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Do you think we will see a bottom tomorrow? Or could this be the beginning of a bear market?
by RyanShook 9y ago
Do you think we will see a bottom tomorrow? Or could this be the beginning of a bear market?
- deleted 9y ago[deleted]
- eddd 9y agoSince there is no natural business cycle, no one knows what will happen. And If someone says he knows, it is because he sets the interests rates.
- AnimalMuppet 9y agoWhy do you say there is no natural business cycle?
- eddd 9y agoBecause arrogant people think they can steer entire global economy with a single parameter - money supply.
- dragonwriter 9y ago> Because arrogant people think they can steer entire global economy with a single parameter - money supply. Which arrogant people? Usually, central bankers I've heard seem to think that monetary policy is useful for smoothing around the edges, but more than that requires fiscal policy, and that monetary policy can't make up for next neglect of fiscal policy (or unwarranted active fiscal interventions.)
- eddd 9y agoFiscal policy depends mostly on monetary policy I think. The amount of money government can borrow is bound by central banks. But, central bankers don't respond to voters, so basically they can do whatever servers the financial system and it stability. Of course I am joking, they simply have no idea what they are doing, since it is virtually impossible. I grew up in post communism country and I have cold sweat when I hear about price control. And somehow price of the money is centrally managed.
- AnimalMuppet 9y ago> Fiscal policy depends mostly on monetary policy I think. The amount of money government can borrow is bound by central banks. I'm not sure that either of those statements is true. It could be, in some situations in some countries. As a general statement? No, because most government borrowing is not borrowing from the central bank. > And somehow price of the money is centrally managed. Empirically, that has worked out rather well - far better than "centrally managed" would lead you to expect. In particular, it has dramatically cut the number of severe downturns (which used to occur whenever the price of money became too high).
- eddd 9y ago> No, because most government borrowing is not borrowing from the central bank. To be precise, it almost always against the constitution. The problem is, the amount of money the government can borrow is tied to the money supply. If FED raised rates a couple percent, US would bankrupt in a few days after. > Empirically, that has worked out rather well . That's arguable, since we don't know what would happen if we didn't intervene with artificial interest rates.
- torstenvl 9y agoI'm reading your comment to mean that you think federal debt is unconstitutional. Is that your position? If so, do you have any support for that position?
- eddd 9y agohttps://www.investopedia.com/articles/bonds/09/bond-market-interest-rates.asp https://www.investopedia.com/articles/bonds/09/bond-market-i... Sorry to leave you with a link, bed time ;)
- daxorid 9y ago> If FED raised rates a couple percent, US would bankrupt in a few days after. Setting aside the fact that the fed funds rate can only wag the short end of the yield curve, I'd like to point something out. If the coupon on ALL issued Treasury debt suddenly went to 10% overnight, then yes, we would be looking at possible solvency issues. But that's not how it works. The coupon the US pays to creditors is fixed until the maturity date of the bond. The average maturity on issued bonds and bills is 69 months. Meaning that open market yields would need to remain at (2*(10-current average yield))% for nearly six years in order to get to that point.
- AnimalMuppet 9y agoIn addition to what dragonwriter said: Even if arrogant people think that, in what way does that mean that there is no natural business cycle?
- eddd 9y agoI could try answering to that in detail, but others (smarter than me) did that already. https://link.springer.com/article/10.1007/BF00843932 https://link.springer.com/article/10.1007/BF00843932
- AnimalMuppet 9y agoAs much as I could read of that without a login sure didn't say that there was no business cycle. And, for that matter, observation of the last century or two certainly leads on to think that there is a business cycle. Maybe, instead of a login-required paper, you could just state a position, and state what evidence you think makes that position reasonable?
- eddd 9y agoI don't deny, there is no business cycle. My point is, that a handful of people decide when the cycle should have it peeks and bottoms. To me it is like: "We don't like winter, so let's warm up the entire planet. And if there is a problem we can always cool it down a bit". There are 7 billions participants in the global economy and somehow FED pretends it has this magic ball that predicts what will happen in upcoming months. And even if it had, they have no proper tools to react on it properly.
- AnimalMuppet 9y agoSo there's a business cycle, but it's not "natural". Or at least the one we have now is not natural. I can agree with that, actually. The difference is, I think that what we have now is an improvement on the natural business cycle. That thing was vicious.
- deleted 9y ago
- daxorid 9y agoBuying at a Shiller P/E of 31.2 after nine years of risk asset appreciation in an environment of rising yields requires the firm conviction that the business cycle has suddenly been abolished.
- vasilipupkin 9y agoNo, it requires belief that 3% real return implied by Shiller PE of 31 is going to be hard to beat by investing in any other asset class.
- pcurve 9y agoIt may bounce tomorrow, but over the next few 12 month, it will be a rough grind down to 18,000. Good lord, what is it with HN downvoting. It's my opinion. I'm putting money where my mouth is based on my equity:cash position. https://finance.yahoo.com/quote/%5EDJI?p=%5EDJI https://finance.yahoo.com/quote/%5EDJI?p=%5EDJI It's easy to fall into the trap of short-term view. Go to the above chart and click 1 day, 5 day, month, YTD, 1 year, 5 year, Max in sequence. Lesson learned for me is, don't bet against the market, but when cycle turns, it can take months or years to play out.
- AnimalMuppet 9y agoWhy 18,000? Why 12 months?
- luckydude 9y agoThe double bounce that the stock market has just done, a high run up, then a dip, then a bounce up, then it goes down, is classic and it signals a bigger drop. I'm not a pro, that's what my guy at Morgan Stanley says. So I think pcurve may be right. I'm about 75% in cash right now. Click on the 6 month view to see the double bounce. WTF HN? A downvote for passing on information?
- luckydude 9y agohttp://www.mcvoy.com/lm/boom-bust.jpg http://www.mcvoy.com/lm/boom-bust.jpg Not sure we are there yet, nobody knows for sure because if they knew they'd own the market. But that was what I was talking about.
- soared 9y ago> Both are headed toward their average price for the past 200 days, a level that technical analysts say may act as a magnet and a floor.