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Yield Curves Invert in U.S., U.K

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Re: Yield Curves Invert in U.S., U.K

#341

Post by ethbro »

cestith wrote: post #198
adventured wrote: post #133

Earlier quoted context omitted.

> The Fed does not have the tools at its disposal that it did in 2008, they have been exhausted. That hasn't been exhausted even in the slightest. The Fed has the exact same tool at its disposal as it did in 2008: it controls the global reserve currency and can run an annual trillion dollar QE program for years as necessary, forcing the rest of the world to partially foot the bill of that QE program to the benefit of…

Oil prices are lower and the euro is looking good as a second reserve currency.

That's a big chunk of pie to remove without some turmoil.

If Brexit were behind us, no doubt. But that's a lot of uncertainty tainting the euro.

https://upload.wikimedia.org/wikipedia/commons/thumb/5/5f/20...

Re: Yield Curves Invert in U.S., U.K

#342

Post by bradstewart »

cr0sh wrote: post #311
roymurdock wrote: post #227

Earlier quoted context omitted.

We don't live in medieval times. Trump is not a good human being, I don't like him one bit, but he's sane (I would go as far as to call him cunning) and democratically elected. Comparing him to insane kings from the 18th century just gets people to chuckle and move on, sweeping deeper critical thought under the rug. To call him stupid or mad ends any line of further inquiry into why he does the things he does, and th…

> democratically elected. If this were true, he wouldn't be POTUS. At best, you could say he was "elected according to the rules, procedures and processes of our democratic republic form of government, as defined by our Constitution". That would be a fairly true statement. It would also probably be a true statement to say that our Electoral College failed us in their primary purpose, which should be to assure that th…

> At best, you could say he was "elected according to the rules, procedures and processes of our democratic republic form of government, as defined by our Constitution".

What, exactly, should "democratically elected" mean if not that exact sentence?

Re: Yield Curves Invert in U.S., U.K

#343

Post by tunesmith »

refurb wrote: post #319
mwfunk wrote: post #262

Earlier quoted context omitted.

WRT making billions of dollars, clearly he didn't. WRT getting elected, he got 3mil fewer votes than his opponent, so you can thank the dysfunction of the EC. WRT to the votes he did get, it's pretty obvious- people dumber than he is, who are apparently blind to seeing his completely obvious con artist act and voting for him, that's how. By completely obvious I mean, the-sky-is-blue, 1+1=2 obvious. That's how obvious…

You might want to consider the idea that people who disagree with you politically might in fact not be dumb, but just have views that differ from yours. Just a thought.

Philosophical question - why is that important to know? What added value is discovered by realizing your opponent's conclusion is not based off of bad facts or faulty reasoning, but different values?

Re: Yield Curves Invert in U.S., U.K

#344

Post by ethbro »

bduerst wrote: post #330
ethbro wrote: post #316

Earlier quoted context omitted.

How's that different than being repeatedly bailed out with VC money?

Nepotism vs. Meritocracy (or at least a rationalized investment)

The VC game seems a bit more... suspect than to clearly label it as a meritocracy. Particularly for serially bankrupt founders.

Re: Yield Curves Invert in U.S., U.K

#345

Post by Retric »

refurb wrote: post #280
Retric wrote: post #39

Earlier quoted context omitted.

Depends on what you mean by timing the market. Several strategies like keeping a fixed ratio of stocks to bond are effectively timing the market. You pull money out of stocks when they go up, and put money into them when they go down. Personally, I am less interested in absolutely maximizing my returns as I am maximizing the likelihood of reaching a return threshold.

A fixed ratio like rebalancing? That’s not really timing the market as you typically rebalance after a set period regardless of how the market has moved.

But you still money money the opposite of how the market moved.

Rebalancing is really taking money out of whatever the better investment was and putting it into what was the worse investment. Consider what would happen if you rebalance an asset like a stock that’s slowly going to 0. Over time your portfolio also hits ~zero even if everything else was going well.

Sure, for a sufficiently diversified investment like the S&P 500 it’s unlikely to hit zero. But the question stands why take money out of the better investment for 50+ years? You could be moving from 10% returns to 2% returns. The theory is about timing the market, you get better returns investing after ups than downs.

PS: Though better may in fact relate to stability more than absolute percentages.

Re: Yield Curves Invert in U.S., U.K

#346

Post by refurb »

8ytecoder wrote: post #276
strenholme wrote: post #221

I remember the dot-com crash of 2001 and seeing companies close so fast, they didn’t their employees a final paychecks; I remember one day, after the dot-com collapse a position I was qualified for got filled within three hours. As someone who has seen this before, things are looking ominous: The stock market drop of late 2018 reminded me of the stock market drop we had in 2000, about a year before everything fell ap…

First of all predicting a crash is a fool’s errand. It as much about emotions as it is about fundamentals. There’s a perfectly valid explanation for the valuation of Startups and the availability of capital for startups in the last 9 or so years. After 2008 crash, markets were stagnant until 2012. At the same time capital was being eased by govts worldwide. This capital has to flow somewhere. Tech startups were ripe…

This is an insightful comment.

