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Stock Markets Tumble Amid Worries Over Tech Firms and Trade Tensions

276 points by aaronbrethorst 9y ago

chollida1 9y ago
It is starting to get ugly. - Fed is raising rates to slow down the economy/inflation - Tech, which did alot of the leading of the market, is finally having to account for alot of its negative externalities. - The US is picking a fight with China and Europe over trade access, though I think the US has a point on this fight. - Market is just over bought by several common factors - Too much institutional money is chasing too few ideas so that these trades are all levered up, the risk here is that the first person to be forced to unwind could cause alot of additional unwinding as the selling off feedback loop plays out. And sadly this could have been bitcoin's time to shine and show that its a gold replacement by performing well when the market goes to shit, but bitcoin is going through an ever larger correction at the moment. Hand's up, who thought back in December that we'd see a 6 handle on bitcoin by April:( Good time for HFT firms though, volatility is back.
- deleted 9y ago
  [deleted]
- ihsw2 9y ago
  There is an open possibility that cash will flood into BTC/ETH as a store of value in a highly volatile S&P market, replacing traditional reservoirs (eg: Japanese/other international equities, precious metals, etc).
  - dragontamer 9y ago
    > highly volatile S&P market Erm, S&P's implied volatility is 23.62% / 30-days. Bitcoin's volatility is over 100% / 30-days. https://www.bitmex.com/app/index/.BVOL https://www.bitmex.com/app/index/.BVOL Implied volatility and historical volatility are different, but they're at least "the same units". So please tolerate this apples-to-oranges comparison. Still, its clear that BTC is way more volatile than the S&P500, even today. In times of crisis, people move their money from high-volatility to low-volatility sources. IE: Stocks to Bonds. In times of growth, people move from low-volatility to riskier (but higher potential of gains), ie: Bonds to Stocks.
  - ng12 9y ago
    I doubt it. Buying gold is irrational in most situations. People do it because it "feels" safe and I'd argue BTC definitely does not.
    - AnimalMuppet 9y ago
      I disagree. I think gold functions, essentially, as a short on paper currencies.
      - ng12 9y ago
        I didn't say you can't make money buying gold, just that gold is driven by irrational fear.
        AnimalMuppet 9y ago
        And I still disagree. Deciding you want a way to short paper currencies can, at times, be very rational. Does gold fulfill that function reasonably well? Yes, I think history shows that it does. So it can be very rational to buy gold. (Perhaps "short" was the wrong word. But it is where people go - with reason - when they're losing confidence in fiat currencies.)
    - hyperbovine 9y ago
      Exactly. There is a reason that the BTC icon is ... a gold coin.
  - bmpafa 9y ago
    Why BTC / ETH and not, say, bonds? I would think BTC / ETH would be anathema to someone fleeing volatility, no matter how bad the S&P got, but I am only a casual watcher of any market.
  - hw 9y ago
    Crypto is far from being a good store of value. I'd argue it's even more volatile than the legacy markets right now. If anything, there'd be a spillover where traders and investors derisk entirely and go into fiat or the traditional store of value which is gold.
  - sbinthree 9y ago
    No, this won't happen, fear makes people go back to old stores of value / dig in to their current ways, as opposed to seeking out new ways (usually). The circumstances that lead people to seek out new ways tend to be an absence of fear and a desire for better functionality as opposed to fear. Cryptos are much more likely than conventional securities to go to near-zero, and fearful people know that.
  - tedsanders 9y ago
    Your comment contains a financial fallacy. Cash cannot flood "into" assets. For every buyer of an asset there is always a seller of that asset. The same number of dollars will be held regardless of the price of cryptocurrencies.
    - djrogers 9y ago
      No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. If cash cannot flood 'into' an asset, then the assets value would never grow.
      - dragonwriter 9y ago
        > No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. There are no dollars in BTC, period. Dollars and BTC may both move, and in certain exchanges one may be traded for the other, but the dollars are never in BTC. (Your net worth, which you may choose to measure in dollars, may be tied up in BTC, but no actual dollars are.)
      - tedsanders 9y ago
        No worries, this is actually a pretty subtle concept because it's an instance where the properties of the aggregate are different than the properties of the individual. An individual can put cash into an asset. You can start with $1, then exchange it for BTC, and now you have $0. The amount of dollars in your accounts has gone down and the amount of BTC in your accounts has gone up. But in aggregate, this is impossible. There is a (mostly[1]) fixed supply of dollars in the world. And there is a (mostly) fixed supply of BTC in the world. When you buy BTC for $1, the $1 just moves from your account to someone else's account. Their BTC moves from their account to your account. In aggregate the amount of dollars is the same before the transaction and after. The amount of BTC is the same before the transaction and after. The reason for this is that for every buyer, there is always a seller. Every single time someone puts dollars "into" an asset, someone else is taking dollars "out of" the asset on the other side of the trade. No one has ever put dollars "into" BTC on net. Generally, prices do not go up because dollars go "into" the asset. It is fallacious to say that the stock market has gone up because dollars have gone "into" the stock market. Dollars flow through markets, they don't flow into markets. Prices reflect opinions of people making transactions, they don't reflect a history of dollars that have gone "into" an asset. To be fair, this issue is kind of pedantic and besides the main point of this thread, but I do think it's a fallacy worth being aware of. Ever since I learned of it, my financial thinking has felt clearer. [1] let's say fixed with respect to you any buy/sell transactions you may or may not execute (this would have be an asterisk, but it turned all of my text into italics)
  - john_moscow 9y ago
    Sure, fearing overvaluation (i.e. too high price-to-earnings ratio) of stock markets, people will switch to an asset where the "earnings" part is zero by design. Sorry, but I would rather place my bets on real estate or dividend stocks (reasonably P/E'd stocks to be more precise).
  - this_user 9y ago
    That makes no sense at all. High volatility for the SPX means +-2% a day. High volatility for crypto currencies means > 20%. Why would you try to secure your capital by moving it to something that is orders of magnitude more volatile? A store of value is by definition something that moves as little as possible.
- PKop 9y ago
  Gold is poised as, with stock market declines, US funding of deficits gets severely pressured. As a result, Fed will have to reverse course, sacrificing the dollar to maintain asset prices and ability to finance government. We'll see if dollar has a short term rise, though as a flight to safety, though I think unlike in past downturns, the dollar and US economy is in a much worse position.
  - AnimalMuppet 9y ago
    How does the stock market declining affect US funding for deficits? Deficits are funded by bonds, which (almost always) move in the opposite direction from stocks. This also means that your second sentence doesn't follow. > ... though I think unlike in past downturns, the dollar and US economy is in a much worse position. I'm a bit undecided, but I fear that you are right on this one.
    - PKop 9y ago
      I've been following the thesis of @LukeGromen, (here's a sampling)[0]. Here I think he covers it mostly in full [1]. Definitely worth a listen.. Also, here is a great 5 part podcast from December where he (and other Dollar bears) talk about the dollar decline[2]. Because of US dollar reserve status, government spending has been financed by foreign buying of treasuries, especially China. In recent years, they have rightly seen the fiscal situation of US, with massive liabilities, as being fixed only by devaluation of the dollar and therefore in real terms holding treasuries, or especially continuing to stockpile them not prudent. And he points out many examples of how they have recently been declining their purchases of treasuries and stockpiling gold (them and Russia). He argues their recent opening of a Oil futures market as their avenue to moving away from dollar, eventually (long long term) pushing Renminbi to gain reserve status but in medium term using gold / oil as their leverage away from dollar. On the stock market/taxes connection, he points out usually a yr over yr decline in tax receipts occurs in recessions. But last month, in the midst of an "everything bubble" (stocks, real estate, bonds, etc.) we saw a year over year decline of tax receipts. [3] Also that stock market is increasing % of GDP & most taxes paid by wealthy whose income increasingly based on stocks market returns implies a dependence at the margin of government spending on high equities valuations. [4] If the market continues to decline, and future months tax receipts decline, the "fed put" will get called into action, as China has stopped funding deficit (enough to match it's increase) so it has to be funded by rising rates in the private market. Libor shows this, as does the decline of the dollar. Here's a link his slide deck covering all of this [5]. See slide 26 for a chart showing that when tax receipts fall "enough", US quickly takes action to weaken the dollar. Slide 25 shows that declines in tax receipts usually correspond to recessions, but except recently.. [0] https://twitter.com/LukeGromen/status/978994115047231488 https://twitter.com/LukeGromen/status/978994115047231488 [1] https://www.theinvestorspodcast.com/episodes/luke-gromen/ https://www.theinvestorspodcast.com/episodes/luke-gromen/ [2] https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-end-game-part-1-of-5 https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-en... [3] https://twitter.com/LukeGromen/status/979079824567427073 https://twitter.com/LukeGromen/status/979079824567427073 [4] https://twitter.com/LukeGromen/status/979087795447894017 https://twitter.com/LukeGromen/status/979087795447894017 [5] https://www.dropbox.com/s/j86wfg79iyds85j/Luke%20Gromen%20Slide%20Deck%20for%20Parts%203%20and%204.pdf https://www.dropbox.com/s/j86wfg79iyds85j/Luke%20Gromen%20Sl...
