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

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

#401

Post by galaxyLogic »

kmonsen wrote: post #397
galaxyLogic wrote: post #185

Earlier quoted context omitted.

Tax-cuts to the rich meant they had more money to invest in stock-market. And the tax-cuts to the corporations meant they made more profits which made them a more attractive target for stock-investors. Both effects meant the stock-market went higher and higher. And so here we are stock market doesn't seem to be going up because there are no new tax-cuts to the rich. There is inflation which is bad for the poor people…

I think, even without hindsight, that I could have done a better job for the economy than the previous president. Biden? Probably not, he has not done much yet. He also does not have large enough majorities to do anything as any tax increases will probably be blocked by the more conservative members of his party.

You could have done (a better job). But that is uncertain, and untestable. Nobody can prove you are wrong when you say so. But not a lot of people will believe you either. Or they say yeah maybe. As to the previous president, I believe you. :-)

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

#402

Post by galaxyLogic »

matwood wrote: post #291
throwaway898989 wrote: post #205

Earlier quoted context omitted.

if you have a large enough sum of money (i.e., $50m USD ) you can stay invested all the time and withdraw a small sum of money each year like $300k With $50m if your portfolio averages 4% a year you would be clearing $2m then pulling out $300k for 1.7 gain. You only pay tax on the income withdrawn

The real baller move for someone worth 50M+ with rates as low as they have been, is take out loans against the 50M to live off of. Pay back the loans with rates less than the annualized market returns. Also limits/pushes out cap gain taxes.

Right, take out a mortgage. That is tax deductible

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

#403

Post by cyanydeez »

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…

You assume that "parabolic" is some how a natural signal as opposed to an artificial effect that "indexing" has changed from 1920 to today.

There's absolutely nothing significant between 1 year and 1 index point.

They arnt connected. Full stop. The shape of a 1 year over 1 index point is arbitrary.

As such, it's shape is meaningless at arbitrary time ranges.

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

#404

Post by pishpash »

adam_arthur wrote: post #104

If interest rates continue to increase, the market is in for a very rough time. COST is about 40 PE right now which implies 2.5% trailing yield. You can get 3.1% on a 10y treasury risk free right now. Of course equities have growth potential, but also risk, typically the spread between risk free rate and equity yields is much higher. Plenty of 30-40 PE companies at index level with close to 0 growth. Companies like N…

On the other hand, real yield is barely 0% and both nominal and real yield curves are still positive and in fact steepening. E/P should be compared to the real yield.

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

#405

Post by herdrick »

mwattsun wrote: post #25

I lived through the dot-com crash and got out safely after hearing something so ludicrous that I had to ask myself "How insane does this industry have to be for someone to think they can build a high growth internet company out of home cement delivery?" My memory may be playing tricks, but it was something like that. After 2008 I became interested with crashes throughout history. There are so many fascinating little…

  - Cement is extremely perishable. 
  - Contruction projects need cement at very precise times.
  - When that precise time will occur is hard to predict -- construction projects have a lot of delays. 
  - In a city there are a lot of construction projects at any given time.
So using software to coordinate cement mixing and delivery has a lot of potential to reduce waste -- or that is, it did back in the dot-com boom when CEMEX started working on that. If you heard about that back then, you were hearing about something with a lot of promise! From what I remember it worked out really well.

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

#406

Post by tonymet »

300bps wrote: post #13
kmonsen wrote: post #11

Earlier quoted context omitted.

I honestly think that’s not the main reason we have inflation now. Since every country in the world is seeing similar inflation I would think it’s supply side and not something any central bank can fight. I’ve always been Keynesian, but it faces the same problem as everything else, you need to be able to predict the future to do it well.

Fed balance sheet is about $9 trillion. This article gives details on $5 trillion in government stimulus. https://www.nytimes.com/interactive/2022/03/11/us/how-covid-... To put those numbers in perspective, the market cap of the entire S&P 500 is about $40 trillion. I hear what you’re saying about supply-side inflation but you don’t think flooding the economy with so much unearned money might be driving up demand a b…

leverage

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

#407

Post by pl-94 »

pfortuny wrote: post #220
ArnoVW wrote: post #189

Earlier quoted context omitted.

Unless we find a way to 'produce' (the P in GDP) without increasing entropy by digging up stuff (oil, metals, whatever) and then releasing them into our ecosystem once we're done with them, those limits seem to be pretty close though. That's not just me thinking that. That's the Club of Rome, in the 70's. https://en.wikipedia.org/wiki/The_Limits_to_Growth Their conclusion at the time: "the most probable result will b…

As long as the Sun shines on (and this is essenty “for ever”), there is an increasing accumulation of energy in the planet: that is where the possibility of exponential “growth” comes.

Your point is invalid because it would require an exponential growth of the sun power (the derivative of an exponential is an exponential). While the sun power is exponential around a billion years, it is a constant over a year. So you would reach at most a linear GDP growth.

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

#408

Post by pl-94 »

adastra22 wrote: post #188
grey-area wrote: post #176

Earlier quoted context omitted.

GDP rising exponentially is also clearly unsustainable. We have IMO reached a paradigm shift in central bank policy after decades of low rates and low inflation. The recent past is not a good guide to the near future in markets.

The entirety of human history since prehistoric times to the present gives evidence contrary to your claim. Human societies have experienced exponential growth since forever, with only occasional brief temporary setbacks. Even the Black Death is a blip on the exponential curve of economic progress.

That's not correct. At a scale of a century, economic growth has been a zero sum game https://ourworldindata.org/economic-growth. Only recent abundance in cheap energy sources has allowed a HUGE economic boost.
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