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Funny, I had the opposite voice in my head telling me I needed to definitely take my money out, even though I was sure at least a portion of the predictions abo

Funny, I had the opposite voice in my head telling me I needed to definitely take my money out, even though I was sure at least a portion of the predictions about yield curves was hype and people making noise to get attention/clicks. My intuition seems to think that even if the market recover/gain some more in the near term, it's not going to go much further before hitting a correction/recession. In addition there is simply too much uncertainty around Brexit, Trump, Iran/Saudis, China/Hong Kong, climate-driven black swans, tech bubbles (e.g. AI, blockchain). I ended up taking money out at the end of July and am not sweating my decision, even though we've recovered about what we lost in August at this point. This shit is a house of cards, I don't have a problem missing out on marginal gains if it means avoiding a major crash.

rolltiide 7y ago
There is a bullish thesis for everything you described. Trump? Strongly suggesting that the US push yields lower, and the only tool it has to do that is by adding more money into the market. Fueling the nonstop 30-year bull market in treasuries and other government bonds, before fueling the excess capital flows into every other asset. Iran/Saudis? Epic Oil Boom Town of unprecedented proportions with coastal US and middle america being the primary recipients. Tech bubbles? A by product of excess money added to the markets, see the 'Trump' entry. China/Hong Kong? What? You gotta really re-evaluate how relevant that situation actually is. Everyone's had plenty of time to deleverage their exposure to that city, and nobody is going to get involved. The surrounding megacities in Guangzhou have all the output now. HK is 3% of China's GDP and has been functioning as an administrative convenience to circumvent customs duties, for years. Sorry about the people, it has nothing to do with the global markets. China itself is an accounting basket case though, but thats always been the case and not a new issue for your portfolio. Brexit? Britain's problem more than anybody else, people have had even longer to deleverage exposure there, and its a slow motion train wreck that the whole rest of the EU has already moved on from. Climate black swans? Well you got me there. The whole point of a black swan is something not being in the model. This is always true and not quantifiable, you either have the appetite or not.
- gooseus 7y ago
  You make all good points and seem to have way more knowledge than I do on these points. I'm a complex systems person though, and it's the interactions between all these things which has spoiled my appetite. I'm not saying I'm right or that anyone should follow my lead, simply pointing out that these things, taken as a whole, makes the future seem very uncertain and leads me to side with the more cautious camp.
  - rolltiide 7y ago
    It's fair. I don't know what anybody is going to do. But lending hasn't dried up and interest rates will be lower than ever letting businesses roll over any maturing debt for some time. If people collectively decide to stop buying that stuff then yeah you'll get your crash, distressed companies, and massive layoffs. but with the European Central Bank starting up QEternity and the Federal Reserve about to start to QE4eva, they're going to be pumping all debt and holding it to maturity...
    - remarkEon 7y ago
      Yep, came here to say essentially this with regard to the Central Banks. I have to wonder if Central Bankers are feeling more and more politicized these days, and will now employ these "creative" options without regard for any long term consequences - whatever those may be.
      - rolltiide 7y ago
        > I have to wonder if Central Bankers are feeling more and more politicized these days I don't think the big ones feel anything. (Fed, ECB) ECB's frontman was a Goldman Sachs alumni, accountable to no one, doing private placements with his buddies, issuing corporate bonds directly to the ECB instead of the ECB picking them up on the secondary market. The US Fed gets a chairman to just the Board of Governors, who is more accountable to the other people on the board of governors, and then the actual Federal Reserve. They are not accountable to the US President or the American people in any capacity. They transcend administrations and are completely divorced from main street rhetoric. They don't care and don't have to. They emerge from their screens a few times a decade and say "huh, there's new pronouns now" and go back to resource management monopoly that they've been playing for 100 years. > and will now employ these "creative" options without regard for any long term consequences I think so, when you look at the incentives. The consequences are very few: there is a risk that the people are disillusioned by how resources are distributed since not everyone has to exchange labor or capital for resources (ECB buying newly issued bonds for billions of euros that didn't previously exist). there is a risk of hyperinflation if there is a real disruption in the need for the monetary union's currency, but uncontrollable need to inject more of the currency into the market. In the mean time, they can keep assets on their balance sheet forever, with only a slight embarrassment if those assets cause losses (such a bonds that default).

