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My thoughts on the content of the article: (1) According to Ray Dalio's theory of long-term credit cycles, we should be healthiest in the decade after a credit

My thoughts on the content of the article: (1) According to Ray Dalio's theory of long-term credit cycles, we should be healthiest in the decade after a credit crunch. (2) When the article says that Apple could use its $210B to buy the bottom 480 companies of the S&P 500, it means any one of the bottom 480 companies. As worded, that sentence is ambiguous at best and deceptive at worst. (3) I don't understand the author's point that companies with the most buybacks saw their value go down the most. Like, isn't that exactly what you would expect? If Apples gives $210B to shareholders, now Apple is worth $210B less. (4) No evidence is given for the claim that all of these companies intended to use their buybacks to prop up their stock price. I doubt any evidence exists. Quite possibly, crummy companies like Sears are buying back stock because returning money to shareholders is better than building new Sears stores. (5) Does it really matter that much if claims on companies' future profits are shifting from risky equity to risky bonds? I honestly don't know. (6) The article argues that the rise of bond ETFs over the past decade ($15B to $300B, 20x) shows the rise of bonds. But, honestly, most of that comes from the rise of ETFs, not the rise of bonds. Over the same time period, the total ETF market, which is mostly equities, grew from $700B in 2008 to $4,600B in 2017. (7) A lot these 'one decade ago' statistics are hard to interpret, since one of the endpoints was in the middle of a terrible financial crisis. (8) The numbers on household credit card debt seem very tragic. I wish I understood more how people use credit cards.

jnbiche 8y ago
> I wish I understood more how people use credit cards. I'll give you the low-down: many Americans don't make enough money to save up money for medical emergencies, and other emergencies, so when one of those happens, they reach for their credit card. Yes, it's a bad idea, but when they're a few months out of the hospital, possibly still sick, then it's easy to panic when getting repeated calls from debt collectors and pull out their credit cards. Same thing happens with auto repairs and house repairs. And many such incidental expenses. As a software developer making over $100,000/year, the instinct of many people here on HN is to say, "why the hell don't they save more?". But when you're making $30,000/year and raising a couple of kids, it's really not possible to save money in most cities and their suburbs. Sure, they could save up more money with that income in a cheap rural area or small town, but then there's no jobs. Saving up enough money for medical and other emergencies is much harder to do for the average lower- to lower-middle class American that many people on HN might realize.
yborg 8y ago
> (8) ... how people use credit cards. This is the "HN bubble" at work. Many of these people are paying medical bills for which they have no insurance or trying to feed their children. And once they fall into the trap, the credit system is designed to keep them there. So yes, it is very tragic.

jnbiche 8y ago

> I wish I understood more how people use credit cards. I'll give you the low-down: many Americans don't make enough money to save up money for medical emergencies, and other emergencies, so when one of those happens, they reach for their credit card. Yes, it's a bad idea, but when they're a few months out of the hospital, possibly still sick, then it's easy to panic when getting repeated calls from debt collectors and pull out their credit cards. Same thing happens with auto repairs and house repairs. And many such incidental expenses. As a software developer making over $100,000/year, the instinct of many people here on HN is to say, "why the hell don't they save more?". But when you're making $30,000/year and raising a couple of kids, it's really not possible to save money in most cities and their suburbs. Sure, they could save up more money with that income in a cheap rural area or small town, but then there's no jobs. Saving up enough money for medical and other emergencies is much harder to do for the average lower- to lower-middle class American that many people on HN might realize.

yborg 8y ago

> (8) ... how people use credit cards. This is the "HN bubble" at work. Many of these people are paying medical bills for which they have no insurance or trying to feed their children. And once they fall into the trap, the credit system is designed to keep them there. So yes, it is very tragic.