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Stocks Off Sharply as Market Upheaval Grows

nytimes.com

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Re: Stocks Off Sharply as Market Upheaval Grows

#171

Post by ajmurmann »

dataker wrote: post #156
forgetsusername wrote: post #136

Earlier quoted context omitted.

> QE is not healthy QE is over (though, I wouldn't be shocked to see more). > 0% interest rate for several years is not healthy. Why not? > 100+ % debt:GDP ration is not healthy. Why not? I mean, I wouldn't call the US economy "flourishing" or anything. But it's not sick, and relative to the rest of the world it's looking pretty good (as the strong dollar and low rates imply).

QE is 'over'(for now), but it has shaped today's economy. There may have QE4. Artificially low interest rates is the main cause of most malinvestment and inflating assets. Usually ends with a pretty rough recession. For debt, I could just say 'Greece/Argentina/Brazil/Japan/...', but(yes) these aren't the world's reserve currency. U.S could just pay its debt to China by 'printing money' Still, it also severely hurt Am…

There was actually a very interesting discussion on econtalk that easily came to the conclusion that interest rates aren't artificially low. The primary, possible reasons they saw were that new industries in the West need fewer initial investments than traditional industries (compare the cost of starting a new refrigerator factory to starting a tech startup) and that Asian countries with much higher saving rates are making up a larger portion of the economy. One point they made is that interest rates were already very low before the recession and QE.

Re: Stocks Off Sharply as Market Upheaval Grows

#172

Post by walod »

dataker wrote: post #132
code4tee wrote: post #7

Broadly speaking the US economy is quite healthy and people were expecting a correction in the stock market for some time. Within tech, it will have some negative impact on the plans of some companies as it will be harder to get lofty valuations based on 'fluff'... during such times investors want to see hard facts and real results to back-up value--but that's a broader trend thats been slowly developing for some tim…

Regardless of your ideological background, you cannot possibly assert the U.S economy is healthy. 0% interest rate for several years is not healthy. QE is not healthy. 100+ % debt:GDP ration is not healthy. Inflating assets is not healthy. A vanishing middle-class is not healthy.

If the economy picked up there wouldn't be a problem. It's apparently better than a total crash, because the economy has to go on either way. The problem is what products and services can we make to make the economy grow again and to employ people. Also you may get malinvestments, but that is what risk is all about. No risk, no gain, you know. You just need a few homeruns to cushion the bad ones and the big homeruns are the ones that create whole new markets and longer employment. How to function and survive in the economy is difficult for everyone and it's a big clusterfuck of complexity and short term thinking, so it's all related in many ways. I think QE and 0% interest rate is the smallest of our problems as far as long term goes

Re: Stocks Off Sharply as Market Upheaval Grows

#173

Post by harmegido »

alyx wrote: post #149
forgetsusername wrote: post #107

Earlier quoted context omitted.

> people were expecting a correction in the stock market for some time "People" are expecting a correction 100% of the time, so the forecast is pretty much useless. If it was truly anticipated, it wouldn't happen. Action, like that which occurred at opening this morning, is sheer panic.

I'm interested to hear other people's experiences. I have a 100k trading portfolio and I have sold/bought nothing in the last week. Thoughts on who's doing all this downward trading?

Individual investors really don't impact prices. It's big funds that are able to do very large trades that have an impact on supply/demand.

And I'd also point out that nothing has to be bought/sold for prices to move, although volume does spike when prices move downwards.

I'm curious about your terminology. 100k is quite a bit for most people. Is that your 'trading' portfolio or your 'investing' portfolio? If it's the latter, I suggest you keep doing what you are doing (i.e. nothing).

Re: Stocks Off Sharply as Market Upheaval Grows

#174

Post by [deleted] »

MCRed wrote: post #84
sillygeese wrote: post #55

Earlier quoted context omitted.

> when you look at the US economy as a whole things are doing quite well To be more accurate, when you look at the propaganda spewed by the mainstream media, everything seems to be fine, because they keep spinning everything in a positive light. In the US, for starters, there's a huge bubble in stocks, and an echo bubble in housing. There's a massive property bubble in Canada and Australia, and so on. With interest r…

We have a democrat who is president, and who took over after a crisis during the term of a republican. (never mind that he was part of the cause of the crisis with his 1990s era "not lending to people who can't repay is racist" lawsuit against banks)... so the liberals of HN are highly motivated to believe that democrats are "responsible" and that they have "fixed the economy" after republicans "wrecked it". So when…

[deleted]

Re: Stocks Off Sharply as Market Upheaval Grows

#175

Post by cromwellian »

jes wrote: post #162
code4tee wrote: post #7

Broadly speaking the US economy is quite healthy and people were expecting a correction in the stock market for some time. Within tech, it will have some negative impact on the plans of some companies as it will be harder to get lofty valuations based on 'fluff'... during such times investors want to see hard facts and real results to back-up value--but that's a broader trend thats been slowly developing for some tim…

Unfunded liabilities (money that is owed, but not currently on-hand) in the United States are said to be greater than $127T: http://www.forbes.com/sites/realspin/2014/01/17/you-think-th... This does not account for unfunded liabilities owed by the states. The situation there is very difficult as well. You also mention that China is rampant with corruption. In my view, with respect to politics and cronyism, I think th…

This is all pretty obvious and a long time coming. There are a lot of forces at play: aging of the population, greater returns to capital vs labor due to increasing productivity.

