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What to Worry About in This Surreal Bull Market

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Re: What to Worry About in This Surreal Bull Market

#161

Post by meebs »

pault wrote: post #152
dhimes wrote: post #103

Earlier quoted context omitted.

Attempting and succeeding are two different things. Right before the last real-estate crash I attended a seminar with an economist who spoke at length why there would not be a crash and in the coming spring there was going to be a real estate boom. Quoted lots of economic stuff to back it up (indicators and such- I don't remember but he was definitely convinced). The field of economics seems to have a ways to go befo…

It occurs to me that economics today is roughly at the same level of development medicine was circa 1500CE.

The difference being there is an advantage to keeping economics knowledge shady & unknowable. Information asymmetry is one way those with wealth can maintain or grow their wealth. I do not subscribe to conspiracy theories, but I do think enough independent selfish actors will result in a "conspiracy theory"-like outcome.

Re: What to Worry About in This Surreal Bull Market

#162

Post by fnovd »

peatmoss wrote: post #119
Al-Khwarizmi wrote: post #106

Honest question: is there any unavoidable reason why there cannot be a permanent bull market? I mean, apart from empirical/historical observation reasons (I don't find those very compelling, as some stuff in economics seems to never happen until it happens). Given the low interest rates, people are growingly investing in diversified stocks to obtain profits in the long term. Index funds are growing, which don't even…

Economy is tied to real consumption of finite resources. As we mine, fish, over harvest, burn, etc. our way out of some resources, we tend to find substitutes or other efficiencies to begin again. But... there is the question of whether our economic growth brings us closer to the absolute carrying capacity of spaceship Earth. So yeah, economic growth can’t continue forever without hitting some bio-physical constraint…

>But... there is the question of whether our economic growth brings us closer to the absolute carrying capacity of spaceship Earth.

Are we inching up on the absolute carrying capacity of Earth? Perhaps. But what about the carrying capacity of the Sun?

We are barely capturing a fraction of the energy the Sun sends our way. Think about what we could do if our ability to harvest renewable energy in the next two decades increased not tenfold or even a hundredfold, but a thousandfold.

The smartphones in our pockets are almost unfathomably more powerful than those of a few decades ago, yet we still power them by burning rocks we found in the ground, eking out barely a day of usage before plugging them back into the grid. There is so much about our digital world that is limited by energy in ways we don't fully appreciate.

Imagine a miniaturized particle accelerator [1] that could actually turn lead into gold [2]. Imagine this done at a scale powered by energy production several orders of magnitude greater than what we have today. Obviously, this is an implausible scenario, but the fact that it could even brush up against the possible makes me wonder. How would such a system affect the value of gold? Our perception of what gold is? How would such a system applied to any resource, design, good, or service fundamentally change the way we interact with our world?

The digital revolution we have seen is something to behold, but perhaps it is only a stepping stone to something larger.

[1] https://spectrum.ieee.org/nanoclast/semiconductors/devices/n...

[2] https://www.scientificamerican.com/article/fact-or-fiction-l...

Re: What to Worry About in This Surreal Bull Market

#163

Post by dguaraglia »

wildmusings wrote: post #68

After basically 0% net growth in the market for over a year leading up to the election, there has been a 25% boom beginning exactly on the day after Trump won. That is no coincidence. The markets are anticipating Trump's promised massive deregulatory push (already well underway), tax cuts, a more union-hostile Justice Department and NLRB, and other business-friendly changes.

Ah yeah, the old "let's take the last year in isolation and ignore the other 7 years of uninterrupted growth before that" approach to economics. Sound methodology.

Re: What to Worry About in This Surreal Bull Market

#164

Post by ac29 »

kylestlb wrote: post #139

The PEOPLE VS COUNTRY graph is a little concerning. Household wealth rising faster than USA GDP. Is there some normal, boring reason why this would happen?

Yes, the assets they hold are overvalued -- at least if you beleive US equities, housing, and other assets shouldnt grow in value faster than US GDP.

Re: What to Worry About in This Surreal Bull Market

#166

Post by the_gastropod »

qznc wrote: post #156
the_gastropod wrote: post #116

Earlier quoted context omitted.

This is not necessarily true. To avoid volatility, invest across asset classes with low correlation [1]. E.g., bonds will probably not tank when U.S. equities do. [1] https://www.investopedia.com/terms/c/coefficientofvariation....

Bitcoin does not correlate with anything. Should people diversify into it?

I said asset classes ;-) Bitcoin is not an asset in financial terms.

Re: What to Worry About in This Surreal Bull Market

#167

Post by sytelus »

the_gastropod wrote: post #116
dominotw wrote: post #101

Earlier quoted context omitted.

>diversify your investments Diversify into what though? Once market crashes, it takes everything down with it.

This is not necessarily true. To avoid volatility, invest across asset classes with low correlation [1]. E.g., bonds will probably not tank when U.S. equities do. [1] https://www.investopedia.com/terms/c/coefficientofvariation....

I think this is no longer true. Many bonds would default and even if they don't the yields on bonds is so small right now that you might as well just keep cash.

Re: What to Worry About in This Surreal Bull Market

#168

Post by mullen »

sytelus wrote: post #165

One of the good way to find out if there is a bubble is to simply plot a graph of total earnings growth vs stock index. If these two are out of sync by huge margins, it's a sell time.

Where can I plot that? There has to be a website that has all that data that I can visualize.

Re: What to Worry About in This Surreal Bull Market

#169

Post by sytelus »

truffle_pig wrote: post #22

Shameless plug (but related): https://isthestockmarketgoingtocrash.com/ Posted this here a while ago and people seemed to like it.

Is market cap / GDP really a right measure for overvaluation? So it looks like current stocks are 7% more overvalued than dot com peak with this measure! In fact current market is likely more overvalued than any other time in the history of stock market.
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