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

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

#111

Post by mancerayder » Mon, Jun 25, 2018, 5:36 PM UTC

throwaway5752 wrote: post #101

matte_black wrote: post #96

Earlier quoted context omitted.

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.

It's not aloofness or isolation - and it's perhaps less sad if you consider that people -- by force of things -- are going to explore how to survive best during tragedies (which includes helping their families). The finger-wagging at corrupt or inefficient systems is important at a certain intellectual level; the rest of us have to think about mortgages and other such earthly things.

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

#112

Post by ISL » Mon, Jun 25, 2018, 5:37 PM UTC

Eridrus wrote: post #77

Analemma_ wrote: post #30

Earlier quoted context omitted.

A Fed chairman is never going to say, "Yup, there's a recession coming": the incentives of their position don't permit it. So they will always come up with reasons why a signal with a previous 100% success rate doesn't mean much now, but in the end, it always amounts to "This time is different", aka, the four most expensive words in history.

Looking at the table, it's odd that only "inversions" are counted as predictions, and there seem to be far more cases where it got "close" to zero, but not quite there. Without a good explanation on why that exact point is so critical, I am a bit skeptical that this is anything but noise. If there is a good explanation of why it is critical, then we're not really in worrying territory yet either then, because we're n…

An inverted yield curve is an explicit statement that bond buyers expect the near term to be worse than the long term.

When the yield on the long-term note is smaller than the short-term yield, and buyers would still rather buy the long-term note, something is afoot.

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

#113

Post by madamelic » Mon, Jun 25, 2018, 5:43 PM UTC

johnchristopher wrote: post #108

fokinsean wrote: post #49

Earlier quoted context omitted.

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 :|.

Pessimism is never fun.

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

#114

Post by timr » Mon, Jun 25, 2018, 5:43 PM UTC

Retric wrote: post #110

timr wrote: post #74

Earlier quoted context omitted.

"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.

Did you even read the link? The year you enter the market is the random variate.

It is a simple, uncontroversial fact that the stock market is not guaranteed to return your money over a randomly chosen N-year period. LTBH merely minimizes the chance that you'll lose money; it doesn't eliminate the chance.

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

#115

Post by throwaway5752 » Mon, Jun 25, 2018, 5:47 PM UTC

mancerayder wrote: post #111

throwaway5752 wrote: post #101

Earlier quoted context omitted.

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.

It's not aloofness or isolation - and it's perhaps less sad if you consider that people -- by force of things -- are going to explore how to survive best during tragedies (which includes helping their families). The finger-wagging at corrupt or inefficient systems is important at a certain intellectual level; the rest of us have to think about mortgages and other such earthly things.

Just standard advice that is widely available is to have at least 3-6 months of emergency funds (liquid cash to cover all monthly expenses) and err on being conservative.

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

#116

Post by davej1024 » Mon, Jun 25, 2018, 5:50 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…

True, past performance is no guarantee for future returns. Worth taking a look at the worst market timer of all time.

http://awealthofcommonsense.com/2014/02/worlds-worst-market-...

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

#117

Post by LarryDarrell » Mon, Jun 25, 2018, 5:54 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!

It's not a game. Suicide rates will go up. People in their late 40s are going to get laid off and have a hard time finding equivalent work ever again. There are a lot of people straining themselves to buy a home at this exact moment. Kids graduating with record student debt, thinking they did everything they were supposed to do, will find themselves in an even softer economy. And all of this will happen during a 4 year assault on our social safety nets.

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

#118

Post by WhompingWindows » Mon, Jun 25, 2018, 5:56 PM UTC

darkerside wrote: post #79

Nokinside wrote: post #47

Earlier quoted context omitted.

Predicting recession reliably 2-3 years in advance with 2 year window would be really good indicator.

DOW 2005: ~10,000 DOW 2007: ~13,000 DOW 2009: ~8,000 DOW 2009 (later): ~10,000 DOW 2011: ~12,500 A 2 year window of precision is completely useless

The DOW is a very poor indicator of the economy, it's just 30 "chosen" companies that somehow represent the whole US market. You're talking about precision and you use one of the most derided economic metrics.

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

#119

Post by dv_dt » Mon, Jun 25, 2018, 5:57 PM UTC

simonsarris wrote: post #98

Bartweiss wrote: post #91

Earlier quoted context omitted.

This is a very good point. It's worth comparing to history, but it's also worth keeping an eye on when the old paradigm breaks. The lasting booms starting post WWII surprised economists of the time. Stagflation was so out-of-model that the 1970s caused a major shift in economic theory. The list goes on. And, of course, we already know that traditionally aligned indicators have been out of sync since ~2007. Productivi…

> Productivity and wages broke lockstep in the 70s Welllll kinda. Total inflation adjusted comp has done almost nothing but go up: https://fred.stlouisfed.org/series/COMPRNFB But I think this too was a paradigm change: Wages shifted to untaxed benefits, like healthcare. At least I think that's going on.

When you plot the line absent a comparison to growth to company productivity, it loses context.

https://www.epi.org/publication/understanding-the-historic-d...

> There is a widespread but mistaken belief that wage stagnation has been partially caused by a shift of compensation toward benefits. Benefits have grown far less than most people realize, rising from 18.3 percent of compensation in 1979 to just 19.7 percent of compensation in 2014

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

#120

Post by cityhomesteader » Mon, Jun 25, 2018, 5:59 PM UTC

madballneek wrote: post #28

I've been hearing this for years. It'll happen when it happens and no one can actually predict. #golong

Pretty much every finance site - marketwatch, wsj, cnbc, bloomberg, zerohedge, etc along with the peter schiffs/etc clickbait it.

For some reason, nytimes paywalled clickbait is constantly spammed here.

The inverted yield curve. There are thousands of articles about the inverted yield curve. The death cross. The black swan event. All just voodoo clickbait nonsense.

Also, I love how the nytimes say "wall st is concerned" as if they knew what wall st was thinking and most importantly, they think that wall st is one entity. A lot of players make up wall st.

If any of these people at these news companies knew what wall st was thinking, they wouldn't be working at news companies making pathetic union salaries. They'd worked in finance and retire before they were 25.

Simply put, when the big players want there to be a recession, there will be a recession. Markets are human created and controlled by humans. It isn't a natural entity following the laws of nature.

The invisible hand of the market doesn't mean that the hand controlling the market doesn't exist. It just means that us mere peasants aren't allowed to see it.