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

nytimes.com

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

#151

Post by smellf »

ergothus wrote: post #95
rm_-rf_slash wrote: post #53

Earlier quoted context omitted.

To be fair, the economy was still fairly strong by that point. It wasn’t until 06-07 that the subprime lending really got out of hand, and even though 07 was technically when the recession started, it didn’t become a full-blown panic until 2008 when Lehman Brothers and Bear Sterns collapsed. The yield curve is like seeing upturned leaves in the wind: a storm may coming, but it’s not clear when.

My knowledge of predicting recessions is unchanged, but my way of looking at leaves on the ground is forever changed...

What he's referring to is not leaves on the ground, but upturned leaves on the trees. The conventional wisdom says that a storm is coming when you can see the backs of the leaves.

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

#152

Post by jonknee »

briandear wrote: post #138
jonknee wrote: post #127

Earlier quoted context omitted.

Currently it's devolving into tariffs on everything. Like Europe's 25% tariff on Harley motorcycles. They're getting hit on both ends too because their inputs are also hit (steel being the big one). Tariff in and tariff out, it's ridiculous.

Actually the tariff is 31%. An increase of 25% over the existing 6% tariff. If Europe is so concerned about tariffs, then why did they have a 6% tariff in the first place? That’s the point of this “trade war” — countries already have tariffs. It’s disingenuous to complain about American tariffs when the EU has built their protectionist model around doing just that. France has a bunch of “protected” industries and the…

The US charges plenty of high tariffs in return, it's not like the US doesn't protect industries. The EU laid these on in response to Trump protecting the domestic steel and aluminum industry (notionally for national security reasons, which is a joke).

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

#153

Post by timr »

timr wrote: post #114
Retric wrote: post #110

Earlier quoted context omitted.

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.

It's a fact, folks. Downvoting doesn't change it, and you don't get to have opinions about it.

If you believe the stock market guarantees you safe returns, you are wrong. No matter what strategy you use, no matter what outlook you choose, you can lose money in the stock market. Don't invest what you can't afford to lose.

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

#154

Post by timr »

davej1024 wrote: post #116
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…

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-...

No, it's not just about "market timing". You can do everything "right", and still lose money. Long-term buy and hold investing is not a guarantee.

An entire generation of young investors has never lived through a serious market decline, and have only been rewarded for HODL. HN skews young. There are a lot of people here who are going to find their worldview painfully challenged when the market does finally turn.

The surest sign of a market bubble in an asset is when I find myself arguing with people that yes, the price of the asset can indeed go down.

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

#155

Post by akhilcacharya »

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…

>Of course this is going to end terribly.

It is basically guaranteed to do so unless the business cycle has stopped for good (unlikely). The question in my mind is who the scapegoat is going to be, and how much denial there's going to be if the real effects of slowing growth start becoming apparent.

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

#156

Post by sciurus »

timr wrote: post #153
timr wrote: post #114

Earlier quoted context omitted.

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.

It's a fact, folks. Downvoting doesn't change it, and you don't get to have opinions about it. If you believe the stock market guarantees you safe returns, you are wrong. No matter what strategy you use, no matter what outlook you choose, you can lose money in the stock market . Don't invest what you can't afford to lose.

You say "don't invest what you can't afford to lose". If you want to eventually retire, what's the alternative?

Editing as clarification for downvoters: This was a sincere question. Since no one can afford to lose their retirement savings, but few people will generate enough income to retire without making long-term investments in the stock market, I was curious what strategy timr was actually advocating. My own approach is to invest in index funds that automatically adjust their investments to be more conservative as my retirement date nears.

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

#157

Post by astura »

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!

As someone had a horse in the race during the previous recession, it's not some sort of "game" and I find this flippant attitude incredibly off-putting to say the least. These are people's livelihoods we're talking about here. The last recession took a huge emotional toll on me, more than can be explained using words.

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

#158

Post by simonsarris »

dv_dt wrote: post #119
simonsarris wrote: post #98

Earlier quoted context omitted.

> 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…

Wow, great counterpoint. Thanks.

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

#159

Post by timr »

sciurus wrote: post #156
timr wrote: post #153

Earlier quoted context omitted.

It's a fact, folks. Downvoting doesn't change it, and you don't get to have opinions about it. If you believe the stock market guarantees you safe returns, you are wrong. No matter what strategy you use, no matter what outlook you choose, you can lose money in the stock market . Don't invest what you can't afford to lose.

You say "don't invest what you can't afford to lose". If you want to eventually retire, what's the alternative? Editing as clarification for downvoters: This was a sincere question. Since no one can afford to lose their retirement savings, but few people will generate enough income to retire without making long-term investments in the stock market, I was curious what strategy timr was actually advocating. My own appr…

If you can't afford to lose it, you should put it in a savings account, a CD or another guaranteed asset until you've accumulated sufficient wealth that you can afford to take risks.

This is investing 101. Any financial planner will tell you the same thing. Most will tell you that you shouldn't have money in the stock market if you're going to need it within the next five years. Ten years is a better number.

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

#160

Post by briandear »

s2g wrote: post #143
briandear wrote: post #138

Earlier quoted context omitted.

Actually the tariff is 31%. An increase of 25% over the existing 6% tariff. If Europe is so concerned about tariffs, then why did they have a 6% tariff in the first place? That’s the point of this “trade war” — countries already have tariffs. It’s disingenuous to complain about American tariffs when the EU has built their protectionist model around doing just that. France has a bunch of “protected” industries and the…

Can you really not see the difference between the reasonable protectionism practiced by every country and the current trade war?

There is no such thing as “reasonable protectionism” unless you are dealing with dumping. Harley could hardly be accused of dumping. So why a 6% tariff in the first place? EU clothing tariffs already average 12% in many other categories it ranges from 4-36%.

So is the EU protecting nearly every industry? Isn’t that the point of this “trade war” — the EU has been applying tariffs to almost everything for a long time. Doesn’t the US have a right to retaliate?

French milk is already better than most American milk, yet France puts a 36% tax on dairy imports in addition to heavily subsidizing dairy. So the effective tariff is much higher. And European consumers end up losing because they have to spend more of their money on dairy — all to protect a fairly small industry when measured as a percentage of GDP. Yet every time reforms are attempted, farmers literally riot.

Why should a country accept their goods being taxed without being able to respond in kind?

This is tit-for-tat to be sure, but the tit didn’t start with the Trump tariffs.

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