The reason why tech has done so well in the past 10 years is partially due to luck. While investment dollars continued to pile up post-2008, tech was one industry who had recently shown really impressive returns. As such, that's where the dollars flowed.

My concern is what happens when a few of those unicorns fail (e.g. Uber)? If sentiment shifts enough, you might see tech suddenly become the ugly duckling. Companies that in reality are doing reasonably well will be painted with the same brush.

When people start to see Uber failing and other unicorns struggling, it just become a self-fulfilling prophecy - "I knew a recession was coming". People get risk adverse, company's stop hiring and it spreads to the economy as a whole.

Re: Yield Curves Invert in U.S., U.K

#347

Post by chronotis »

asdf21 wrote: post #236
chronotis wrote: post #233

Earlier quoted context omitted.

I'm not sure whether to feel vindicated to see someone else echoing my own internal thoughts, or to feel nauseous about reliving those years. I was fortunate enough to have been at a company that was making money, but I still remember growing from 500 employees to 4000 or so in 2 years...and then dropping back down to 1500 two years later. We bought a small software company for the talent, and 3 months later was told…

500 employees to 1,500 in 4 years is still extremely solid growth. Markets have corrections, if your company is providing something of value I'm sure things will be okay.

I wasn't exhaustive in my storytelling. Most of that growth came from M&A activity. Financial engineering.

Re: Yield Curves Invert in U.S., U.K

#348

Post by prewett »

datpuz wrote: post #141

I asked this in a similar thread a couple of weeks ago, but I feel like the sentiment is a lot more pessimistic today than it was then. Anyway, I've been holding way too much cash for the last two years in anticipation of a recession. Everyone was telling me that trying to time the market is a bad idea and that I should just invest and forget about it, but given the current signals, might it be a good idea for me to…

Timing the marking is a bad idea, but getting good value for your money is a good idea, and has some element of timing. Don't try to figure out when prices are low, figure out when value is high. For instance, relatively low P/E, high dividend yield, high ROI, high ROE, etc. If you're looking to invest in an index fund, check out the S&P 500 historical P/E: https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...

There's no shame in holding cash when value is low. People like Buffett are known for doing it. There are no called strikes in investing, so don't swing at mediocre pitches. But when value is high, you'd better swing for the fences, because that doesn't happen all that often.

Re: Yield Curves Invert in U.S., U.K

#349

Post by andy_ppp »

ttul wrote: post #246
strenholme wrote: post #221

I remember the dot-com crash of 2001 and seeing companies close so fast, they didn’t their employees a final paychecks; I remember one day, after the dot-com collapse a position I was qualified for got filled within three hours. As someone who has seen this before, things are looking ominous: The stock market drop of late 2018 reminded me of the stock market drop we had in 2000, about a year before everything fell ap…

"Tech" is another way of saying "risk" in the eyes of investors. When the yield curve inverts, it means investors - as a herd - are turning away from risk in the short term. Tech being a manifestation of risk is going to take a short term hit in the form of more difficult capital raising. It's probably too early to roll this out, but for those who didn't live through 2008, I present Sequoia Capital's "RIP Good Times"…

For me that Deck basically says what I think will happen now and what happened in 2008. Some people will lose money, governments will panic, people with normal jobs will have a harder and harder time and people in IT will get richer as if there is no recession even happening.

It will also push automation to happen much faster meaning an even bigger underclass of people.

And finally you will still be able to raise shedloads of money (if your business is good) but it will cost you more of your business. Poor you.

Re: Yield Curves Invert in U.S., U.K

#350

Post by strenholme »

hyperpape wrote: post #291
ummonk wrote: post #248

Earlier quoted context omitted.

I think the difference this time around is that the largest tech companies (Apple, Google, Facebook, Microsoft, to a lesser extent Amazon) are generating healthy profits. So while there is likely an issue with a lot of the unprofitable unicorns, the industry as a whole won't collapse.

If anyone has done a comparison of the size of profitless companies in the (tech) market, today and before the dot-com crash, that would be incredibly valuable. My gut feeling is that they constituted a larger portion of the market back then, but I've never seen a direct comparison.

Not enough time to do a real comparison, but Uber feels a lot bigger than all of the mid-sized startups which dominated the dot-com landscape. They are a lot bigger than Webvan was (22,000 vs. 3,500 employees) not to mention Netscape (2,500 employees at its peak); Webvan and Netscape were the most famous big dot-com flops.
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