rolltiide 7y ago

There is a bullish thesis for everything you described. Trump? Strongly suggesting that the US push yields lower, and the only tool it has to do that is by adding more money into the market. Fueling the nonstop 30-year bull market in treasuries and other government bonds, before fueling the excess capital flows into every other asset. Iran/Saudis? Epic Oil Boom Town of unprecedented proportions with coastal US and middle america being the primary recipients. Tech bubbles? A by product of excess money added to the markets, see the 'Trump' entry. China/Hong Kong? What? You gotta really re-evaluate how relevant that situation actually is. Everyone's had plenty of time to deleverage their exposure to that city, and nobody is going to get involved. The surrounding megacities in Guangzhou have all the output now. HK is 3% of China's GDP and has been functioning as an administrative convenience to circumvent customs duties, for years. Sorry about the people, it has nothing to do with the global markets. China itself is an accounting basket case though, but thats always been the case and not a new issue for your portfolio. Brexit? Britain's problem more than anybody else, people have had even longer to deleverage exposure there, and its a slow motion train wreck that the whole rest of the EU has already moved on from. Climate black swans? Well you got me there. The whole point of a black swan is something not being in the model. This is always true and not quantifiable, you either have the appetite or not.

gooseus 7y ago
You make all good points and seem to have way more knowledge than I do on these points. I'm a complex systems person though, and it's the interactions between all these things which has spoiled my appetite. I'm not saying I'm right or that anyone should follow my lead, simply pointing out that these things, taken as a whole, makes the future seem very uncertain and leads me to side with the more cautious camp.
- rolltiide 7y ago
  It's fair. I don't know what anybody is going to do. But lending hasn't dried up and interest rates will be lower than ever letting businesses roll over any maturing debt for some time. If people collectively decide to stop buying that stuff then yeah you'll get your crash, distressed companies, and massive layoffs. but with the European Central Bank starting up QEternity and the Federal Reserve about to start to QE4eva, they're going to be pumping all debt and holding it to maturity...
  - remarkEon 7y ago
    Yep, came here to say essentially this with regard to the Central Banks. I have to wonder if Central Bankers are feeling more and more politicized these days, and will now employ these "creative" options without regard for any long term consequences - whatever those may be.
    - rolltiide 7y ago
      > I have to wonder if Central Bankers are feeling more and more politicized these days I don't think the big ones feel anything. (Fed, ECB) ECB's frontman was a Goldman Sachs alumni, accountable to no one, doing private placements with his buddies, issuing corporate bonds directly to the ECB instead of the ECB picking them up on the secondary market. The US Fed gets a chairman to just the Board of Governors, who is more accountable to the other people on the board of governors, and then the actual Federal Reserve. They are not accountable to the US President or the American people in any capacity. They transcend administrations and are completely divorced from main street rhetoric. They don't care and don't have to. They emerge from their screens a few times a decade and say "huh, there's new pronouns now" and go back to resource management monopoly that they've been playing for 100 years. > and will now employ these "creative" options without regard for any long term consequences I think so, when you look at the incentives. The consequences are very few: there is a risk that the people are disillusioned by how resources are distributed since not everyone has to exchange labor or capital for resources (ECB buying newly issued bonds for billions of euros that didn't previously exist). there is a risk of hyperinflation if there is a real disruption in the need for the monetary union's currency, but uncontrollable need to inject more of the currency into the market. In the mean time, they can keep assets on their balance sheet forever, with only a slight embarrassment if those assets cause losses (such a bonds that default).