When buying the dip doesn’t work: An analysis of the dot-com crash • Hacker News Board

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#151

Post by eastbound » Sun, May 08, 2022, 5:44 AM UTC

tedunangst wrote: post #75

rfreiberger wrote: post #41

Earlier quoted context omitted.

One of the big wake up calls I had during that time was a friend telling me about Webvan. At the time I was younger and not investing so the conservation was mostly around how great the food was, cheaper than up scale stores and they delivered. The echo that reflected much of the dot com era was as he mentioned "how do they make money doing this". The wild part is the wages they paid was higher than other delivery dr…

Funny that webvan is always cited as an example of a startup that could never work, but really just an early example of do something that doesn't scale and just keep doing it until you somehow make money. But VCs weren't yet ready for the unicorn burn.

Juicero was the mirror product, then: An overpriced orange juice machine, with little packets that you can only buy on subscription, but can’t suspend while on holidays, with a QR code to prevent you from consuming after your holidays. It is also down if it can’t reach the Wifi. It showed that you can overcharge and make everything become a cloud subscription, because money was unlimited on the consumer side this time.

Surprisingly, it didn’t work outside of the Bay area. Some entrepreneurs have difficulty seeing the world’s situation beyond their local horizon.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#152

Post by JumpCrisscross » Sun, May 08, 2022, 5:47 AM UTC

EGreg wrote: post #121

JumpCrisscross wrote: post #62

Earlier quoted context omitted.

> everyone seems to be sitting in cash? What is this based on? Every indicator suggests we’re still in a risk-on mode as an economy. It’s why we have inflation.

Yield curve inverted and interest rates have begun to go up. Risk on?

> curve inverted and interest rates have begun to go up. Risk on?

Yes, we’re still seeing billions of dollars being deployed into start-ups [1], crypto and the like. We are less risk on than we were. But within America, there is no flight to safety. (Internationally, it’s more complicated.)

[1] https://fortune.com/2022/04/08/venture-capitals-2022-slowdow...

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#153

Post by astrange » Sun, May 08, 2022, 5:47 AM UTC

_uy6i wrote: post #72

tyre wrote: post #16

Earlier quoted context omitted.

> The COVID fiscal canon blew growth and inflation skyward. This is not true and has wrongly given credit to people who have said, since 2020, that COVID relief would cause inflation. Our current inflation is driven by supply chain issues (unrelated to COVID relief) and rising oil (unrelated to COVID relief.)

This may be the case for many goods (e.g. cars, furniture, dishwashers, beef) - but definitely not assets (e.g. homes, bonds, stocks, art)

Asset and good inflation aren't the same kind of thing because you won't die if you can't buy a stock, and you can buy any fraction of a stock not just one share these days. (Although the second one is a reason they've gotten more expensive.)

Homes are a special case, but it's entirely possible for the purchase price of homes to go up while rent doesn't.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#154

Post by benjaminwootton » Sun, May 08, 2022, 5:47 AM UTC

Tiktaalik wrote: post #35

kmonsen wrote: post #11

Earlier quoted context omitted.

I honestly think that’s not the main reason we have inflation now. Since every country in the world is seeing similar inflation I would think it’s supply side and not something any central bank can fight. I’ve always been Keynesian, but it faces the same problem as everything else, you need to be able to predict the future to do it well.

Every other country did what the Fed did for the same reason: We've experienced (and are still experiencing) a once a century global pandemic. The measures to limit pandemic deaths would have completely destroyed the economy had the governments and their associated banks not taken the measures they took to support people during this difficult time. It's not the Feds fault, it's the pandemic.

There is still considerable debate if those measures were actually effective. Did closing down entire industries, closing borders, making 20 year olds WFH etc really move the needle on Covid deaths in retrospect?

And even if it did, was it ethical, fair and is it a reasonable price to damage the economy and life prospects of hundreds of millions of young people who weren’t at statistical risk?

Its important because it means the current and future mess is down to bad science and politics and not an act of god.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#155

Post by astrange » Sun, May 08, 2022, 5:48 AM UTC

hanniabu wrote: post #150

argomo wrote: post #137

Earlier quoted context omitted.

