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

Post by tsimionescu » Sun, May 08, 2022, 9:50 PM UTC

bushbaba wrote: post #74

tsimionescu wrote: post #58

Earlier quoted context omitted.

Given that global warming will cause the global economy to contract one way or another within the next 100 years (either we willingly contract to soften the blow, or keep going and producing more greenhouse gases until a massive crash), I really don't think this is the right time to think in these terms.

Wouldn’t global warming increase asset price in many areas. Food will be more expensive. Housing more expensive. Green Energy is more expensive. Just look at Germany and California electrical rates. I don’t see how it’ll reduce prices

Post by 650 » Sun, May 08, 2022, 11:26 PM UTC

Tiktaalik wrote: post #338

benjaminwootton wrote: post #154

Earlier quoted context omitted.

There is still considerable debate if those measures were actually effective. Did closing down entire industries, closing borders, making 20 year olds WFH etc really move the needle on Covid deaths in retrospect? And even if it did, was it ethical, fair and is it a reasonable price to damage the economy and life prospects of hundreds of millions of young people who weren’t at statistical risk? Its important because i…

The measures were certainly very effective under the metric of limiting deaths. British Columbia and New Zealand have about the same population, both are rich jurisdictions. BC was relatively open (compared to other Canadian provinces) while NZ was more locked down. BC has dramatically more deaths than NZ. And then if you compare BC, which was more locked down than various US states, BC had less deaths than them. It…

Post by fny » Sun, May 08, 2022, 11:42 PM UTC

tedunangst wrote: post #84

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…

Every even modestly exponential curve has the same shape. https://www.wolframalpha.com/input?i=y+%3D+1.05%5Ex+from+1+t...

Post by refurb » Mon, May 09, 2022, 1:21 AM UTC

john_moscow wrote: post #67

refurb wrote: post #33

Earlier quoted context omitted.

Your strategy sounds like "pick winning stocks"? A strategy which has been show to produce (on average) worse returns than index investing. Index investing has produced a ~200% return in the past 15 years (from 2007 peak to now). Not sure what you mean by "a chance of seeing a profit in your lifetime".

There's a third strategy of "index minus bullshit stocks" where you would include both INTC and AMD stocks for risk hedging, but would leave out things with questionable sustainability like Uber and Netflix that otherwise made it into the index due to the speculative value.

Post by abhayhegde » Mon, May 09, 2022, 1:48 AM UTC

rossdavidh wrote: post #320

lucidlive wrote: post #308

It feels like the vast majority of the comments are negative towards the stock market and essentially saying “we may not recover this time”. The thing is, we always think that. We always think this time is different. We always think this might be the end. When Covid struck? It was different because the world economy was shut. When 2008 happened? It was different. 2000? Different. 1987? Different. Markets will eventua…

I feel like this comment is well addressed in the article, where it shows how long it would take to get back to even from various dip-buying scenarios. Some of the timelines are far longer than most people would be able to cope with.