‘A Powerful Signal of Recessions’ Has Wall Street’s Attention • Hacker News Board

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#101

Post by throwaway5752 » Mon, Jun 25, 2018, 5:24 PM UTC

matte_black wrote: post #96

throwaway5752 wrote: post #87

Earlier quoted context omitted.

This, in a nutshell, is why the human condition is so tragic. This won't be "interesting", believe me. Watch what happens when the body of startups funded by global pools of capital (which are the underlying source of capital for VCs) sees the NPV of software startups vanish as lower expected investment returns smack up against higher risk-free rates. The current software economy is incredibly leveraged and intertwin…

So when WeWork files for bankruptcy is that the signal to start moving into cash?

Sorry for a bit of a meta-reply, but this is kind of the reason for my sadness: there is this sense of isolation/aloofness to your question. The best thing to do is to work hard to prevent this outcome, since it's less than zero sum. I am sorry, but even if I knew your financial situation and goals I wouldn't want to offer investing opinions.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#102

Post by jakecrouch » Mon, Jun 25, 2018, 5:24 PM UTC

One explanation of the inflation of the public and private markets in the US is that the Chinese are in the middle of a massive debt bubble, anyone with cash there has nothing good to do with it, so they've been willing to invest in the US at almost any price.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#103

Post by jedberg » Mon, Jun 25, 2018, 5:25 PM UTC

coliveira wrote: post #48

solotronics wrote: post #35

Earlier quoted context omitted.

I always toyed with the idea of taking small positions far out of the money buying puts to hedge against my 401k.

Options are fairly priced. Meaning that they are priced according to the risk. Unless you have some very good reason to use them, they can lead to ruin. This is just another way to say that it is like playing in the casino. On the other hand, if you have a lot of gains in the stock market, using options may be a small price to keep your piece of mind. Just understand that they give you no clear edge.

If used correctly, options are like buying an insurance policy. You pay a small amount up front to hedge against large future losses. Hence where the term "hedge fund" comes from.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#104

Post by WalterGR » Mon, Jun 25, 2018, 5:26 PM UTC

zukzuk wrote: post #88

simonsarris wrote: post #73

People often note, like another comment here notes: > since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago This is an interesting line of thinking, but I think it's a mistake. We can use this fact itself and circumscribe some meta-thinking around it. Put the same fact another way, this is arguing that the 1960's started a brand new paradigm that was mater…

"This time it's different" is literally the last things always said right before the next recession kicks in. A nice, 500 page overview: https://press.princeton.edu/titles/8973.html

Blind link goes to page for:

This Time Is Different: Eight Centuries of Financial Folly

by Carmen M. Reinhart & Kenneth S. Rogoff (2009)

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#105

Post by throwaway5752 » Mon, Jun 25, 2018, 5:26 PM UTC

shams93 wrote: post #93

throwaway5752 wrote: post #78

The difference is that a powerful group of people is enacting policies that have triggered recession/depression in the past and no good historical precedent/academic support for working. It's seems kind of crazy to me we're ignoring that part. We're starting trade wars on multiple fronts, exiting or weakening multilateral alliances (and simultaneous giving an advantage to our global adversaries), and weakening the ba…

Ultimately they're not raising tariffs on end products, they're raising it on parts, but that will still cause inflation plus unemployment because tariffs on parts will drive production out of the US where it gets taxed on the way back in, so you'll both lose exiting US jobs while driving up the cost of products coming back in as you both make it impossible to produce in the US and also drive up prices.

What reason do you have for expecting current tariffs to not escalate into broader and more destructive tariffs in this ongoing trade war? Are you basing this on rational choice theory? Because I have some disappointing news for you in that case.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#106

Post by AboutTheWhisles » Mon, Jun 25, 2018, 5:26 PM UTC

simonsarris wrote: post #73

People often note, like another comment here notes: > since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago This is an interesting line of thinking, but I think it's a mistake. We can use this fact itself and circumscribe some meta-thinking around it. Put the same fact another way, this is arguing that the 1960's started a brand new paradigm that was mater…

Nixon was forced to take the US fully off the gold standard since Charles De Gaulle was exchanging his treasuries for gold, exposing that the US could not keep it's dollar pegged to gold at the current price. This lead to significant inflation as the dollar floated against other currencies.

It is no stretch to say that there has been a new paradigm that started in the late 60s as the Vietnam war extracted a heavy monetary toll.

https://fred.stlouisfed.org/series/AMBNS

The current monetary system is only a few decades old.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#107

Post by bunderbunder » Mon, Jun 25, 2018, 5:31 PM UTC

Judgmentality wrote: post #85

wokky wrote: post #83

Earlier quoted context omitted.

The stock market is not the economy.

How do you propose to measure economic health?

Economic health in general? GDP misses some important details, but it's a much better measure than simply looking at the share prices (not even the market caps) of a small selection of companies operating in a specific sliver of the economy that was very important 100 years ago, but represents a declining fraction of overall US productivity.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#108

Post by johnchristopher » Mon, Jun 25, 2018, 5:31 PM UTC

fokinsean wrote: post #49

tjr225 wrote: post #33

As someone who (I'm guessing like a lot of others who post here) didn't really have any financial responsibilities during the .com bust and the real estate bust, it will be interesting to have a neck in the game this go around!

Same, I remember how much the last one stressed out my Dad. I was in high school and didn't fully appreciate the significance of what was going on. I'm a bit anxious anticipating the next one, but it's part of the game!

> [..] part of the game!

Why not trying to spice things up with a baby coming at the same time or your significant other being diagnosed with cancer ? /s

Wtf, people :|.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#109

Post by paulddraper » Mon, Jun 25, 2018, 5:32 PM UTC

rubicon33 wrote: post #72

yellowstuff wrote: post #57

Earlier quoted context omitted.

Then a year after the lows it was back over 1200, and it's basically been straight up since then. Unless you timed things very accurately you were better off simply holding.

Housing markets in many areas didn't recover for 8+ years.

The supply of developed real estate has much more inertia than most of the market.

It takes most of a decade to see the full effects of a temporary surplus or shortage.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#110

Post by Retric » Mon, Jun 25, 2018, 5:34 PM UTC

timr wrote: post #74

codingdave wrote: post #64

Earlier quoted context omitted.

Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring. Then move to a more conservative position.

"Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring." No, it isn't. It's quite possible to lose money with a buy-and-hold strategy if you get unlucky, particularly if you aren't diversified. It's probably the most reliable way of investing, but you can still lose money. Stocks are not guaranteed to go up over all possible 50-year intervals. Monte carlo simulations of…

Monte carlo simulations don't model reality very well here. Years are not independent of each other.

For buy and hold to fail for something like the S&P500, companies would need to fail to make money or pay dividends for 50 years. If that's going on retirement is the least of your concerns.