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

‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

nytimes.com

Post reply on HN
Print view View original

271–280 of 289 posts

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#271

Post by samsonradu »

dgacmu wrote: post #220
samsonradu wrote: post #197

Earlier quoted context omitted.

@dgacmu Cannot reply to your comment so I will here. > For any investor, there is a point in the mortgage interest rate vs risk-adjusted returns space at which investing is better. That point may differ, of course. I agree there always is a point, what I think is that the risk-adjusted return should be much bigger to be worth taking. The spread between the mortgage rate and the stock market return usually is not that…

Right - but what you just said was an expression of your risk/reward preference. :) But also, in the US, there's a pretty large contingent of mortgage holders who have (You don't need to account for inflation in that return calculation, since the mortgage rate is also affected by inflation.) If you're me -- 42, great job security, relatively small mortgage relative to income, and in a high tax bracket that's unlikely…

> which compare very nicely to the (expected / hoped for) 9.7% average return from a diversified total market fund.

Understood, guess it's hard for me to wrap my head around this. As a european this feels unsustainable and way too good to be true.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#272

Post by kybernetikos »

bwanab wrote: post #56
67_45 wrote: post #45

Earlier quoted context omitted.

What is the goal of essentially reducing the amount of money in the economy?

To reduce the heat in what could be an overheated economy. Many economists look at the employment rate as being too low which could signal inflation.

This confuses me a little. Many things seem to be pointing towards inflation - worsening global trade climate, high employment, knowledge that economic difficulty will be met with printing etc. But if the market expects inflation then shouldn't long term rates be higher to offset the expected inflation?

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#273

Post by jokoon »

Isn't scare mongering a common way to prevent risk?

Usually if the future seems bleak, don't traders adjust their behavior and investments to avoid loss?

As long as finance is scared, it seems that a recession cannot happen.

Of course some might get frustrated and find that they are unable to expand their business, and break through barriers, and lobby against regulations.

I wonder how wall Street is behaving since Trump's election, and if risky policy is being put in place, and if wall Street is being cautious.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#274

Post by AnimalMuppet »

panarky wrote: post #227
akhilcacharya wrote: post #155

Earlier quoted context omitted.

>Of course this is going to end terribly. It is basically guaranteed to do so unless the business cycle has stopped for good (unlikely). The question in my mind is who the scapegoat is going to be, and how much denial there's going to be if the real effects of slowing growth start becoming apparent.

> The question in my mind is who the scapegoat is going to be Step 1 - do dumb and harmful things to increase your popularity among ignorant supporters Step 2 - blame the innocent for the inevitable crisis Step 3 - use the crisis you created to justify more dumb and harmful things Step 4 - multiple crises cascade into catastrophe Step 5 - use the catastrophe to justify emergency powers, suspend due process, arrest po…

That assumes that it's deliberately planned, rather than incompetence.

Or, I suppose, it could be incompetence that still knows how to recognize opportunity...

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#275

Post by AnimalMuppet »

amluto wrote: post #263
throwaway5752 wrote: post #105

Earlier quoted context omitted.

What reason do you have for expecting current tariffs to not escalate into broader and more destructive tariffs in this ongoing trade war? Are you basing this on rational choice theory? Because I have some disappointing news for you in that case.

If I were in charge of a country subject to new tariffs, I would consider playing it differently. Rather than applying punitive tariffs back, I would consider trying to get US manufacturers that are affected to the tariffs to move to my country and export finished products to the US. After all, the nonsensical structure of Trump’s tariffs may be more harmful to the US than to anyone else.

The problem with that is timing. Politically, people demand action now - like, this week. Getting a business to move takes months to years.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#276

Post by Retric »

timr wrote: post #178
Retric wrote: post #168

Earlier quoted context omitted.

If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend. Sure, keeping ~3 years income outside of the market if your actually retired is a good idea idea. But,…

"If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend." If you need the money in five years, you should not be putting it in the stock market . If the money…

Cost dollar averaging already does a fairly good job of timing the market via retirement savings. Trying to beat that is a terrible idea, as being out of the market for a few days can easily cost you a year of growth.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#277

Post by AnimalMuppet »

simonsarris wrote: post #73

People often note, like another comment here notes: > since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago This is an interesting line of thinking, but I think it's a mistake. We can use this fact itself and circumscribe some meta-thinking around it. Put the same fact another way, this is arguing that the 1960's started a brand new paradigm that was mater…

Re your third option:

Let's say bonds are yielding 10%. Here's a stock that has a dividend of $1/year. What should the price be? $10 (assuming the company is not growing), because that's the price you would pay to get the same return in bonds. (Note that the bond market is twice as big as the stock market, so it defines the "normal" rate of return.)

Now bonds drop to 2.5% rate of return. Now the same stock is worth $40.

It's not just that the stock market is the only good outlet for extra cash. It's that the low rate of return in other markets raises the price of stocks until the risk-adjusted yield rates match.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#278

Post by codingdave »

Latteland wrote: post #206
codingdave wrote: post #64

Earlier quoted context omitted.

Over the long run, that is always true. Just hold and grow, until you are within 10 years of retiring. Then move to a more conservative position.

Suppose you were planning to retire in 2018, and you sold in 2008 or 2009 after the economy crashed. Bad things would happen. No one knew if or how fast the stock market would come back. Better to sell a little bit over time and move to safer investments. But there are many studies showing no one can time the market.

Agreed - perhaps I phrased it incorrectly, but I meant to say the you start moving investments out of the market 10 years prior to your retirement date, not that you sell everything in one huge move at the 10 year mark.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#279

Post by samsonradu »

simonsarris wrote: post #73

People often note, like another comment here notes: > since 1960 there has been a US economic recession once every 5 to 10 years. The last one ended in 2009, 9 years ago This is an interesting line of thinking, but I think it's a mistake. We can use this fact itself and circumscribe some meta-thinking around it. Put the same fact another way, this is arguing that the 1960's started a brand new paradigm that was mater…

Any of the options you listed above is a possible scenario. I would add, as Thiel says, that the reason recessions happened so often after 1960s was because people's expectation of growth has been more optimistic than the real economy growth. This resulted in over-leveraging and over-buying of entire asset classes which eventually caused a bubble.

Here's a talk I found interesting regarding growth and the future of the economy: https://www.youtube.com/watch?v=KKLDevYyE9I&index=13&t=0s&li...

One relevant part I liked regarding the Madoff scandal:

Obviously, you were like how could these people be so stupid to give this person all this money? Didn't they read the details? ... But one of the reasons it happened, psychologically, was because people thought 8-10% with 0 risk was perfectly normal. That's why nobody asked any questions.

Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention

#280

Post by freehunter »

debt wrote: post #217

I can see it now... Investors will mistake the loud pop caused by the bursting crypto bubble for gunshots. They'll jump for cover, becoming scared of tech, but as they do they'll then mistake another loud sound, this time a kaboom, of the AI hype cycle exploding. With it will go chatbots, self-driving cars and voice-powered assistants. Then there's a rupture and a glow then a mushroom cloud appears on the horizon. Pe…

>bursting crypto bubble

I've been looking for lateral career moves in my industry for a while now, and I'll be damned if every "exciting new company" in information security isn't a blockchain company. And not a single one of them can tell you what they're doing with the blockchain to help with security, they can only tell you how much money they're making.

Post reply on HN