- bjelkeman-again 9y ago
  What trade access does the US want in Europe that we are denying?
  - dragontamer 9y ago
    I have no freaking idea. But its the mindset of a lot of Americans. As an American, I apologize for the ignorance of the majority of us. Unfortunately, Trump's words are resonating and many people believe Mr. Trump's point of view. EDIT: I see the downvotes. So let me challenge you with this thought. Exactly WHAT ARE THE Europeans doing to hurt the US's economy? As per the question of the direct parent of this post.
    - toomuchtodo 9y ago
      Come on, this isn't the thread for it. People don't vote for Trump because they're ignorant or stupid, it's because they're desperate. And if you don't believe that's the case, I'll go spend a day in rural West Virginia with you and show you first hand. As an American, I despise the man, but fully support his efforts at tempering globalism and clamping down on H1Bs. I don't have to like him to judge his policies on a case by case basis.
      - dragontamer 9y ago
        This specific issue has nothing to do with Trump. For at LEAST the last 20 years, I've heard of people complain about "Trade Deficits" and the perils of "Globalization". Sure, Trump is an anti-globalist. But so are a TON of other people. My statements are aimed at anti-globalists in general. > And if you don't believe that's the case, I'll go spend a day in rural West Virginia with you and show you first hand. Indeed. And I've spent a week in rural Washington (Spokane). The town was decimated after a lumber mill closing, and tons of people were on welfare. Trust me dude, I've seen it myself. HUGE stretches of areas where the ONLY revenue source are Native American casinos and/or military bases, with closed down factories overlooking hills. There were some successful farmland, but that's not enough to sustain the economy of the population. Now explain to me how raising Aluminum / Steel prices is going to improve the position of towns like this? Explain to me why a trade war with China / Europe / Other countries helps at all? China just increased tariffs on Pork, Wine, dried fruits and nuts: https://www.npr.org/sections/thesalt/2018/04/02/598870076/what-chinese-tariffs-targeting-american-crops-will-mean-for-farmers https://www.npr.org/sections/thesalt/2018/04/02/598870076/wh... Good luck rust-belt / heartland. The trade war is coming. A good chunk of the rural folks have been wanting this for years. If Trump wasn't going to be elected last year, it'd only be a matter of time before some other "anti-globalist" came into power. Unfortunately for the rural folks: they're the ones who depend most heavily on exports AND imports. Increase costs of steel and aluminum makes manufacturing more difficult. Sure, it helps the US Steel industry, but there are FAR more rural towns out there who rely upon cheap steel prices for the meager manufacturing that they already have. And obviously, if China stops buying Pork / Fruits / Wine / etc. etc. from American farmers, then those farmers are going to get hurt. Its obviously lose/lose if you give it some thought. Alas, too many people are focused on the "Trade Deficit" to even care.
- vowelless 9y ago
  > Good time for HFT firms though, volatility is back. That's definitely true .......
- cm2187 9y ago
  And the Fed has barely started retiring QE [1]. If they increase the pace it will add another massive pressure on stock valuations. [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
- bad_user 9y ago
  > Bitcoin ... show that its a gold replacement by performing well when the market goes to shit I think it should be pretty clear that Bitcoin is not a gold replacement. Neither have any intrinsic value (unlike property), except that gold has been in use for thousands of years. If the market goes to shit, then so does Bitcoin, because it's a bubble.
  - djrogers 9y ago
    > Neither have any intrinsic value Gold has a million industrial, scientific, and cosmetic uses that give it intrinsic value.
    - hangonhn 9y ago
      But its use in those areas is dwarfed by its use as a store of value. Or to put it a different way, its industrial, scientific, and cosmetic usage has a far smaller effect on its price than people buying it as a stable store of value.
      - aylmao 9y ago
        I guess what the previous comment was getting at is that it at least has _some_ value outside of being a financial tool. Bitcoins aren't even physical so they are not even useful as paperweights.
    - bbatha 9y ago
      But the utility of those applications does not translate into gold’s current price. Most of gold’s value is from speculators and people using it as a wealth store.
    - ori_b 9y ago
      If that's true, why is it sitting in vaults instead of being consumed for those uses?
      - nikanj 9y ago
- nikanj 9y ago
  It's a lot easier to HODL your bitcoin when you don't have looming mortgage payments. When the economy gets rough, people are going to liquidate holdings in assets all across the board. With Bitcoin having no real-world value aside from being an great token for a fully-anonymous game of greater fool, the prognosis is not great. With other asset classes, there's some real-world value backing the minimum price (real estate has rent, stocks bring dividends, bonds guarantee interest payments, etc). With bitcoin, there's no real bottom for the value. In this, it's actually similar to a lot of unicorn stocks. What's the real-world value of a business that's bleeding money like no tomorrow? The P/E ratio is negative!
  - 21 9y ago
    > With other asset classes, there's some real-world value backing the minimum price 90% of gold's price is investment/speculation, only 10% has real-world usage backing. I'm not sure why you discount intangibles. A lot of Apple/Adidas value is based just on their perceived brand. Bitcoin has the same thing, an intangible brand value which keeps on rising based on more people getting confortable with it.
    - nikanj 9y ago
      I think we are saying the same thing. Apple/Adidas might have inflated prices today, but they're also creating actual products, selling for actual money, in actual stores. That's the key difference. Bitcoin is as valuable as Beanie Babies. Those too had a perceived brand value, which was supposed to keep on rising forever.
      - 21 9y ago
        The fact that you or I don't value an asset doesn't mean that that's asset value must therefore be zero. I wouldn't pay 5 million dollars for Michal Jackson's glove, but some people did. That in itself makes it more valuable that let's say it's cost of manufacture. And it's valuation is rational, but in a more complicated kind of rationality than the simple ones presented in economics 101 books. I think you are a person which believes that this is a correct approach: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus I don't
- this_user 9y ago
  > It is starting to get ugly. Not really, to be honest. The SPX is still above the February high. We are merely back to were we were in October 2017 before the acceleration into the end of the year and the January rally. We're still up around 9% for the last 12 months. Q4 earnings have been extremely strong, and early indications suggest the same for Q1. The looming risk of a trade war seems to have spooked the market somewhat, which has resulted in a re-pricing. But, as it stands, pullbacks are still buying opportunities here as long as we don't see a large scale escalation.
  - XJOKOLAT 9y ago
    LOL
  - pyoung 9y ago
    The OP is saying 'there are icebergs ahead', and you are saying 'lol, nothing to worry about, we are moving at record speed!'. The recent market volatility has more to do with the debt markets than near term quarterly earnings. No one really knows how the messy combination of tax cut fueled growth, trade wars, inflation (or lack of), fed rate schedule, record US deficits, and unwinding QE will impact markets, but the general consensus is that interest rates are going to rise. The question of the day is 'how fast?'. Too fast, and it will hit the brakes on the economy. Too slow, and we may overheat (if we haven't already).
  - tejohnso 9y ago
    SPX is down 7% from the February high. Are you referring to the February 2017 high? Looking from a yearly perspective, we've gone from a period of slow, stable growth to a period of uncertainty and loss, with a doubling of volatility. I think it's just as reasonable to call this the beginning of something ugly, as it is to say it's a buying opportunity.
  - heurist 9y ago
    I am far from an expert in these matters so I can only quote others who seem to know more. Peter Schiff sounds like a gold salesman at times (he is afaik), but he makes the argument that rather than fixing the issues that caused the bubble that led to the Great Recession, the Fed and stimulus managed to only make it bigger. Now the market is burning itself up with expectations of economic growth under Republicans, but all they are doing is growing the deficit and putting the US deeper into a hole that it can never dig itself out of. Soon the US will be unable to acquire more debt and we'll do another round of quantitative easing, which could spiral into hyperinflation as we're forced to repay our debt by printing money. This will be terrible for the US because we've become a nation of debtors and consumers. He believes the coming recession will be worse than 2008 and that we are in the largest bubble the US has ever experienced, possibly never having even escaped the 2008 recession in the first place. He believes all this will come due before the end of Trump's term, probably within a year or two. I've heard other famous investors say a recession is likely to begin next year. These might not be in order of when he spoke: https://www.youtube.com/watch?v=1Fd58n4HhAM https://www.youtube.com/watch?v=1Fd58n4HhAM https://www.youtube.com/watch?v=WD2zcyfwdJ4 https://www.youtube.com/watch?v=WD2zcyfwdJ4 https://www.youtube.com/watch?v=5DuHWGh2GgU https://www.youtube.com/watch?v=5DuHWGh2GgU https://www.youtube.com/watch?v=03Ke9rIYGsc https://www.youtube.com/watch?v=03Ke9rIYGsc
