201–210 of 297 posts
Is ancap economists from Austrian school considers economics correctly? They say a lot of things but I still can not decide whether they geniuses or populists?
Earlier quoted context omitted.
It is an indicator and it's not totally non-meaningful. But GDP growth, when it's at the price of increasing the public debt and inflation, is no real growth. Instead of looking at the US, let's look at what used to be a relevant ally... In the eurozone, for example, politicians are hiding the lack of growth behind a growing mountain of public debt and the GDP growth ain't even beating inflation since the 2008 crisis…
US looks everything except being "less fucked" as eurozone. It is actively self destructing while mounting debt while, true, trying to destruct everyone else.
The point being is that the US should NOT follow ANY economic advice from EU leaders, it is a recipe for disaster.
Earlier quoted context omitted.
It makes sense if you're looking at it from the perspective of a European investor. e.g. You start with 1000 EUR, convert and buy into an S&P500 fund, wait a year, sell and convert back to EUR. Celsius and Fahrenheit doesn't work as an analogy because the rate does not change over time as it does with currencies.
I think it depends on whether you're planning on holding it in currency or using the currency to buy other things. Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P? If more the latter, then converting to EUR is just a very temporary exchange and its nominal amount doesn't exactly matter.
... Wait, why would you expect the price of goods to follow the valuation of, well, any market index, never mind one specific foreign market index? Like, I don't understand why you think that would happen. If anything, you'd expect a minor inverse relationship, at least on a global scale; rapid growth of cost of goods indicates inflation, which implies central bank tightening, which tends to depress stock values a bit.
I find the S&P500 to be interesting as a demonstration for currency risk. Denoted in US, it went up ~18% or so. For me as an EUR investor, it went up just 4.6% when accounting for the loss of the USD. Comparing that to indicies that usually do not perform that well, Euro Stoxx 50 is up ~22% and MSCI Emerging Markets ~21%.
I noticed this as well. I haven’t found a good cure for this other than diversifying globally.
Ironically last year has been good for those who held EUR based or CHF based indexes.
Earlier quoted context omitted.
> Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P? I don't understand this question, are you asking if material goods and services in Europe, which uses EUR, "somewhat" follows the S&P, a US stock market index?
If you have to hold USD to buy and sell USD products (as a European) it doesn't make sense to compare your SPY position vs EURUSD because you have to use those USD to buy something or pay some debt.
Approximately no individual does this. Some companies may hold some foreign currency reserves, but even there it is not _particularly_ common in most cases.
As a European, I have never, in 40 years, had any USD, except a small amount of paper currency. If I'm buying something made in the US, I'm probably buying from a local vendor, or else will convert on the fly. If I'm visiting the US, I'll convert on the fly (this is even cheap, now, thanks to neo-banks). I own a bunch of US equity, but indirectly via a euro-denominated global market index fund. This is fairly standard. In general it's only common for individuals to hold foreign currency where the local currency is particularly unstable.
Earlier quoted context omitted.
Everyone wants to park some money and have other people work hard to increase the real value of said parked money. Not everyone can win big. Storing value is actually pretty amazing thing and that it can be profitable is magic. Of course the environment and poorest pays some of the free lunch.
An investor friend once told me that the US needs to always be in debt because treasuries give investors a risk-free place to park their money between investments. The sense of entitlement was astounding.
I hate Trump, but this piece doesn't seem to prove or argue anything at all. It's basically free market fanaticism, it says that economic metrics are good in spite of protectionism and not because of it because how could it be otherwise? Invisible hand, etc. It's totally begging the question. If the free market economy is so resilient to threats, why didn't it thrive also in 2008?
I think 2008+ if anything shows that free market economies indeed are resilient to threats even in the worst times.
Do not mistake economic indicators such as GDP or "growth" for meaningful measures of economic health.
Earlier quoted context omitted.
The roi is unfortunately not the same if you earn your money in euros and need to pay your taxes in euros. At one point one has to do a forex trade and that will be a loss for the euro investor
Only if you convert it at a loss and are unable to wait for USD to recover. If (and it is, admittedly, a big assumption) we assume that USD and EUR are broadly stable currencies over the long term, then short term changes in the ratio don't matter for long term investors. You're buying a share of productive capacity, the currency it is listed in doesn't matter.
Yeah, er, that's a very big if. There's no real reason to assume that, and history doesn't really bear it out.
If anything in the near term you'd probably expect the USD to weaken further vs the Euro; Trump seems _very_ keen to install a fed chair who'll cut rates even where not supported by inflation and employment numbers, whereas the ECB is more disciplined and less subject to political interference.