Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

endlessmetrics.substack.com

Post reply on HN
Print view View original

201–210 of 408 posts

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

#201

Post by krigath »

adastra22 wrote: post #188
grey-area wrote: post #176

Earlier quoted context omitted.

GDP rising exponentially is also clearly unsustainable. We have IMO reached a paradigm shift in central bank policy after decades of low rates and low inflation. The recent past is not a good guide to the near future in markets.

The entirety of human history since prehistoric times to the present gives evidence contrary to your claim. Human societies have experienced exponential growth since forever, with only occasional brief temporary setbacks. Even the Black Death is a blip on the exponential curve of economic progress.

In terms of population? Yes In terms of economic productivity per capita? No, not if you look at periods prior to the industrial revolution[1]

[1] https://www.google.com/url?sa=t&source=web&rct=j&url=https:/...

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

#202

Post by DoughnutHole »

WA wrote: post #198
sharkweek wrote: post #37

Earlier quoted context omitted.

Have you seen the movie Margin Call? There’s a great scene where the CEO of a Goldman-style bank is recapping the last 100+ years of global financial collapses and he mentions, “we just can’t help ourselves.” https://youtu.be/LtFyP0qy9XU One of the best banking movies I’ve ever seen. Jeremy Irons absolutely nails his role.

Isn’t that the movie in which every dialog is basically "but look at the numbers" without ever going into any kind of detail? I didn’t like it.

Well it's not really about the numbers - the details of the collapse don't really matter. In the context of the last crash we know the global economy is brought down by financialised insanity and fraud. It's a morality play showing what's happening inside the first firm to realise the house of cards is about to collapse, and who are about to bring it down themselves by being the first out the door. The details aren't really the point.

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

#203

Post by mejutoco »

gonehome wrote: post #171
jokethrowaway wrote: post #161

Earlier quoted context omitted.

While I can see luxury food delivery kind-of working (wealthy workers in the office ordering lunch, wealthy home workers ordering lunch, fitness nuts who want calories and good food without cooking), Juicero was just plain ridiculous. Competition from local supermarket is too strong. I can get freshly squeezed juice from the store machine anytime I want for cheap.

Plus juice is kind of a crappy high sugar project that’s bad for you? Relatedly, I have no idea how “Joe and The Juice” stores remain in business. They’re in super valuable real estate in cities across the country and as far as I can tell never have anyone in them.

I keep hearing this, but I don‘t really think fresh orange juice, for instance, is as bad as sth like sunny delight or soda. I do not have a source though.

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

#204

Post by RealityVoid »

freyr wrote: post #169
bagacrap wrote: post #53

Earlier quoted context omitted.

I don't know why you're so confident. All of these things can contribute to inflation.

Probably an adherent of modern monetary theory.

MMT does not say that liberal issue of currency does not cause inflation.

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

#205

Post by throwaway898989 »

galaxyLogic wrote: post #160
refurb wrote: post #36

Earlier quoted context omitted.

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…

if you have a large enough sum of money (i.e., $50m USD ) you can stay invested all the time and withdraw a small sum of money each year like $300k

With $50m if your portfolio averages 4% a year you would be clearing $2m then pulling out $300k for 1.7 gain. You only pay tax on the income withdrawn

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

#206

Post by jstx1 »

sharkweek wrote: post #37
mwattsun wrote: post #25

I lived through the dot-com crash and got out safely after hearing something so ludicrous that I had to ask myself "How insane does this industry have to be for someone to think they can build a high growth internet company out of home cement delivery?" My memory may be playing tricks, but it was something like that. After 2008 I became interested with crashes throughout history. There are so many fascinating little…

Have you seen the movie Margin Call? There’s a great scene where the CEO of a Goldman-style bank is recapping the last 100+ years of global financial collapses and he mentions, “we just can’t help ourselves.” https://youtu.be/LtFyP0qy9XU One of the best banking movies I’ve ever seen. Jeremy Irons absolutely nails his role.

I kind of enjoyed watching it and at the same time I don't think it's a good movie. It's so overly dramatic, the conflict between the characters is super vague, and the most annoying thing is the language they use - a lot of the time the characters talk to each other with metaphors and generic cliches to the point where they aren't saying anything. But the thing is that everyone in the room works in finance, they have no reason to be super generic and non-technical (apart from making the movie more accessible).

I imagine that people who work in finance would like it even less than I did.

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

#207

Post by epicureanideal »

jrumbut wrote: post #191
GolfPopper wrote: post #181

Earlier quoted context omitted.

It's also the same reasoning used by a Thanksgiving Turkey. The farmer has always come in and given the turkey food, so logically he will continue to do so. And it is true. Until it isn't. But the cost of that one day when it isn't is very high for the turkey.

What's the turkey supposed to do? It can either starve itself now or die with a full stomach later.

There are some limitations to the metaphor but I think it illustrates the point.

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

#208

Post by tasuki »

5350-uiop-1130 wrote: post #182
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…

I hope this is true but I also feel like we no longer follow any kind of logic after 2008, we totally detached from reality.

> I [...] feel like we no longer follow any kind of logic after 2008, we totally detached from reality.

What does it mean we have detached from reality? That valuations are not what they should be? What exactly should they be then? Who should be deciding these things?

And a bonus question: Why do you think the current valuations are what they are?

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

#209

Post by tasuki »

ars wrote: post #141
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…

> 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 That's because you are using a linear graph instead of a logarithmic graph. If you have $100 and it double you have $200, if you have $10,000 and it doubles you have $20,000. Both of those are the same chance, but if you use a linear graph it looks parabolic. Do yourself a favor and NEVER…

> That's because you are using a linear graph instead of a logarithmic graph.

The macrotrends.net graph linked by fny is logarithmic (by default, though there's a "Log Scale" checkbox to turn it off). It's also inflation-adjusted by default, which I think is a little unfair.

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

#210

Post by flipbrad »

I'd love to better understand how crashes start / propagate. A lot of the discussion seems to talk in slightly binary terms - "bear" vs "bull", "crash" as an on/off state, etc. But if we think inflation and reduced stimulus are going to cause a downturn in the stock market, I assume different sectors / types of companies will get impacted at different times? I'd love to see some theories/discussion of how that might play out. Timing dips might be super hard, but predicting how they play out, once they're underway, might be less difficult
Post reply on HN