- melling 9y ago
  What stocks will Warren Buffet be looking to buy once the fear sets in? How does one evaluate value the way he does?
  - nikanj 9y ago
    The ones that have a business model your grandad would understand. His heuristic is somewhat naive, but he's made a lot of money by betting against the paradigm shifts and capitalistic innovations. He's basically applying systems theories to companies, and knows that the more complex a system is, the more possible failure states it has.
    - melling 9y ago
      I’m looking for a heuristic. He’ll be staying in his “Circle or Competence”, great company, evaluating companies for their “margin of safety”? He’s only looking at a handful of numbers to determine a good buy. We really should try to learn from this market movement. Warren Buffett and Charlie Munger offer decades of knowledge and wisdom.
  - davidw 9y ago
    I think at this point he's able to simply buy up a lot of companies, which is an option not available to normal people.
  - jacques_chester 9y ago
    > What stocks will Warren Buffet be looking to buy once the fear sets in? Whatever's a good deal when the prices drop low enough. > How does one evaluate value the way he does? It's not difficult, he and Munger consistently refer to a handful of books and themes and repeat them over and over. They do have advantages that you and I don't, however. First: they have a captive source of cheap cash in their insurance businesses. They are run strictly for underwriting profit, meaning there is always cheap float on hand to invest. Second: they don't participate in the open market a lot of the time. A lot of the B-H stable is composed of successful private businesses who sold directly, rather than being purchased via the share market. Buffet & Menger can more or less let the deals-of-a-century come to them. Third: if there's nothing good to buy, they don't. They accumulate cash and near-cash assets. This means that when the market tanks, they are one of the few groups with cash on hand to snap up bargains. This happened in a big way during 2007 and 2008.
- branchless 9y ago
  > Hand's up, who thought back in December that we'd see a 6 handle on bitcoin by April:( Me, because fiat currencies derive their value from the requirement to pay domestic tax in said currency. Bitcoin does not have this.
cwkoss 9y ago
Market is long overdue for a correction, these issues are just the straws that broke the camel's back.
- eldavido 9y ago
  It's interesting how the market never just drops though. I was talking about this with my family over the weekend. There always has to be some precipitating event, e.g. if you think Tesla is wildly overvalued, it gets adjusted as the result of some event like a (car) crash, and all of a sudden, it's a giant panic. It's certainly interesting to watch.
  - kasey_junk 9y ago
    That’s largely not true of most stocks. They tend to have fairly stable prices that are impacted predictably by things like macro factors & earnings reports. Something like Tesla that can be impacted dramatically (over longish timeframes) by a single event is amplified because it’s a speculative investment.
    - eldavido 9y ago
      Is there published research on this? I'd like to read it, if so. Intuitively it feels like you're right but it's not what I've seen.
  - nostrademons 9y ago
    This is often a result of selection bias. There's always some event out there that could conceivably affect the stock price in some direction. When the price moves, your brain (and the news headlines) ties the price move to the event because humans don't like "Yeah, it was just random chance" as an explanation, but the actual reason the price moved was there were fewer or more buyers than sellers that day. I've seen this happen in action when the S&P 500 might start the day with a big drop and the headlines are all "Markets drop on inflation fears" at 11 AM, and then they turn positive in the afternoon, and suddenly the headline changes to "Markets rebound on positive economic data". In actuality, neither the inflation fears nor the economic data was the cause of the market moves, but "Markets move randomly throughout the day", though true, is a terrible headline that won't get any clicks, and so no news outlet will ever run with it.
ironjunkie 9y ago
On top of that, you have Trump tweeting negatively about Amazon. This pushed AMZN down for a third session now, snowballing with it a lot of others. He basically brought down the economy he is responsible for.
- AznHisoka 9y ago
  But why do investors have to respond to Trump's tantrums? Why don't they collectively just ignore him?
  - dragontamer 9y ago
    Because Trump controls the US Postal Service, by nature of being the president. If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon. On the contrary to your post: it is the JOB of investors to pay attention to the US President, as well as the powers he has... to keep your investments safe. Its your 401k retirement at risk here. Therefore, it behooves you to move your money to safer pastures if the President is making threats.
    - mullen 9y ago
      > If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon. No, he can't. There are laws in place to prevent the USPS from changing the price based on who is shipping. The USPS is Net Neutrality at its best.
      - dragontamer 9y ago
        > No, he can't. Uh huh. Let me get more specific then. https://www.scribd.com/document/254642175/Amazon-USPS-Sunday-Deal https://www.scribd.com/document/254642175/Amazon-USPS-Sunday... What is preventing Mr. Trump from tearing up this contract for Amazon Sunday Deliveries? Hint: absolutely nothing. Mr. Trump can destroy the USPS's revenue AND hurt Amazon at the same time if he so wished. I guess destroying the contract will take 30 days, but in any case, Mr. Trump can make "Sunday USPS deliveries" of Amazon goods incredibly more expensive in just one month. Mr. Trump may need to fire a few Post Office directors, but Mr. Trump doesn't really seem to care too much about the turnover of this organization he's running.
matte_black 9y ago
This market is a bit painful right now, amazing how everything seems to be going to shit all at once. Right now, I'm back to where I was a few months ago. But, the economy is still pretty good IMO, I still have 40k in cash to allocate, planning to buy in if things go a bit lower. Trade war stuff should subside once people get used to the new reality, and the issues with tech stocks are mostly negative press, but fundamentals are still strong and that's what matters. Wait till earnings. I do not hold any positions in TSLA.
- fwdpropaganda 9y ago
  Trade war isn't a matter of people getting used to. You're adding actual frictions to the system.
  - AnimalMuppet 9y ago
    To expand a bit: When you add frictions, you reduce the number of transactions that are profitable, and therefore reduce the number that happen. So total economic activity goes down.
  - smileysteve 9y ago
    But this is optics/pr; let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less. It's really a shame the tariffs and the corporate tax rate weren't packaged together to be closer to revenue neutral.
    - fwdpropaganda 9y ago
      > let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less. I couldn't really tell what point you're trying to make. Also don't really why you're connecting those two. I'm sure in your mind it makes a lot of sense, but you gotta share it with the rest of us...
meddlepal 9y ago
I suppose a silver lining on a tanked economy caused by President Trump is that it probably ends his parties control of Congress in November. If he keeps wiping out market value at record pace with his policy statements and decisions he is going to have a hard time convincing people the Republican party is the party of smart business.
- akhilcacharya 9y ago
  The problem is it also allows him to take credit for a recovery like Reagan did in '84.
  - nkozyra 9y ago
    Unlike Reagan, Trump didn't inherit an economy already in recession. Unemployment started to spike in 1980 and the economy was a significant factor in the election.
    - jghn 9y ago
      However according to Fox and the right on general he did. So it doesn’t matter what you and I think as his base believes they’re living in the Obama Recession
  - seanmcdirmid 9y ago
    It doesn’t seem likely that this would happen before the midterms. Also, Trump is having a direct effect on the economy through his words (tweets) and actions (tariffs), Reagan was more of a bystander.
- dmix 9y ago
  Instead of fixing core problems exposed recently, ie, not letting a single person via the executive branch have direct control over important things like tariffs (this used to be something only congress had control over) people want to just blame the other party as a solution for everything. Despite the fact the executive branch grew the fastest and exercised some of the greatest amount of power under the previous party, much like the previous guy before him who also set a record of executive power expansion, etc, helping set the stage for current volatility. I seem to be one of the few people concerned by the fact such market volatility is even possible based on one man's decision making. Although I should note there is a uniquely large disconnect from the things said by the current administration as opposed to the actual actions - and the subsequent media (and lesser extent market) reactions. I'm happy people are concerned about abuse of power but it's disheartening that it's been so weakly correlated to real world power use/expansion.
