“A Mild Recession” • Hacker News Board

Re: “A Mild Recession”

#21

Post by SketchySeaBeast » Thu, Jul 14, 2022, 2:05 PM UTC

Jensson wrote: post #13

SketchySeaBeast wrote: post #11

Earlier quoted context omitted.

Given no reliable alternatives, I don't see an option other than to bet my long term goals on long running trends.

You cherry picked the companies though. Take the index for the top companies in some other country than USA and that investment no longer looks as secure. USA did great the past 100 years, many other countries didn't.

OK, so I didn't make the original S&P market argument, I think they should go bigger and focus on globally diversified broad market funds, but, to get back to my original point, what's the alternative here?

Re: “A Mild Recession”

#22

Post by epups » Thu, Jul 14, 2022, 2:05 PM UTC

Honestly I don't think the issue is that another recession is coming. It's going to be the fourth or fifth serious economic crisis I've experienced in my lifetime. What worries me is that the quality of our political leadership and in general our ability to diagnose and address complex issues is, in my view, at an all-time low.

Re: “A Mild Recession”

#23

Post by epups » Thu, Jul 14, 2022, 2:07 PM UTC

atemerev wrote: post #2

Oh, this is just the beginning. Ten years of “oh, just buy index funds” strategy will unwind with a huge snap.

Yes, as opposed to any other strategy which will unwind even harder.

Re: “A Mild Recession”

#24

Post by lumost » Thu, Jul 14, 2022, 2:08 PM UTC

nh23423fefe wrote: post #3

I actually feel really prepared for this one. 2007 made me nervous, but not this one. I feel secure in my employment and I finally have a real emergency fund even if I lose my job. I'm not optimistic about long term though. The infinite growth delusion seems like it will break in my lifetime, retirement is scary

Owning a house with a reasonable monthly expenditure, having a nest egg to withstand a year of unemployment all make for great downturn protection.

One concern with this recession is that there is a risk that low interest rates distorted prices in irrational ways. Historic examples from the communist block do not look kindly on rapid price reallocation. Nest eggs don’t last long in a market losing 25% YoY with 10% inflation.

Housing has become a dragon which either requires high inflation, government policy intervention, or a severe crash to correct.

Re: “A Mild Recession”

#25

Post by jghn » Thu, Jul 14, 2022, 2:10 PM UTC

samsonradu wrote: post #6

nh23423fefe wrote: post #3

I actually feel really prepared for this one. 2007 made me nervous, but not this one. I feel secure in my employment and I finally have a real emergency fund even if I lose my job. I'm not optimistic about long term though. The infinite growth delusion seems like it will break in my lifetime, retirement is scary

Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job l…

IMO at some point these sorts of disaster scenario thought experiments wind up in a place where if it happens, we're all pretty screwed anyways.

Do I have sufficient funds to survive for a while in a typical recessionary environment? Yes. If the shit really hits the fan, markets crash to next to nothing, real estate craters, etc and this lasts for multiple years well yeah. I'm in trouble. But that'll be true of just about everyone and we're probably looking at general societal collapse at that point.

Re: “A Mild Recession”

#26

Post by samsonradu » Thu, Jul 14, 2022, 2:18 PM UTC

PretzelPirate wrote: post #18

samsonradu wrote: post #6

Earlier quoted context omitted.

Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job l…

This seems too pessimistic without knowing specifics about the original commenter’s situation. I have no debt, a fully paid off house, and plenty of cash which has left me feeling confident about any upcoming recession. Could I get fired from my well-paying job tomorrow, the recession lasts for 5 years, and the food supply runs out so we all starve to death? Sure, but it’s probably not worth calling out. I was in col…

I used the word ‘statistically’ to underline the fact that it will not happen to everyone, and specially not to the commenter in particular.

Re: “A Mild Recession”

#27

Post by hestefisk » Thu, Jul 14, 2022, 2:18 PM UTC

atemerev wrote: post #2

Oh, this is just the beginning. Ten years of “oh, just buy index funds” strategy will unwind with a huge snap.

What is the alternative?

Re: “A Mild Recession”

#28

Post by nh23423fefe » Thu, Jul 14, 2022, 2:19 PM UTC

samsonradu wrote: post #6

nh23423fefe wrote: post #3

I actually feel really prepared for this one. 2007 made me nervous, but not this one. I feel secure in my employment and I finally have a real emergency fund even if I lose my job. I'm not optimistic about long term though. The infinite growth delusion seems like it will break in my lifetime, retirement is scary

Too young to understand what happened in the 2008 GFC but I doubt the 'feeling prepared' part works like this. First of all, the recessions tend to last longer than most people expect/plan for. Statistically, it will turn out their 'secure' jobs will be less 'secure' than expected. Meanwhile their emergency funds will start shrinking (slowly at first, then all at once) due to loss of purchasing power & eventual job l…

But you just responded point by point with non-sequiturs.

I made a comparison between 2007 and now, while you just stated ignorance of the past and made pessimistic assertions of my ability to estimate relative security.

Meanwhile you hold a belief like, "the future will be good because capital will be allocated better"

Re: “A Mild Recession”

#29

Post by atlgator » Thu, Jul 14, 2022, 2:22 PM UTC

epups wrote: post #22

Honestly I don't think the issue is that another recession is coming. It's going to be the fourth or fifth serious economic crisis I've experienced in my lifetime. What worries me is that the quality of our political leadership and in general our ability to diagnose and address complex issues is, in my view, at an all-time low.

They are downplaying this whole thing heading into the midterm elections. Inflation is transitory, it's the supply chain, it's Putin, it's gas station owners and oil companies, we're doing a soft landing. These are all cover stories for doing nothing. Low interest rates + $5T in bond purchases fueled remarkable growth and all time high employment. Raising interest rates and selling those bonds will do the opposite. This reality is uncomfortable heading into midterm elections, which is why the Fed has largely done nothing to curb. And yes, 1.5% is nothing.

Re: “A Mild Recession”

#30

Post by symlinkk » Thu, Jul 14, 2022, 2:24 PM UTC

nh23423fefe wrote: post #3

I actually feel really prepared for this one. 2007 made me nervous, but not this one. I feel secure in my employment and I finally have a real emergency fund even if I lose my job. I'm not optimistic about long term though. The infinite growth delusion seems like it will break in my lifetime, retirement is scary

What do you consider to be a real emergency fund?