4 ms·

Perhaps then your definition of 'expert' is incorrect? Would it not be that the ones who saw it coming were really the experts? And those who laughed at them

Perhaps then your definition of 'expert' is incorrect? Would it not be that the ones who saw it coming were really the experts? And those who laughed at them were anything but? I would argue that those who laughed at the doomsayers of 2000 & 2008 are the same as those now arguing that BitCoin can only go up. Your reply is a rather odd justification for self-destructive financial behavior.

bryananderson 9y ago
The difficulty lies not in predicting a crash successfully, but in being able to do so consistently. At any given time, there is someone who is saying that it’s all about to fall apart. There might even be someone who gets the timing and the reasons right. The hard part is doing so consistently, and there’s little evidence that anyone can do this, which indicates that luck is the primary factor in various famous “crystal ball” economic predictions.
ceejayoz 9y ago
> Would it not be that the ones who saw it coming were really the experts? Maybe, maybe not. Without a track record of doing it a whole bunch of times, it's far more likely they made a lucky guess, stumbled into information, etc. Some are even right but don't get the timing correct. For example, this guy wound up losing everything and owing $106k on a margin call... but if you look at the stock value today he was absolutely correct in shorting it. https://www.marketwatch.com/story/help-my-short-position-got-crushed-and-now-i-owe-e-trade-10644556-2015-11-19 https://www.marketwatch.com/story/help-my-short-position-got...
ncallaway 9y ago
> Would it not be that the ones who saw it coming were really the experts? No, because there are people that predict fiscal doom all the time. * People predicted that 2016 would have a huge crash. * People predicted that 2017 would have a huge crash. * People predicted that 2018 would have a huge crash. * People will predict that 2019 would have a huge crash. * People will predict that 2020 would have a huge crash. If there's a huge crash in 2019, are you sure the people that predicted the 2019 crash are geniuses? Perhaps some of them were simply lucky. You have to be super careful if you are going to go by a small sample of past predictions, because there are a lot of people that make a lot of predictions. Statistically, some of them will make predictions that are correct by random chance.
- soundwave106 9y ago
  It is impossible for people to predict the future perfectly (this is why diversification in investment is so important). "Don't try to time the market" is also generally considered good advise. It's impossible to know exactly when a crash occurs. That said, it is possible to use market indicators, historical factors, and other numeric qualifications for reasons to be wary, because the investment asset looks too expensive. For instance, up to the 2008 crash, two important indicators -- the price to income ratio, and the price to rent ratio, were very high, indicating real estate was significantly overvalued. The same thing applied to the sky high prices of many .com stocks in 2000, who really didn't have any profit or even cash flow behind it to back the valuation up. There were plenty of experts raising warning flags on these bubbles. Even from a broader perspective, The Economist was wary of Internet stocks in 1999 (https://www.economist.com/node/183809 https://www.economist.com/node/183809) and was wary of the housing bubble that caused the 2008 crash in 2005 (http://www.economist.com/node/4079027 http://www.economist.com/node/4079027). (Of course, The Economist in 1999 used Amazon as the example of an overvalued stock. Whoops. Shows that you "never know". But they wouldn't have been wrong if they had used, say, pets.com.)

bryananderson 9y ago

The difficulty lies not in predicting a crash successfully, but in being able to do so consistently. At any given time, there is someone who is saying that it’s all about to fall apart. There might even be someone who gets the timing and the reasons right. The hard part is doing so consistently, and there’s little evidence that anyone can do this, which indicates that luck is the primary factor in various famous “crystal ball” economic predictions.

ceejayoz 9y ago

> Would it not be that the ones who saw it coming were really the experts? Maybe, maybe not. Without a track record of doing it a whole bunch of times, it's far more likely they made a lucky guess, stumbled into information, etc. Some are even right but don't get the timing correct. For example, this guy wound up losing everything and owing $106k on a margin call... but if you look at the stock value today he was absolutely correct in shorting it. https://www.marketwatch.com/story/help-my-short-position-got-crushed-and-now-i-owe-e-trade-10644556-2015-11-19 https://www.marketwatch.com/story/help-my-short-position-got...

ncallaway 9y ago

> Would it not be that the ones who saw it coming were really the experts? No, because there are people that predict fiscal doom all the time. * People predicted that 2016 would have a huge crash. * People predicted that 2017 would have a huge crash. * People predicted that 2018 would have a huge crash. * People will predict that 2019 would have a huge crash. * People will predict that 2020 would have a huge crash. If there's a huge crash in 2019, are you sure the people that predicted the 2019 crash are geniuses? Perhaps some of them were simply lucky. You have to be super careful if you are going to go by a small sample of past predictions, because there are a lot of people that make a lot of predictions. Statistically, some of them will make predictions that are correct by random chance.

soundwave106 9y ago
It is impossible for people to predict the future perfectly (this is why diversification in investment is so important). "Don't try to time the market" is also generally considered good advise. It's impossible to know exactly when a crash occurs. That said, it is possible to use market indicators, historical factors, and other numeric qualifications for reasons to be wary, because the investment asset looks too expensive. For instance, up to the 2008 crash, two important indicators -- the price to income ratio, and the price to rent ratio, were very high, indicating real estate was significantly overvalued. The same thing applied to the sky high prices of many .com stocks in 2000, who really didn't have any profit or even cash flow behind it to back the valuation up. There were plenty of experts raising warning flags on these bubbles. Even from a broader perspective, The Economist was wary of Internet stocks in 1999 (https://www.economist.com/node/183809 https://www.economist.com/node/183809) and was wary of the housing bubble that caused the 2008 crash in 2005 (http://www.economist.com/node/4079027 http://www.economist.com/node/4079027). (Of course, The Economist in 1999 used Amazon as the example of an overvalued stock. Whoops. Shows that you "never know". But they wouldn't have been wrong if they had used, say, pets.com.)