JumpCrisscross 9y ago
Poor Spotify--they're set to go public tomorrow [1]. (Last time they were talking about going public, Snap beat them to the punch.) [1] https://www.ft.com/content/a3c43c14-2876-11e8-b27e-cc62a39d57a0 https://www.ft.com/content/a3c43c14-2876-11e8-b27e-cc62a39d5...
- smileysteve 9y ago
  ?Luckily? They're not being underwritten by anybody, which means that the internal shareholders get to control what price they will sell at. Entirely.
tekkk 9y ago
The self-proclaimed genius president seems like is following through his threats. What worries me is not the fact he is challenging China for its more than questionable trade practises but the incompetency how this problem would be solved. Tit-for-tat politics won't go far. And just when I started investing in stocks, oh well. I had a policy that I'd buy only after market crash and keep my assets liquid till then but since predicting market crash is just as improbable as investing at the right time I wagered that I should just buy now and worry about it later.
- komali2 9y ago
  No worries, just keep buying. Unless you're trying to become a day trader, you were never trying to time the market anyway, just have a nest egg. If all your stocks zero out, liquid capital will be worthless anyway. Raise chickens.
- shdh 9y ago
  What happens when the Chinese circumvent the petro-dollar?
nostromo 9y ago
It's common for people to look at the S&P 500 chart and immediately decide it's due for a crash. (In fact people have been doing that since 2013!) But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good. Why has the market risen for so long? Because the correction in 08 was so fast and deep, and took so long to recover from. That doesn't mean we're due for a correction anymore than sunny weather makes you due for rain. Barring a shock to the system (a war, an unforeseen debt crisis perhaps coming from China, terrorism, etc.) I think we've got some more gains to realize.
- aaronbrethorst 9y ago
  Barring a shock to the system ( a war , an unforeseen debt crisis perhaps coming from China, etc.) I think we've got some more gains to realize. https://www.newyorker.com/news/news-desk/john-bomb-iran-bolton-the-new-warmonger-in-the-white-house https://www.newyorker.com/news/news-desk/john-bomb-iran-bolt...
  - throwaway84742 9y ago
    It’s “good cop bad cop”. Trump is a skilled negotiator, he’s setting up a negotiation. Same with “trade war”. Same with North Korea.
    - dragonwriter 9y ago
      > Trump is a skilled negotiator Trump is a skilled brand marketer; beyond that there is a dearth of evidence.
      - throwaway84742 9y ago
        My sides. Dude is worth 4 billion dollars, ran hundreds of businesses over the course of his extensive business career, negotiated his way out of severe personal debt, is married to a hot former model 24 years his junior, and is a president of the US of A after taking up politics as a hobby 1.5 years before the election. And there’s still “dearth of evidence”. What does he need to do? Cure cancer?
3pt14159 9y ago
There was a bit of discussion over here when banks first warned about an oncoming downturn: https://news.ycombinator.com/item?id=15081150 https://news.ycombinator.com/item?id=15081150
contrarianguy 9y ago
Let's see how many people sell low. Just hit support on various indexes today. Short-term bottom is in, already today, or tomorrow on marginal new lows. Signed, 15 years futures experience
- celticninja 9y ago
  Can you explain what you mean? I'm reading it that you think this is as low as it is going for the moment, but could easily be wrong.
  - contrarianguy 9y ago
    > explain Just chart voodoo. Nothing much to see; it's an artform and every TA "expert" is an artist. > could easily be wrong You've summarized what it means to be a successful trader very succinctly. No trade idea is guaranteed.
    - tehlike 9y ago
      This message and previous one seem to be contradicting. You are making a prediction, admitting that you can be very wrong. Did i get this right? Or was your prediction a sarcasm?
      - tejohnso 9y ago
        He started by saying "Let's see how..." That doesn't sound like a prediction to me.
        tehlike 9y ago
        "Short-term bottom is in, already today, or tomorrow on marginal new lows." That was the prediction part, but his "sign: 15 years futures experience" kind of sounds like it's sarcasm.
        9y ago
kristianc 9y ago
It surprises me that people are so exercised about Trump's tweets and Amazon. Amazon is the archetypal survivor of the original dot com bust, has grown enormously since then. AWS alone is a $10bn a year business.
- ISL 9y ago
  It's the trade war, not Amazon, that matters.
cs702 9y ago
A possible explanation for the sudden change in mindset: Until recently, data was considered "the new oil." Those who sit on vast amounts of it were considered rich. Now, after the Equifax hack, the FaceBook/Cambridge Analytica scandal, and other revelations (such as Grindr freely sharing highly personal data), it seems that data is increasingly being viewed as "the new uranium." Data, it seems, is becoming radioactive and must be carefully controlled and safeguarded to prevent leaks. Those who sit on vast amounts of it must now handle it with care to avoid societal, political, regulatory, and legal backlash. The stock market seems to be reflecting data's transition from asset to liability.
- matte_black 9y ago
  The problem isn't the data. The problem is people who think bad things will happen to them if any of their precious data is ever leaked.
  - wlesieutre 9y ago
    Like if Grindr sells your HIV+ status and then instead of hiring you an employer picks the other candidate because they know you'd raise the group health insurance rates? Let's not pretend that there's no way to misapply this data and that a lot of people won't be incentivized to do so.
    - matte_black 9y ago
      Regulation exists to prevent this kind of thing. Your example perfectly illustrates the power of data, and the potential for revenue, negative and positive.
      - icebraining 9y ago
        And part of those regulations are the ones that prevent data from being captured (and subsequently leaked) willy-nilly.
  - Clubber 9y ago
tanilama 9y ago
Trump is bring the end of a system. Interesting to see how it will actually unfold. Trade war with China will hurt both sides, with China on the loser side. But China will be resilient, after all the anti-west narrative never goes away and Trump only proves its correctness , when the propaganda machine rolls it will make China even more united, a divided US on the other hand, is not. Any negative impact will be written down by opposition as bullets for next election. Violent delights will have violent ends. Grab my popcorns, the show has just begins.
bluetwo 9y ago
Anyone who tells you why the market went up or down without talking to everyone who bought or sold stock is pulling that wisdom from their rear end.
machinehermit 9y ago
"Stock market starts to correct because it has been doing nothing but going up for a decade, News at 11".
Install_Gentoo 9y ago
Get rekt, Capital is your god, die like your god.
m3kw9 9y ago
Market at all time high relative to 5-10 year average it is way above average. This is a psychological run market, models will often roll with punches. So people are in a hand on the trigger mode after suffering suffering close 10 percent losses. Any news and downs will trigger more downs, and ups will cause people to buy back due to losses and the models also play into these predicted effects.
dqpb 9y ago
> A broad market sell-off hit Wall Street on Monday, ...as a recent blitz of bad news about technology companies and festering worries about a trade war between the United States and China Indeed the media blitz against US tech companies has been well coordinated. Somebody is running a very effective campaign.
- shdh 9y ago
  Who's running said campaign?
feelin_googley 9y ago
"He reminded me to re-watch the onstage interview from just months before that he did with me and Walt Mossberg. Walt asked him about privacy and referenced Facebook CEO Mark Zuckerberg, who was also in the room listening. "Privacy means people know what they're signing up for - in plain English, and repeatedly," said Jobs in that interview, which you can see below, aiming at the young techie and advertising-based businesses like Facebook." Source: https://www.recode.net/2018/4/2/17189192/mark-zuckerberg-facebook-steve-jobs-apple-tim-cook https://www.recode.net/2018/4/2/17189192/mark-zuckerberg-fac...
deleted 9y ago
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blondie9x 9y ago
It is a bit more complicated than just data becoming a liability. There are a bunch of moves that the current president has taken that undo the actions the previous president took to help the United States and the global economy recover from the worst financial recession in history. The undoing of all of those efforts and the efforts of previous generations is seriously a risk the global marks and capitalism. Potential NAFTA withdraw, TPP withdraw, Paris Climate Accord withdraw, starting trade wars, creating America isolationism, is a serious headwind for the global economy for for American prosperity. The markets are beginning to price that in and will continue to do so until we get back on the course we were on before this administration took office.
rdlecler1 9y ago
GDPR is the Sarbanes-Oxley of data privacy. It was intended to stop the large abusers but it just stifled small companies, giving large companies even more of a protective advantage. Omar size fits all rules make no sense.
- laaph 9y ago
  > It was intended to stop the large abusers but it just stifled small companies It also hasn't gone in to effect yet, so I'm not sure how much stifling it has done so far.

