want.

On the other hand, I may be missing something. Ray Dalio's All Weather Portfolio is 55% bonds, and it's supposed to be safe-ish for any market conditions.

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#132

Post by AnimalMuppet »

cs702 wrote: post #40

The abstract does a great job of summarizing the OP's findings: > I show that the decline in interest rates and corporate tax rates over the past three decades accounts for the majority of the period’s exceptional stock market performance. Lower interest expenses and corporate tax rates mechanically explain over 40 percent of the real growth in corporate profits from 1989 to 2019. In addition, the decline in risk-fre…

Higher returns because of higher profits due to decreasing interest rates, and higher P/E due to decreasing interest rates. But it can't keep going like that in the future, because interest rates have very little room to decrease further. Therefore stock prices cannot keep going according the trend we've seen in the last 40 years.

Makes sense to me. It was a really nice ride. Kind of a drag for the next generation, though.

I wonder if this explains some of the increasing inequality. Those who have stocks are getting outsized gains; those who don't, aren't. If so, then inequality may not continue growing the way it has been.

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#133

Post by crystalmeph »

AnimalMuppet wrote: post #131
crystalmeph wrote: post #46

Earlier quoted context omitted.

https://fred.stlouisfed.org/series/DGS10/ Zoom out to "Max" to get the full 60 year history. You can clearly see a full four decades of declining interest rates running from 1981-2020. That very neatly corresponds with the amazing stock market growth most HN readers, myself included, have grown up with. The stock market growth is neatly correlated with declining interest rates, not with the actual value of the intere…

But if interest rates rise, bonds lose too. That is, the bonds you hold today lose market value (the value you could get if you sold them today). The longer the duration of the bond, the more they lose. So if you expect interest rates to rise, I'm not sure holding bonds (especially long bonds) is the protection you want. On the other hand, I may be missing something. Ray Dalio's All Weather Portfolio is 55% bonds, an…

They lose in the short term, but if you're buying and holding to maturity, you get that money back. If you're worried about losing "market value" in a rising interest rate regime, buy shorter-term bonds. You can buy short-term bond funds, or buy bonds individually on Fidelity, Vanguard, etc.

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#134

Post by AnimalMuppet »

fnordpiglet wrote: post #35
darby_nine wrote: post #2

Very interesting paper. > I show that the decline in interest rates and corporate tax rates over the past three decades accounts for the majority of the period’s exceptional stock market performance. It's interesting that they've shown this to the exclusion of other narratives, mainly frontier markets like semiconductors and software allowing "easy" creation of value. I think this is partially why investors are so ea…

I call bullshit. Tax rates and interest rates certainly help spur investment and expansion of production but it’s hard to look at the world we live in today, with electric cars that can self drive and hand held devices connected to natural language comprehending oracles of knowledge, JIT industries end to end, starships to mars for colonization in mid to late stages, etc, and think “yep the only value is the value th…

I don't think that's the claim. The claim is that the stock market outperforming the historical trend is due to declining interest rates.

I mean, there was value created in the 1960s and 1970s, too - computers! Minicomputers! Microcomputers! Transistor radios! Walking on the moon! 747s! Much better railroad engines! The start of the internet! The interstate highway system! And on and on. But it wasn't showing up in the stock market. Why not? Because the interest rates were rising, and almost all of the gains were disappearing into that headwind.

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#135

Post by AndrewKemendo »

lurking15 wrote: post #116
AndrewKemendo wrote: post #112

Earlier quoted context omitted.

I’m totally on board with the idea that we were never a valid democracy - and effectively a defacto oligarchy - to begin with

Oligarchy is the unavoidable state of human society, even in communism as it’s ever been instantiated you have oligarchy

This claim is historically inaccurate

Do you have an epistemological elucidation of your claim?

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#136

Post by carapace »

AndrewKemendo wrote: post #126
carapace wrote: post #119

Earlier quoted context omitted.

Depends on what you mean by "valid". King George probably thought we weren't but not in the way you mean, eh? We could draw a line from the Magna Carta to the Equal Rights Amendment. Democracy is a work-in-progress.

Moreso the 3/5ths compromise means the republic didn’t actually represent a significant portion of their claimed collective territories inhabitants. The articles of confederation was a business arrangement primarily to consolidate a market with similar laws for the ability to monopolize the cotton market. Of which Britain was largest purchaser btw. So yes, from the beginning the Americas were a free “wilderness” that…

I bring up the genocide of the First Nations a lot. Slavery too.

