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> The chances of a recession by the end of 2020 are mounting. And the prospects for the American stock market in the next decade have worsened appreciably. The

by imron 8y ago

> The chances of a recession by the end of 2020 are mounting. And the prospects for the American stock market in the next decade have worsened appreciably. The day after Trump's election win, NY Times published an article [0] by nobel-prize winning economist Paul Krugman saying: "It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover? Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear. Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never." That prediction didn't work out so well. And maybe these new prognostications are built on more solid foundations, but still they are prognostications, and if the past decade has taught us anything, it seems most pundits and economists have no clue what they are talking about. 0: https://www.nytimes.com/interactive/projects/cp/opinion/election-night-2016/paul-krugman-the-economic-fallout https://www.nytimes.com/interactive/projects/cp/opinion/elec...

themagician 8y ago
The prediction didn’t work out so well—so far. Hindsight compresses time. Things said in 2004 and 2005 definitely bubbled up to the top after Lehman’s collapsed in ‘08 as “correct predictions of the coming financial crisis.” If things implode tomorrow or six months or even a year from now everyone will look back at that Krugman quote and say, “The man’s a damn genius, he totally called it.” It’s easy to forget about the time period when a financial prediction was wrong before it was right, particularly when the magnitude of disruption is significant. Sometimes the time even emboldens the former position because “they knew all along.” The one thing we do know is that markets are cyclical. There is always another crisis lurking around the corner. If you went to a cash position the day after Trump was elected you seem like a fool today. You can wake up a financial genius tomorrow. Maybe you didn’t sell at the top, but people who got out of real estate in 2005 probably don’t look back with too much regret saying, “should have hung in there another two years.”
- nradov 8y ago
  Markets are fractal, not cyclical.
- imron 8y ago
  > Things said in 2004 and 2005 definitely bubbled up to the top after Lehman’s collapsed in ‘08 as “correct predictions of the coming financial crisis.” Also known as a broken clock is right at least twice a day. Vanguard is doing the same thing here by saying sometime in the next 2 years the economy will start doing worse. They'll be right eventually. > If you went to a cash position the day after Trump was elected you seem like a fool today. You can wake up a financial genius tomorrow. Many people were expecting another market downturn at around the time Trump was elected - not because of Trump but because it was 8 years since the last one. The market rallied instead and now Trump has a buffer. The market today could fall by as much as it did in 2008, and it would still be at about the same level as it was when Trump was elected.
throwaway34241 8y ago
To be fair, I remember him taking that back and admitting he let emotions cloud his judgement pretty much right away. I can forgive a bad (and probably very sleep-deprived) election day take if they admit it. Disclaimer: I'm not intimately familiar with his views, but since he's a pretty prolific political columnist (in addition to being an economist) I'm sure there's plenty of other stuff worthy of criticism.

by imron 8y ago

themagician 8y ago

The prediction didn’t work out so well—so far. Hindsight compresses time. Things said in 2004 and 2005 definitely bubbled up to the top after Lehman’s collapsed in ‘08 as “correct predictions of the coming financial crisis.” If things implode tomorrow or six months or even a year from now everyone will look back at that Krugman quote and say, “The man’s a damn genius, he totally called it.” It’s easy to forget about the time period when a financial prediction was wrong before it was right, particularly when the magnitude of disruption is significant. Sometimes the time even emboldens the former position because “they knew all along.” The one thing we do know is that markets are cyclical. There is always another crisis lurking around the corner. If you went to a cash position the day after Trump was elected you seem like a fool today. You can wake up a financial genius tomorrow. Maybe you didn’t sell at the top, but people who got out of real estate in 2005 probably don’t look back with too much regret saying, “should have hung in there another two years.”

nradov 8y ago
Markets are fractal, not cyclical.
imron 8y ago
> Things said in 2004 and 2005 definitely bubbled up to the top after Lehman’s collapsed in ‘08 as “correct predictions of the coming financial crisis.” Also known as a broken clock is right at least twice a day. Vanguard is doing the same thing here by saying sometime in the next 2 years the economy will start doing worse. They'll be right eventually. > If you went to a cash position the day after Trump was elected you seem like a fool today. You can wake up a financial genius tomorrow. Many people were expecting another market downturn at around the time Trump was elected - not because of Trump but because it was 8 years since the last one. The market rallied instead and now Trump has a buffer. The market today could fall by as much as it did in 2008, and it would still be at about the same level as it was when Trump was elected.

throwaway34241 8y ago

To be fair, I remember him taking that back and admitting he let emotions cloud his judgement pretty much right away. I can forgive a bad (and probably very sleep-deprived) election day take if they admit it. Disclaimer: I'm not intimately familiar with his views, but since he's a pretty prolific political columnist (in addition to being an economist) I'm sure there's plenty of other stuff worthy of criticism.