It is starting to get ugly. - Fed is raising rates to slow down the economy/inflation - Tech, which did alot of the leading of the market, is finally having to account for alot of its negative externalities. - The US is picking a fight with China and Europe over trade access, though I think the US has a point on this fight. - Market is just over bought by several common factors - Too much institutional money is chasing too few ideas so that these trades are all levered up, the risk here is that the first person to be forced to unwind could cause alot of additional unwinding as the selling off feedback loop plays out. And sadly this could have been bitcoin's time to shine and show that its a gold replacement by performing well when the market goes to shit, but bitcoin is going through an ever larger correction at the moment. Hand's up, who thought back in December that we'd see a 6 handle on bitcoin by April:( Good time for HFT firms though, volatility is back.

deleted 9y ago
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ihsw2 9y ago
There is an open possibility that cash will flood into BTC/ETH as a store of value in a highly volatile S&P market, replacing traditional reservoirs (eg: Japanese/other international equities, precious metals, etc).
- dragontamer 9y ago
  > highly volatile S&P market Erm, S&P's implied volatility is 23.62% / 30-days. Bitcoin's volatility is over 100% / 30-days. https://www.bitmex.com/app/index/.BVOL https://www.bitmex.com/app/index/.BVOL Implied volatility and historical volatility are different, but they're at least "the same units". So please tolerate this apples-to-oranges comparison. Still, its clear that BTC is way more volatile than the S&P500, even today. In times of crisis, people move their money from high-volatility to low-volatility sources. IE: Stocks to Bonds. In times of growth, people move from low-volatility to riskier (but higher potential of gains), ie: Bonds to Stocks.
- ng12 9y ago
  I doubt it. Buying gold is irrational in most situations. People do it because it "feels" safe and I'd argue BTC definitely does not.
  - AnimalMuppet 9y ago
    I disagree. I think gold functions, essentially, as a short on paper currencies.
    - ng12 9y ago
      I didn't say you can't make money buying gold, just that gold is driven by irrational fear.
      - AnimalMuppet 9y ago
        And I still disagree. Deciding you want a way to short paper currencies can, at times, be very rational. Does gold fulfill that function reasonably well? Yes, I think history shows that it does. So it can be very rational to buy gold. (Perhaps "short" was the wrong word. But it is where people go - with reason - when they're losing confidence in fiat currencies.)
  - hyperbovine 9y ago
    Exactly. There is a reason that the BTC icon is ... a gold coin.
- bmpafa 9y ago
  Why BTC / ETH and not, say, bonds? I would think BTC / ETH would be anathema to someone fleeing volatility, no matter how bad the S&P got, but I am only a casual watcher of any market.
- hw 9y ago
  Crypto is far from being a good store of value. I'd argue it's even more volatile than the legacy markets right now. If anything, there'd be a spillover where traders and investors derisk entirely and go into fiat or the traditional store of value which is gold.
- sbinthree 9y ago
  No, this won't happen, fear makes people go back to old stores of value / dig in to their current ways, as opposed to seeking out new ways (usually). The circumstances that lead people to seek out new ways tend to be an absence of fear and a desire for better functionality as opposed to fear. Cryptos are much more likely than conventional securities to go to near-zero, and fearful people know that.
- tedsanders 9y ago
  Your comment contains a financial fallacy. Cash cannot flood "into" assets. For every buyer of an asset there is always a seller of that asset. The same number of dollars will be held regardless of the price of cryptocurrencies.
  - djrogers 9y ago
    No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. If cash cannot flood 'into' an asset, then the assets value would never grow.
    - dragonwriter 9y ago
      > No, if I buy BTC for $1 then sell it for $2, there is now $1 more in BTC than I put in to it. There are no dollars in BTC, period. Dollars and BTC may both move, and in certain exchanges one may be traded for the other, but the dollars are never in BTC. (Your net worth, which you may choose to measure in dollars, may be tied up in BTC, but no actual dollars are.)
    - tedsanders 9y ago
      No worries, this is actually a pretty subtle concept because it's an instance where the properties of the aggregate are different than the properties of the individual. An individual can put cash into an asset. You can start with $1, then exchange it for BTC, and now you have $0. The amount of dollars in your accounts has gone down and the amount of BTC in your accounts has gone up. But in aggregate, this is impossible. There is a (mostly[1]) fixed supply of dollars in the world. And there is a (mostly) fixed supply of BTC in the world. When you buy BTC for $1, the $1 just moves from your account to someone else's account. Their BTC moves from their account to your account. In aggregate the amount of dollars is the same before the transaction and after. The amount of BTC is the same before the transaction and after. The reason for this is that for every buyer, there is always a seller. Every single time someone puts dollars "into" an asset, someone else is taking dollars "out of" the asset on the other side of the trade. No one has ever put dollars "into" BTC on net. Generally, prices do not go up because dollars go "into" the asset. It is fallacious to say that the stock market has gone up because dollars have gone "into" the stock market. Dollars flow through markets, they don't flow into markets. Prices reflect opinions of people making transactions, they don't reflect a history of dollars that have gone "into" an asset. To be fair, this issue is kind of pedantic and besides the main point of this thread, but I do think it's a fallacy worth being aware of. Ever since I learned of it, my financial thinking has felt clearer. [1] let's say fixed with respect to you any buy/sell transactions you may or may not execute (this would have be an asterisk, but it turned all of my text into italics)
- john_moscow 9y ago
  Sure, fearing overvaluation (i.e. too high price-to-earnings ratio) of stock markets, people will switch to an asset where the "earnings" part is zero by design. Sorry, but I would rather place my bets on real estate or dividend stocks (reasonably P/E'd stocks to be more precise).
- this_user 9y ago
  That makes no sense at all. High volatility for the SPX means +-2% a day. High volatility for crypto currencies means > 20%. Why would you try to secure your capital by moving it to something that is orders of magnitude more volatile? A store of value is by definition something that moves as little as possible.
PKop 9y ago
Gold is poised as, with stock market declines, US funding of deficits gets severely pressured. As a result, Fed will have to reverse course, sacrificing the dollar to maintain asset prices and ability to finance government. We'll see if dollar has a short term rise, though as a flight to safety, though I think unlike in past downturns, the dollar and US economy is in a much worse position.
- AnimalMuppet 9y ago
  How does the stock market declining affect US funding for deficits? Deficits are funded by bonds, which (almost always) move in the opposite direction from stocks. This also means that your second sentence doesn't follow. > ... though I think unlike in past downturns, the dollar and US economy is in a much worse position. I'm a bit undecided, but I fear that you are right on this one.
  - PKop 9y ago
    I've been following the thesis of @LukeGromen, (here's a sampling)[0]. Here I think he covers it mostly in full [1]. Definitely worth a listen.. Also, here is a great 5 part podcast from December where he (and other Dollar bears) talk about the dollar decline[2]. Because of US dollar reserve status, government spending has been financed by foreign buying of treasuries, especially China. In recent years, they have rightly seen the fiscal situation of US, with massive liabilities, as being fixed only by devaluation of the dollar and therefore in real terms holding treasuries, or especially continuing to stockpile them not prudent. And he points out many examples of how they have recently been declining their purchases of treasuries and stockpiling gold (them and Russia). He argues their recent opening of a Oil futures market as their avenue to moving away from dollar, eventually (long long term) pushing Renminbi to gain reserve status but in medium term using gold / oil as their leverage away from dollar. On the stock market/taxes connection, he points out usually a yr over yr decline in tax receipts occurs in recessions. But last month, in the midst of an "everything bubble" (stocks, real estate, bonds, etc.) we saw a year over year decline of tax receipts. [3] Also that stock market is increasing % of GDP & most taxes paid by wealthy whose income increasingly based on stocks market returns implies a dependence at the margin of government spending on high equities valuations. [4] If the market continues to decline, and future months tax receipts decline, the "fed put" will get called into action, as China has stopped funding deficit (enough to match it's increase) so it has to be funded by rising rates in the private market. Libor shows this, as does the decline of the dollar. Here's a link his slide deck covering all of this [5]. See slide 26 for a chart showing that when tax receipts fall "enough", US quickly takes action to weaken the dollar. Slide 25 shows that declines in tax receipts usually correspond to recessions, but except recently.. [0] https://twitter.com/LukeGromen/status/978994115047231488 https://twitter.com/LukeGromen/status/978994115047231488 [1] https://www.theinvestorspodcast.com/episodes/luke-gromen/ https://www.theinvestorspodcast.com/episodes/luke-gromen/ [2] https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-end-game-part-1-of-5 https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-en... [3] https://twitter.com/LukeGromen/status/979079824567427073 https://twitter.com/LukeGromen/status/979079824567427073 [4] https://twitter.com/LukeGromen/status/979087795447894017 https://twitter.com/LukeGromen/status/979087795447894017 [5] https://www.dropbox.com/s/j86wfg79iyds85j/Luke%20Gromen%20Slide%20Deck%20for%20Parts%203%20and%204.pdf https://www.dropbox.com/s/j86wfg79iyds85j/Luke%20Gromen%20Sl...
bjelkeman-again 9y ago
What trade access does the US want in Europe that we are denying?
- dragontamer 9y ago
  I have no freaking idea. But its the mindset of a lot of Americans. As an American, I apologize for the ignorance of the majority of us. Unfortunately, Trump's words are resonating and many people believe Mr. Trump's point of view. EDIT: I see the downvotes. So let me challenge you with this thought. Exactly WHAT ARE THE Europeans doing to hurt the US's economy? As per the question of the direct parent of this post.
  - toomuchtodo 9y ago
    Come on, this isn't the thread for it. People don't vote for Trump because they're ignorant or stupid, it's because they're desperate. And if you don't believe that's the case, I'll go spend a day in rural West Virginia with you and show you first hand. As an American, I despise the man, but fully support his efforts at tempering globalism and clamping down on H1Bs. I don't have to like him to judge his policies on a case by case basis.