The point of the Revolution wasn't that the USA became a utopia instantly, the point is that they threw out the king and then didn't make themselves kings.

Establishing and extending freedom and human rights has been and continues to be a slog, a hard-fought and ongoing battle.

In re: the original statement, the capitalists didn't take over the government, they started it, and we the (rest of the) people are taking it over from them.

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#137

Post by lurking15 »

AndrewKemendo wrote: post #135
lurking15 wrote: post #116

Earlier quoted context omitted.

Oligarchy is the unavoidable state of human society, even in communism as it’s ever been instantiated you have oligarchy

This claim is historically inaccurate Do you have an epistemological elucidation of your claim?

I don't know look at any organization in humanity, the most obvious one is what happened with the Democrat party, Biden is undeniably feeble and there was an entire oligarchic effort to deny that reality even during his 2020 campaign. We're told democracy is in peril if Kamala doesn't win when she's never been successfully entertained in a primary, in fact she's only lost with near zero support. That's apparently "popular will" when it's by now obviously nothing more than manufactured consent.

If you want more rigorous work, read up on Elite theory: https://en.wikipedia.org/wiki/Elite_theory

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#138

Post by AnimalMuppet »

lurking15 wrote: post #137
AndrewKemendo wrote: post #135

Earlier quoted context omitted.

This claim is historically inaccurate Do you have an epistemological elucidation of your claim?

I don't know look at any organization in humanity, the most obvious one is what happened with the Democrat party, Biden is undeniably feeble and there was an entire oligarchic effort to deny that reality even during his 2020 campaign. We're told democracy is in peril if Kamala doesn't win when she's never been successfully entertained in a primary, in fact she's only lost with near zero support. That's apparently "po…

It's "the unavoidable state of human society" because there is a theory in philosophy, political science, and sociology, and that theory has some people advocate for that theory? That's not evidence. There are multiple other, conflicting, schools of philosophy and sociology, all of which have people that advocate for them.

Got any evidence?

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#139

Post by consteval »

gizmo wrote: post #90
delfinom wrote: post #68

Earlier quoted context omitted.

Yep. But I'm so extremely skeptical the "your 401k will always go up by 10%" argument is going to continue to hold for more decades. Eventually the blood they are squeezing out from companies and consumers will run out...

If the US economy keeps growing then American businesses will do well and the stock market will reflect that. It’s hard to image scenarios where the American economy shrinks while other countries have growing prosperity.

> It’s hard to image scenarios where the American economy shrinks while other countries have growing prosperity

I don't understand this viewpoint - this seems like the obvious end result of the last 50 ish years of tomfoolery.

The US doesn't make anything anymore, our economy is purely theoretical. We're lying on a huge scale and scamming, and that's how we have our economy. We gave up entire industries - and almost all of them - to foreign countries. China, Korea, Japan, Bangladesh and on and on.

Yes, these companies are "American". In name only. All the capital, all the means of production - which is the actual "economy" here - is being held by not us. We literally just gave up our means of production.

What we did then is made up a bunch of fake jobs to justify these companies in the US and to extract money from these developing countries.

It's only a matter of time before they wisen up and realize they have all the capital.

Granted, not all industries are like this. Just most.

Re: The coming long-run slowdown in corporate profit growth and stock returns [pdf] (2023)

#140

Post by AndrewKemendo »

carapace wrote: post #136
AndrewKemendo wrote: post #126

Earlier quoted context omitted.

Moreso the 3/5ths compromise means the republic didn’t actually represent a significant portion of their claimed collective territories inhabitants. The articles of confederation was a business arrangement primarily to consolidate a market with similar laws for the ability to monopolize the cotton market. Of which Britain was largest purchaser btw. So yes, from the beginning the Americas were a free “wilderness” that…

I bring up the genocide of the First Nations a lot. Slavery too. The point of the Revolution wasn't that the USA became a utopia instantly, the point is that they threw out the king and then didn't make themselves kings. Establishing and extending freedom and human rights has been and continues to be a slog, a hard-fought and ongoing battle. In re: the original statement, the capitalists didn't take over the governme…

I’d generally agree here - though frankly I don’t think it’s as notable as the “founders” want it to be that they didn’t immediately declare themselves lords (despite doing that for 100 years prior)

I currently live in “Prince William” County. Take that for what you will but it’s not cause lordships weren’t around

I don’t think anyone should get points for not behaving like a psychopath

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