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How This Ends

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Re: How This Ends

#381

Post by karpierz »

nostrademons wrote: post #338
politician wrote: post #311

Earlier quoted context omitted.

Defense economics will prevent this transition to city-states from happening.

I would've agreed with you until about 5 years ago. The reason I disagree with you now is because technology and methods of war-fighting have changed. Emerging defense technologies like drones, lasers, robots, micro-scale manufacturing, and self-driving vehicles - along with the latest generation of existing weaponry like MANPADS and anti-tank missiles - all preference the defender. They allow a group of relatively u…

> Emerging defense technologies like drones, lasers, robots, micro-scale manufacturing, and self-driving vehicles - along with the latest generation of existing weaponry like MANPADS and anti-tank missiles - all preference the defender.

> They allow a group of relatively untrained and loosely organized defenders who know the terrain well to deploy extremely effective resistance against an attacker, as long as it's at short range. A drone swarm can quite literally destroy all hostile forces within an area without risking a single person, but it can't do this beyond say 100 miles out.

We already have this "drone swarm", we just call it a guided missile.

The hard part in fighting a modern army isn't killing them, it's finding them. The defender is inherently at a disadvantage in this regard because they have things to defend, which necessitate that they're position in the vicinity. Russia is struggling at the moment not because defenders are inherently advantaged but because they're relying on conscripts and relatively untrained soldiers.

> The musket allowed relatively untrained militias to enjoy superior firepower over the knights and longbowmen that had trained professionally their whole lives. As a result, smaller city-states and colonies could defend themselves against the large standing armies that kings and emperors could wield, and so the feudal system collapsed.

The exact opposite of what you're describing happened with the wide utilization of gunpowder. Pre-gunpowder, city-states and small kingdoms enjoyed relative independence due to the sheer expense of penetrating walls. Post-gunpowder, artillery (not rifles) required a whole professional organization to be utilized effectively, and formed the backbone of the army, so small states could no longer field or effectively defend against larger states, leading to increased centralization of authority, well before the creation of nation-states. "Makers of Modern Strategy from Machiavelli to the Nuclear Age" covers this transition pretty extensively.

Re: How This Ends

#382

Post by largbae »

wkyle wrote: post #244
largbae wrote: post #151

Earlier quoted context omitted.

Buy an index fund and when the market is down try and buy more. If you do wish to do something to actively manage things, try giving Nassim Taleb books a read, or just read about his or Mark Spitznagel's investment strategy. They also keep 97% of their money in an index fund, but the other 3% are slowly wasted away buying far out-of-the-money PUT options on boring stocks that are very cheap to buy because they'll "ne…

To give a brief counter to the Taleb/Spitznagel Empirica Kurtosis strategy, the pricing of deep out of the money options is systematically overvalued in relation to the Black-Scholes model, suggesting that the market correctly prices in fat tails. The volatility smile pattern describes the 'overvalued' nature of these options, and the SKEW index tracks their pricing. https://en.wikipedia.org/wiki/Volatility_smile htt…

I wonder if this adjustment is enough... Spitznagel's fund did return 4,144% in Q1 2020. Maybe they found some other similar hole, but one seems to still exist.

https://finance.yahoo.com/news/mark-spitznagel-univesa-cio-o...

Re: How This Ends

#383

Post by eropple »

xienze wrote: post #371
electrondood wrote: post #326

Earlier quoted context omitted.

Seriously? You think things are going to get so bad the government seizes real estate en masse? That's not going to fly in the U.S. for one second.

When the AOC wing of the left starts gaining real power in the coming decades, you bet.

This is absolute nonsense. Ocasio-Cortez is not far off of a bog-standard social democrat and she would be at best boring almost anywhere else in the industrialized West. (Maybe not "making majority policy", but not controversial.)

Re: How This Ends

#384

Post by jacquesm »

natly wrote: post #71

Getting really annoying to have to keep track of macro events affecting my life year after year instead of just being able to live a normal peaceful life.

Historically speaking that's the norm. The last 70 years are an anomaly.