    - dragontamer 9y ago
      This specific issue has nothing to do with Trump. For at LEAST the last 20 years, I've heard of people complain about "Trade Deficits" and the perils of "Globalization". Sure, Trump is an anti-globalist. But so are a TON of other people. My statements are aimed at anti-globalists in general. > And if you don't believe that's the case, I'll go spend a day in rural West Virginia with you and show you first hand. Indeed. And I've spent a week in rural Washington (Spokane). The town was decimated after a lumber mill closing, and tons of people were on welfare. Trust me dude, I've seen it myself. HUGE stretches of areas where the ONLY revenue source are Native American casinos and/or military bases, with closed down factories overlooking hills. There were some successful farmland, but that's not enough to sustain the economy of the population. Now explain to me how raising Aluminum / Steel prices is going to improve the position of towns like this? Explain to me why a trade war with China / Europe / Other countries helps at all? China just increased tariffs on Pork, Wine, dried fruits and nuts: https://www.npr.org/sections/thesalt/2018/04/02/598870076/what-chinese-tariffs-targeting-american-crops-will-mean-for-farmers https://www.npr.org/sections/thesalt/2018/04/02/598870076/wh... Good luck rust-belt / heartland. The trade war is coming. A good chunk of the rural folks have been wanting this for years. If Trump wasn't going to be elected last year, it'd only be a matter of time before some other "anti-globalist" came into power. Unfortunately for the rural folks: they're the ones who depend most heavily on exports AND imports. Increase costs of steel and aluminum makes manufacturing more difficult. Sure, it helps the US Steel industry, but there are FAR more rural towns out there who rely upon cheap steel prices for the meager manufacturing that they already have. And obviously, if China stops buying Pork / Fruits / Wine / etc. etc. from American farmers, then those farmers are going to get hurt. Its obviously lose/lose if you give it some thought. Alas, too many people are focused on the "Trade Deficit" to even care.
vowelless 9y ago
> Good time for HFT firms though, volatility is back. That's definitely true .......
cm2187 9y ago
And the Fed has barely started retiring QE [1]. If they increase the pace it will add another massive pressure on stock valuations. [1] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
bad_user 9y ago
> Bitcoin ... show that its a gold replacement by performing well when the market goes to shit I think it should be pretty clear that Bitcoin is not a gold replacement. Neither have any intrinsic value (unlike property), except that gold has been in use for thousands of years. If the market goes to shit, then so does Bitcoin, because it's a bubble.
- djrogers 9y ago
  > Neither have any intrinsic value Gold has a million industrial, scientific, and cosmetic uses that give it intrinsic value.
  - hangonhn 9y ago
    But its use in those areas is dwarfed by its use as a store of value. Or to put it a different way, its industrial, scientific, and cosmetic usage has a far smaller effect on its price than people buying it as a stable store of value.
    - aylmao 9y ago
      I guess what the previous comment was getting at is that it at least has _some_ value outside of being a financial tool. Bitcoins aren't even physical so they are not even useful as paperweights.
  - bbatha 9y ago
    But the utility of those applications does not translate into gold’s current price. Most of gold’s value is from speculators and people using it as a wealth store.
  - ori_b 9y ago
    If that's true, why is it sitting in vaults instead of being consumed for those uses?
    - nikanj 9y ago
nikanj 9y ago
It's a lot easier to HODL your bitcoin when you don't have looming mortgage payments. When the economy gets rough, people are going to liquidate holdings in assets all across the board. With Bitcoin having no real-world value aside from being an great token for a fully-anonymous game of greater fool, the prognosis is not great. With other asset classes, there's some real-world value backing the minimum price (real estate has rent, stocks bring dividends, bonds guarantee interest payments, etc). With bitcoin, there's no real bottom for the value. In this, it's actually similar to a lot of unicorn stocks. What's the real-world value of a business that's bleeding money like no tomorrow? The P/E ratio is negative!
- 21 9y ago
  > With other asset classes, there's some real-world value backing the minimum price 90% of gold's price is investment/speculation, only 10% has real-world usage backing. I'm not sure why you discount intangibles. A lot of Apple/Adidas value is based just on their perceived brand. Bitcoin has the same thing, an intangible brand value which keeps on rising based on more people getting confortable with it.
  - nikanj 9y ago
    I think we are saying the same thing. Apple/Adidas might have inflated prices today, but they're also creating actual products, selling for actual money, in actual stores. That's the key difference. Bitcoin is as valuable as Beanie Babies. Those too had a perceived brand value, which was supposed to keep on rising forever.
    - 21 9y ago
      The fact that you or I don't value an asset doesn't mean that that's asset value must therefore be zero. I wouldn't pay 5 million dollars for Michal Jackson's glove, but some people did. That in itself makes it more valuable that let's say it's cost of manufacture. And it's valuation is rational, but in a more complicated kind of rationality than the simple ones presented in economics 101 books. I think you are a person which believes that this is a correct approach: https://en.wikipedia.org/wiki/Homo_economicus https://en.wikipedia.org/wiki/Homo_economicus I don't
this_user 9y ago
> It is starting to get ugly. Not really, to be honest. The SPX is still above the February high. We are merely back to were we were in October 2017 before the acceleration into the end of the year and the January rally. We're still up around 9% for the last 12 months. Q4 earnings have been extremely strong, and early indications suggest the same for Q1. The looming risk of a trade war seems to have spooked the market somewhat, which has resulted in a re-pricing. But, as it stands, pullbacks are still buying opportunities here as long as we don't see a large scale escalation.
- XJOKOLAT 9y ago
  LOL
- pyoung 9y ago
  The OP is saying 'there are icebergs ahead', and you are saying 'lol, nothing to worry about, we are moving at record speed!'. The recent market volatility has more to do with the debt markets than near term quarterly earnings. No one really knows how the messy combination of tax cut fueled growth, trade wars, inflation (or lack of), fed rate schedule, record US deficits, and unwinding QE will impact markets, but the general consensus is that interest rates are going to rise. The question of the day is 'how fast?'. Too fast, and it will hit the brakes on the economy. Too slow, and we may overheat (if we haven't already).
- tejohnso 9y ago
  SPX is down 7% from the February high. Are you referring to the February 2017 high? Looking from a yearly perspective, we've gone from a period of slow, stable growth to a period of uncertainty and loss, with a doubling of volatility. I think it's just as reasonable to call this the beginning of something ugly, as it is to say it's a buying opportunity.
- heurist 9y ago
  I am far from an expert in these matters so I can only quote others who seem to know more. Peter Schiff sounds like a gold salesman at times (he is afaik), but he makes the argument that rather than fixing the issues that caused the bubble that led to the Great Recession, the Fed and stimulus managed to only make it bigger. Now the market is burning itself up with expectations of economic growth under Republicans, but all they are doing is growing the deficit and putting the US deeper into a hole that it can never dig itself out of. Soon the US will be unable to acquire more debt and we'll do another round of quantitative easing, which could spiral into hyperinflation as we're forced to repay our debt by printing money. This will be terrible for the US because we've become a nation of debtors and consumers. He believes the coming recession will be worse than 2008 and that we are in the largest bubble the US has ever experienced, possibly never having even escaped the 2008 recession in the first place. He believes all this will come due before the end of Trump's term, probably within a year or two. I've heard other famous investors say a recession is likely to begin next year. These might not be in order of when he spoke: https://www.youtube.com/watch?v=1Fd58n4HhAM https://www.youtube.com/watch?v=1Fd58n4HhAM https://www.youtube.com/watch?v=WD2zcyfwdJ4 https://www.youtube.com/watch?v=WD2zcyfwdJ4 https://www.youtube.com/watch?v=5DuHWGh2GgU https://www.youtube.com/watch?v=5DuHWGh2GgU https://www.youtube.com/watch?v=03Ke9rIYGsc https://www.youtube.com/watch?v=03Ke9rIYGsc
melling 9y ago
What stocks will Warren Buffet be looking to buy once the fear sets in? How does one evaluate value the way he does?
- nikanj 9y ago
  The ones that have a business model your grandad would understand. His heuristic is somewhat naive, but he's made a lot of money by betting against the paradigm shifts and capitalistic innovations. He's basically applying systems theories to companies, and knows that the more complex a system is, the more possible failure states it has.
  - melling 9y ago
    I’m looking for a heuristic. He’ll be staying in his “Circle or Competence”, great company, evaluating companies for their “margin of safety”? He’s only looking at a handful of numbers to determine a good buy. We really should try to learn from this market movement. Warren Buffett and Charlie Munger offer decades of knowledge and wisdom.
- davidw 9y ago
  I think at this point he's able to simply buy up a lot of companies, which is an option not available to normal people.
- jacques_chester 9y ago
  > What stocks will Warren Buffet be looking to buy once the fear sets in? Whatever's a good deal when the prices drop low enough. > How does one evaluate value the way he does? It's not difficult, he and Munger consistently refer to a handful of books and themes and repeat them over and over. They do have advantages that you and I don't, however. First: they have a captive source of cheap cash in their insurance businesses. They are run strictly for underwriting profit, meaning there is always cheap float on hand to invest. Second: they don't participate in the open market a lot of the time. A lot of the B-H stable is composed of successful private businesses who sold directly, rather than being purchased via the share market. Buffet & Menger can more or less let the deals-of-a-century come to them. Third: if there's nothing good to buy, they don't. They accumulate cash and near-cash assets. This means that when the market tanks, they are one of the few groups with cash on hand to snap up bargains. This happened in a big way during 2007 and 2008.
branchless 9y ago
> Hand's up, who thought back in December that we'd see a 6 handle on bitcoin by April:( Me, because fiat currencies derive their value from the requirement to pay domestic tax in said currency. Bitcoin does not have this.