As an absurd conclusion, birthrates drop to ~1 per couple, 2/3rds of the population retired, and robots put most people out of work.

Is it really so surprising that taxes would have to go up massively on the owners of the robots and other capital to provide all of the retirees a basic income?

Hans Moravec, who ran the CMU robotics department, pointed out these trends in his 1988 book _Mind Children_ and what the end game would be.

My fear about the unfunded liabilities argument is that it appears to be the new talking point of Trump and Fox News, and rather than see the writing on the wall with respect to the long term trends in the labor market and demographics, it'll just be more arguments about slashing federal social programs, pensions, and the liabilities themselves, which will make us all the less prepared when the real devil comes knocking.

Re: Stocks Off Sharply as Market Upheaval Grows

#176

Post by forgetsusername »

gmarx wrote: post #148
forgetsusername wrote: post #107

Earlier quoted context omitted.

> people were expecting a correction in the stock market for some time "People" are expecting a correction 100% of the time, so the forecast is pretty much useless. If it was truly anticipated, it wouldn't happen. Action, like that which occurred at opening this morning, is sheer panic.

That isn't true. People expect a correction when there has been a long run up in prices and when those prices are high relative to, for example, earnings. This has been the case for quite some time. On the other hand when the S&P hit the 600s in 2008 (or was it 2007?) I doubt anyone was anticipating a correction

>high relative to, for example, earnings. This has been the case for quite some time.

Well, the Shiller CAPE has been "relatively high" (above the mean) since about 1998. So, I guess we agree that people have been calling for corrections the whole time. And it's useless.

Re: Stocks Off Sharply as Market Upheaval Grows

#177

Post by carsongross »

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

https://mises.org/library/human-action-0/html/pp/818

Re: Stocks Off Sharply as Market Upheaval Grows

#178

Post by jazzyk »

golergka wrote: post #147
cryoshon wrote: post #138

Earlier quoted context omitted.

I keep trying to tell people, but they've drank the koolaid from the mainstream media, unfortunately... the facts as you have listed them are there for anyone to think about, but the rabid "EVERYTHING IS FINE, SHUT UP AND BUY MORE" crowd won't have the thought of weak fundamentals in their head. Many of the problems are "easy" to fix with government action, but the consequences of the easy fixes are problematic.

> they've drank the koolaid > the rabid ... crowd won't have the thought of weak fundamentals If you've been telling people using the same level of rhetoric and the same amount of facts as in this comment, I wouldn't be surprised if they don't listen to you, regardless of whether you're actually right or not.

It is probably out of frustration, because whatever language you use to argue something which is not supported by the mass media is rejected by most people as being 'fringe' or 'kooky' (Ron Paul being a well-known example).

The public is only slowly waking up to the fact that mass media ownership has been consolidated among 5-6 major corporate/industrial conglomerates.

Slowly, hence the frustration.

Re: Stocks Off Sharply as Market Upheaval Grows

#179

Post by achompas »

cryoshon wrote: post #83
wiremine wrote: post #38

Earlier quoted context omitted.

The participation rate is down 3.3% from 2005 [1]. Given the huge shift in demographics over the last 10 years [2], I don't think that's a data point that screams "smashed." [1] http://data.bls.gov/timeseries/LNS11300000 [2] Lost of baby boomers retiring and Gen X being such a small demo compared to the boomers and the millennials.

The demographic shift angle doesn't make sense. The boomers are slowly exiting the workforce, sure-- on an individual basis, as they can choose to retire at different times. Many are having to defer retirement or not retire. This isn't an orderly mass exit, it's a trickle. Millenials are a far larger generation than the boomers, and are rapidly leaving college and attempting to enter the workforce-- 100% of them are…

The fact that labor participation rates haven't stabilized or even increased in response to their population level attempts to enter the workforce shows that there really are not enough jobs to go around.

I'm not sure the data bears this out. If they're looking they're in the labor force, and we'd see a commensurate rise in unemployment for age groups 20-24. That's clearly not the case, as unemployment is down ~1.5% for that demo since mid-2014:

http://www.bls.gov/web/empsit/cpseea10.htm

I don't have demo-level participation data available but that would clarify whether rates are lower bc of millenial LF dropout or millenial employment success.

Re: Stocks Off Sharply as Market Upheaval Grows

#180

Post by incongruity »

zrail wrote: post #20
adventured wrote: post #17

Earlier quoted context omitted.

Which completely falls apart if you are 'unlucky' and buy at the wrong time. So by its very nature, buying that index fund requires good timing as well. Just ask Japanese investors. Or Chinese investors from 2007. They went sideways for eight years, and after their bubble deflates will likely see 20 total sideways years. Or the Nasdaq from 1999 to 2012. Point being, even the premise of index buying requires some smar…

> even the premise of index buying requires some smart timing Or just investing a regular amount of new money on a regular schedule, which will even out the timing issues.

Which underscores the value of starting to save for retirement in your 20s...
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