Re: How This Ends

#385

Post by abirch »

jbay808 wrote: post #304
abirch wrote: post #272

Earlier quoted context omitted.

Are their countries with negative nominal rates without asset bubbles? Have their been high interest rate countries with asset bubbles? E.g., dutch 1600s interest rates or 16% during Tulipmania.

> Are their countries with negative nominal rates without asset bubbles? That's very hard to know, but to be clear it's negative real rates that drive the bubbles. There's much more incentive to speculate when cash is a hot potato. For example Japan is much less bubbly these days than in the 1980s, even though nominal interest rates are lower now. > Have their been high interest rate countries with asset bubbles? E.g…

> That's very hard to know, but to be clear it's negative real rates that drive the bubbles.

Real rates are usually negative. Real interest rates defined as the Nominal Rate - Inflation. Japan has a negative nominal rate right now.

Re: How This Ends

#386

Post by plonk »

vintagedave wrote: post #171
fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

So for non-finance-experts, what should we be doing with our money? Investing in what? Keeping in the bank? It sounds from your comment like there is _nothing_ that won't be devalued, even gold. Is real estate worthwhile? (Note: I am in the EU not US.)

Sounds like the right time to buy stocks? Assets likely won't stay dead for the next forty years.

Re: How This Ends

#387

Post by anm89 »

This isn't a particularly insightful call to make in May 2022, we're already deep into this process.

A year ago or even 6 months ago I would have said this was pretty insightful if you had called it while everything was still moving up

Re: How This Ends

#388

Post by jbay808 »

jeffbee wrote: post #140
herf wrote: post #28

I agree we are working through an asset bubble in tech and housing - P/E's went quite a ways above the historical line, as did housing prices. But think about the chip shortage (automotive, consumer electronics) - raising interest rates does not "fix" supply and make prices lower. Think about oil & gas markets. Think about labor shortages. When supply is broken, it's not only a monetary policy problem. Most of these…

Housing is not a bubble, at least not in the U.S.A. The prices are supported by a fundamental shortage of the product. It is not driven by speculation but demographic pressure.

A bubble can still form on the back of strong fundamental growth trends. To the extent that people have convinced themselves that housing can't be a bubble because demographics are in its favour, they may also be willing to buy in at any price, and thereby make a bubble.

Re: How This Ends

#389

Post by 88913527 »

rsanek wrote: post #349
ChrisMarshallNY wrote: post #83

> I would be planning to ride this thing out for at least eighteen months or more. I'm betting more like three to five years. I was talking to a friend (another old guy, like me, but really rich, unlike me). We've both been through at least two recessions (big, nasty ones, with teeth and claws). We realized that there's an entire generation of folks; many running companies, that have never seen a real bear market. It…

>there's an entire generation of folks; many running companies, that have never seen a real bear market If anything, this is a problem that is much less bad than it was in previous down markets. "7% of CEOs were younger than 50 years old at the end of 2018, compared with about 16% at the end of 2009." [0] "Data on S&P 500 companies measured over the last two decades by executive recruiter Spencer Stuart shows a small…

S&P 500 CEO's. That's a very select subset of CEOs. Many large companies aren't public today and this leaves out CEOs of small-to-mid sized businesses.

Re: How This Ends

#390

Post by ineedasername »

jeffbee wrote: post #136
ChrisMarshallNY wrote: post #83

> I would be planning to ride this thing out for at least eighteen months or more. I'm betting more like three to five years. I was talking to a friend (another old guy, like me, but really rich, unlike me). We've both been through at least two recessions (big, nasty ones, with teeth and claws). We realized that there's an entire generation of folks; many running companies, that have never seen a real bear market. It…

How could there be a whole generation of CEOs who never saw a recession? Are there 13-year-old CEOs?

Graduate college in mid 2008 and will mostly look like the economy has only even gone up for your entire 14 year career. If you were smart though you'd at least be familiar with the concept of cyclical downturns and maybe plan for it, though lots of people have a hard time tightening their belt when times are good.
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