cwkoss 9y ago

Market is long overdue for a correction, these issues are just the straws that broke the camel's back.

eldavido 9y ago
It's interesting how the market never just drops though. I was talking about this with my family over the weekend. There always has to be some precipitating event, e.g. if you think Tesla is wildly overvalued, it gets adjusted as the result of some event like a (car) crash, and all of a sudden, it's a giant panic. It's certainly interesting to watch.
- kasey_junk 9y ago
  That’s largely not true of most stocks. They tend to have fairly stable prices that are impacted predictably by things like macro factors & earnings reports. Something like Tesla that can be impacted dramatically (over longish timeframes) by a single event is amplified because it’s a speculative investment.
  - eldavido 9y ago
    Is there published research on this? I'd like to read it, if so. Intuitively it feels like you're right but it's not what I've seen.
- nostrademons 9y ago
  This is often a result of selection bias. There's always some event out there that could conceivably affect the stock price in some direction. When the price moves, your brain (and the news headlines) ties the price move to the event because humans don't like "Yeah, it was just random chance" as an explanation, but the actual reason the price moved was there were fewer or more buyers than sellers that day. I've seen this happen in action when the S&P 500 might start the day with a big drop and the headlines are all "Markets drop on inflation fears" at 11 AM, and then they turn positive in the afternoon, and suddenly the headline changes to "Markets rebound on positive economic data". In actuality, neither the inflation fears nor the economic data was the cause of the market moves, but "Markets move randomly throughout the day", though true, is a terrible headline that won't get any clicks, and so no news outlet will ever run with it.

ironjunkie 9y ago

On top of that, you have Trump tweeting negatively about Amazon. This pushed AMZN down for a third session now, snowballing with it a lot of others. He basically brought down the economy he is responsible for.

AznHisoka 9y ago
But why do investors have to respond to Trump's tantrums? Why don't they collectively just ignore him?
- dragontamer 9y ago
  Because Trump controls the US Postal Service, by nature of being the president. If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon. On the contrary to your post: it is the JOB of investors to pay attention to the US President, as well as the powers he has... to keep your investments safe. Its your 401k retirement at risk here. Therefore, it behooves you to move your money to safer pastures if the President is making threats.
  - mullen 9y ago
    > If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon. No, he can't. There are laws in place to prevent the USPS from changing the price based on who is shipping. The USPS is Net Neutrality at its best.
    - dragontamer 9y ago
      > No, he can't. Uh huh. Let me get more specific then. https://www.scribd.com/document/254642175/Amazon-USPS-Sunday-Deal https://www.scribd.com/document/254642175/Amazon-USPS-Sunday... What is preventing Mr. Trump from tearing up this contract for Amazon Sunday Deliveries? Hint: absolutely nothing. Mr. Trump can destroy the USPS's revenue AND hurt Amazon at the same time if he so wished. I guess destroying the contract will take 30 days, but in any case, Mr. Trump can make "Sunday USPS deliveries" of Amazon goods incredibly more expensive in just one month. Mr. Trump may need to fire a few Post Office directors, but Mr. Trump doesn't really seem to care too much about the turnover of this organization he's running.

matte_black 9y ago

This market is a bit painful right now, amazing how everything seems to be going to shit all at once. Right now, I'm back to where I was a few months ago. But, the economy is still pretty good IMO, I still have 40k in cash to allocate, planning to buy in if things go a bit lower. Trade war stuff should subside once people get used to the new reality, and the issues with tech stocks are mostly negative press, but fundamentals are still strong and that's what matters. Wait till earnings. I do not hold any positions in TSLA.

fwdpropaganda 9y ago
Trade war isn't a matter of people getting used to. You're adding actual frictions to the system.
- AnimalMuppet 9y ago
  To expand a bit: When you add frictions, you reduce the number of transactions that are profitable, and therefore reduce the number that happen. So total economic activity goes down.
- smileysteve 9y ago
  But this is optics/pr; let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less. It's really a shame the tariffs and the corporate tax rate weren't packaged together to be closer to revenue neutral.
  - fwdpropaganda 9y ago
    > let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less. I couldn't really tell what point you're trying to make. Also don't really why you're connecting those two. I'm sure in your mind it makes a lot of sense, but you gotta share it with the rest of us...

meddlepal 9y ago

I suppose a silver lining on a tanked economy caused by President Trump is that it probably ends his parties control of Congress in November. If he keeps wiping out market value at record pace with his policy statements and decisions he is going to have a hard time convincing people the Republican party is the party of smart business.

akhilcacharya 9y ago
The problem is it also allows him to take credit for a recovery like Reagan did in '84.
- nkozyra 9y ago
  Unlike Reagan, Trump didn't inherit an economy already in recession. Unemployment started to spike in 1980 and the economy was a significant factor in the election.
  - jghn 9y ago
    However according to Fox and the right on general he did. So it doesn’t matter what you and I think as his base believes they’re living in the Obama Recession
- seanmcdirmid 9y ago
  It doesn’t seem likely that this would happen before the midterms. Also, Trump is having a direct effect on the economy through his words (tweets) and actions (tariffs), Reagan was more of a bystander.
dmix 9y ago
Instead of fixing core problems exposed recently, ie, not letting a single person via the executive branch have direct control over important things like tariffs (this used to be something only congress had control over) people want to just blame the other party as a solution for everything. Despite the fact the executive branch grew the fastest and exercised some of the greatest amount of power under the previous party, much like the previous guy before him who also set a record of executive power expansion, etc, helping set the stage for current volatility. I seem to be one of the few people concerned by the fact such market volatility is even possible based on one man's decision making. Although I should note there is a uniquely large disconnect from the things said by the current administration as opposed to the actual actions - and the subsequent media (and lesser extent market) reactions. I'm happy people are concerned about abuse of power but it's disheartening that it's been so weakly correlated to real world power use/expansion.