As the saying goes, there are four types of economies: developed, undeveloped, Argentina, and Japan.

Why Argentina?

Argentina's economy is a series of endless crises from the government choosing the worst possible ways to intervene in it at every opportunity. Like a reverse South Korea.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#156

Post by pl-94 » Sun, May 08, 2022, 5:49 AM UTC

grey-area wrote: post #119

tedunangst wrote: post #84

Earlier quoted context omitted.

Every even modestly exponential curve has the same shape. https://www.wolframalpha.com/input?i=y+%3D+1.05%5Ex+from+1+t...

Exponential curves in real assets are not sustainable.

The GDP is itself exponential. A growth of +2% a year is an example of an exponential curve. Sure there are "limits to growth" (see Meadows et al.) but it's not clear whether those limits are reached yet.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#157

Post by astrange » Sun, May 08, 2022, 5:50 AM UTC

phendrenad2 wrote: post #140

astrange wrote: post #98

Earlier quoted context omitted.

Workers (well, unemployed ones) got $2400 a month. "We just got a $2000 check" is a meme from people who weren't unemployed and are looking for more free money.

What percentage of the population is unemployed?

That's not the question, the question is what the percentage was in 2020.

People who were still working got 1. PPP loans 2. support from their customers still being able to buy things.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#158

Post by astrange » Sun, May 08, 2022, 5:51 AM UTC

slaw wrote: post #83

mberning wrote: post #59

Earlier quoted context omitted.

Buy all the time. Only reliable way to win.

Past performance is not indicative of future results. Japan stock market JP225 didn't recover yet from 1990 crash.

Do Japanese people have to buy Japanese stocks just because it's the same country?

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#159

Post by astrange » Sun, May 08, 2022, 5:52 AM UTC

tyre wrote: post #16

fny wrote: post #10

Look at a chart of the S&P 500 from 1920 to 2008 and you'll notice something rather curious: the stock market has gone parabolic ever since the financial crisis. What made this period so unique? Tremendously low interest rates coupled with quantitative easing dissuaded capital from financing the real economy and instead encouraged herding and levering up in the financial economy for returns. At ever dip, it was an op…

> The COVID fiscal canon blew growth and inflation skyward. This is not true and has wrongly given credit to people who have said, since 2020, that COVID relief would cause inflation. Our current inflation is driven by supply chain issues (unrelated to COVID relief) and rising oil (unrelated to COVID relief.)

> Our current inflation is driven by supply chain issues (unrelated to COVID relief)

Well, specifically it's because everyone went home and switched from purchasing services to goods. So there are serious composition effects comparing 2019 to 2020 and you don't have to assume you're making less money because an inflation number said you are.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#160

Post by galaxyLogic » Sun, May 08, 2022, 5:57 AM UTC

refurb wrote: post #36

nathanvanfleet wrote: post #18

Sad to think that investing in the stock market, which I have only been able to financially over the last 5 years might have been much riskier than I might have previously thought. What I previously thought as "okay I just leave it in the stock market for a bit of time to recoup" is something I am now realizing would likely have to be 10+ years. It's kind of funny because I was getting shaky about having money in the…

My grandfather had $3M invested in the market in 2007. Lost $1M at the bottom in 2008, but didn't do anything other than rebalance. Now worth $8M. Either you fret over every price move and likely buy/sell at the worst times, or you invest with a long-term vision and stop tracking the price moves everyday.

Problem with "long term investing" as I see it is that to realize the gains you must get out of the market at approximately the correct time. That is difficult psychologically because if you have been able to increase your worth by doing what you have been doing so far you are likely to keep on doing it. Then one day the next crash comes. All of a sudden having been a long term investor does not help so much any more.

You need to be a long-term investor for a limited term. But hard to know when that term is over.

So I think when markets go up you should seriously consider taking some money out and using it for leisure and travel and education investing in yourself. But taking money out and spending it is not usually considered prudent investing. Especially because taking money out means you must pay taxes on it. So you stay in the market and soon most of your long-term gains are wiped out, and you have to be a "long term investor" all over again.