JumpCrisscross 9y ago

Poor Spotify--they're set to go public tomorrow [1]. (Last time they were talking about going public, Snap beat them to the punch.) [1] https://www.ft.com/content/a3c43c14-2876-11e8-b27e-cc62a39d57a0 https://www.ft.com/content/a3c43c14-2876-11e8-b27e-cc62a39d5...

smileysteve 9y ago
?Luckily? They're not being underwritten by anybody, which means that the internal shareholders get to control what price they will sell at. Entirely.

tekkk 9y ago

The self-proclaimed genius president seems like is following through his threats. What worries me is not the fact he is challenging China for its more than questionable trade practises but the incompetency how this problem would be solved. Tit-for-tat politics won't go far. And just when I started investing in stocks, oh well. I had a policy that I'd buy only after market crash and keep my assets liquid till then but since predicting market crash is just as improbable as investing at the right time I wagered that I should just buy now and worry about it later.

komali2 9y ago
No worries, just keep buying. Unless you're trying to become a day trader, you were never trying to time the market anyway, just have a nest egg. If all your stocks zero out, liquid capital will be worthless anyway. Raise chickens.
shdh 9y ago
What happens when the Chinese circumvent the petro-dollar?

nostromo 9y ago

It's common for people to look at the S&P 500 chart and immediately decide it's due for a crash. (In fact people have been doing that since 2013!) But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good. Why has the market risen for so long? Because the correction in 08 was so fast and deep, and took so long to recover from. That doesn't mean we're due for a correction anymore than sunny weather makes you due for rain. Barring a shock to the system (a war, an unforeseen debt crisis perhaps coming from China, terrorism, etc.) I think we've got some more gains to realize.

aaronbrethorst 9y ago
Barring a shock to the system ( a war , an unforeseen debt crisis perhaps coming from China, etc.) I think we've got some more gains to realize. https://www.newyorker.com/news/news-desk/john-bomb-iran-bolton-the-new-warmonger-in-the-white-house https://www.newyorker.com/news/news-desk/john-bomb-iran-bolt...
- throwaway84742 9y ago
  It’s “good cop bad cop”. Trump is a skilled negotiator, he’s setting up a negotiation. Same with “trade war”. Same with North Korea.
  - dragonwriter 9y ago
    > Trump is a skilled negotiator Trump is a skilled brand marketer; beyond that there is a dearth of evidence.
    - throwaway84742 9y ago
      My sides. Dude is worth 4 billion dollars, ran hundreds of businesses over the course of his extensive business career, negotiated his way out of severe personal debt, is married to a hot former model 24 years his junior, and is a president of the US of A after taking up politics as a hobby 1.5 years before the election. And there’s still “dearth of evidence”. What does he need to do? Cure cancer?

3pt14159 9y ago

There was a bit of discussion over here when banks first warned about an oncoming downturn: https://news.ycombinator.com/item?id=15081150 https://news.ycombinator.com/item?id=15081150

contrarianguy 9y ago

Let's see how many people sell low. Just hit support on various indexes today. Short-term bottom is in, already today, or tomorrow on marginal new lows. Signed, 15 years futures experience

celticninja 9y ago
Can you explain what you mean? I'm reading it that you think this is as low as it is going for the moment, but could easily be wrong.
- contrarianguy 9y ago
  > explain Just chart voodoo. Nothing much to see; it's an artform and every TA "expert" is an artist. > could easily be wrong You've summarized what it means to be a successful trader very succinctly. No trade idea is guaranteed.
  - tehlike 9y ago
    This message and previous one seem to be contradicting. You are making a prediction, admitting that you can be very wrong. Did i get this right? Or was your prediction a sarcasm?
    - tejohnso 9y ago
      He started by saying "Let's see how..." That doesn't sound like a prediction to me.
      - tehlike 9y ago
        "Short-term bottom is in, already today, or tomorrow on marginal new lows." That was the prediction part, but his "sign: 15 years futures experience" kind of sounds like it's sarcasm.
        9y ago

kristianc 9y ago

It surprises me that people are so exercised about Trump's tweets and Amazon. Amazon is the archetypal survivor of the original dot com bust, has grown enormously since then. AWS alone is a $10bn a year business.

ISL 9y ago
It's the trade war, not Amazon, that matters.

cs702 9y ago

A possible explanation for the sudden change in mindset: Until recently, data was considered "the new oil." Those who sit on vast amounts of it were considered rich. Now, after the Equifax hack, the FaceBook/Cambridge Analytica scandal, and other revelations (such as Grindr freely sharing highly personal data), it seems that data is increasingly being viewed as "the new uranium." Data, it seems, is becoming radioactive and must be carefully controlled and safeguarded to prevent leaks. Those who sit on vast amounts of it must now handle it with care to avoid societal, political, regulatory, and legal backlash. The stock market seems to be reflecting data's transition from asset to liability.

matte_black 9y ago
The problem isn't the data. The problem is people who think bad things will happen to them if any of their precious data is ever leaked.
- wlesieutre 9y ago
  Like if Grindr sells your HIV+ status and then instead of hiring you an employer picks the other candidate because they know you'd raise the group health insurance rates? Let's not pretend that there's no way to misapply this data and that a lot of people won't be incentivized to do so.
  - matte_black 9y ago
    Regulation exists to prevent this kind of thing. Your example perfectly illustrates the power of data, and the potential for revenue, negative and positive.
    - icebraining 9y ago
      And part of those regulations are the ones that prevent data from being captured (and subsequently leaked) willy-nilly.
- Clubber 9y ago

tanilama 9y ago

Trump is bring the end of a system. Interesting to see how it will actually unfold. Trade war with China will hurt both sides, with China on the loser side. But China will be resilient, after all the anti-west narrative never goes away and Trump only proves its correctness , when the propaganda machine rolls it will make China even more united, a divided US on the other hand, is not. Any negative impact will be written down by opposition as bullets for next election. Violent delights will have violent ends. Grab my popcorns, the show has just begins.

bluetwo 9y ago

Anyone who tells you why the market went up or down without talking to everyone who bought or sold stock is pulling that wisdom from their rear end.

machinehermit 9y ago

"Stock market starts to correct because it has been doing nothing but going up for a decade, News at 11".

Install_Gentoo 9y ago

Get rekt, Capital is your god, die like your god.

m3kw9 9y ago

Market at all time high relative to 5-10 year average it is way above average. This is a psychological run market, models will often roll with punches. So people are in a hand on the trigger mode after suffering suffering close 10 percent losses. Any news and downs will trigger more downs, and ups will cause people to buy back due to losses and the models also play into these predicted effects.

dqpb 9y ago

> A broad market sell-off hit Wall Street on Monday, ...as a recent blitz of bad news about technology companies and festering worries about a trade war between the United States and China Indeed the media blitz against US tech companies has been well coordinated. Somebody is running a very effective campaign.

shdh 9y ago
Who's running said campaign?

feelin_googley 9y ago

"He reminded me to re-watch the onstage interview from just months before that he did with me and Walt Mossberg. Walt asked him about privacy and referenced Facebook CEO Mark Zuckerberg, who was also in the room listening. "Privacy means people know what they're signing up for - in plain English, and repeatedly," said Jobs in that interview, which you can see below, aiming at the young techie and advertising-based businesses like Facebook." Source: https://www.recode.net/2018/4/2/17189192/mark-zuckerberg-facebook-steve-jobs-apple-tim-cook https://www.recode.net/2018/4/2/17189192/mark-zuckerberg-fac...

deleted 9y ago

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blondie9x 9y ago

It is a bit more complicated than just data becoming a liability. There are a bunch of moves that the current president has taken that undo the actions the previous president took to help the United States and the global economy recover from the worst financial recession in history. The undoing of all of those efforts and the efforts of previous generations is seriously a risk the global marks and capitalism. Potential NAFTA withdraw, TPP withdraw, Paris Climate Accord withdraw, starting trade wars, creating America isolationism, is a serious headwind for the global economy for for American prosperity. The markets are beginning to price that in and will continue to do so until we get back on the course we were on before this administration took office.

rdlecler1 9y ago

GDPR is the Sarbanes-Oxley of data privacy. It was intended to stop the large abusers but it just stifled small companies, giving large companies even more of a protective advantage. Omar size fits all rules make no sense.

laaph 9y ago
> It was intended to stop the large abusers but it just stifled small companies It also hasn't gone in to effect yet, so I'm not sure how much stifling it has done so far.