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The amount of friends I have that are out of work and posting screenshots of robinhood on ig and snap right now is wild. This feels like crypto 2017 all over ag

by ideals 6y ago

The amount of friends I have that are out of work and posting screenshots of robinhood on ig and snap right now is wild. This feels like crypto 2017 all over again. I suppose the difference is there is a real market under it all and retail traders aren't entirely driving this, but they're the ones left holding the bag when the curtain drops.

Loughla 6y ago
That's where the FOMO comes in. I, and many, many of my friends, missed out on Bitcoin in college. Many of my friends are posting the same things you state on their social media, and are making it clear they won't be left behind this time. Not sure what all that means, but it's fascinating.
- 3pt14159 6y ago
  It means a massive crash is coming. Money printer go brrr is funny, but it's not capable of propping up the entire market forever. There's a flight to safety that happens when countries really start printing.
  - lumost 6y ago
    If a money printer channels money directly into assets than its entirely feasible that the money printer can drive the asset to an arbitrary valuation e.g. asset hyperinflation. Great for making the economy appear solvent, terrible for everything else.
    - 3pt14159 6y ago
      If this were true, Zimbabwe would have a lucrative stockmarket. It's not true though. A high enough inflation rate damages investor confidence and makes business operations more complex. I means constantly needing to minimize cash on hand in the local currency, or having to price contracts in inflation adjusted dollars increasing risk and mental overhead of doing business. At extremis, it means many market participants refusing to do business in the currency at all. Large economies like Germany have gone to the printers before and it doesn't end well.
      - lumost 6y ago
        This is true when viewing from an external currency. If I only care about the nominal value of the S&P500 or the nominal price of oil/copper/steel/aluminum/Gold in dollars. Then the nominal price can inflate indefinitely. Historically no one has been able to inflate assets, without inflating the real economy. If the Fed's QE approach is having this effect then even as a dollar spender you would want to hold assets above all else.
        blueblisters 6y ago
        Contracts and price tags of things you buy are also is nominal dollars. When they change daily, it becomes extremely frustrating for consumer or producers to manage the overheads of these price swings.
        lumost 6y ago
        This also depends on whether asset price inflation trickles into the real economy. Historical examples where asset prices were multiple orders of magnitude beyond the earning capability of workers include feudalism. From a pure economics standpoint it's feasible to have a society where only some people can afford an asset, and everyone else pays a comparatively small fee to rent the asset roughly equivalent to their entire disposable income. This is a pretty terrible system overall where assets are allocated to those with money and ROI is bounded by the amount that can be. extracted from a servitude class. The point of this example is that we should not constrain our economic concerns to simple hyper-inflation, as that can mislead us into thinking that as long as we aren't observing consumer price inflation we can print money indefinitely.
  - marktangotango 6y ago
    I echo this sentiment, but when all major central banks are printing? And the Fed is buying equities? There's some sort of brinksmanship going on that I find highly disturbing. Also seems like there's a large amount of will to keeping the party going indefinitely.
    - hpkuarg 6y ago
      The Fed isn't buying equities. You could maybe argue that the bond ETFs that the Fed bought are "equities", but they aren't really. They're just working to keep interest rates low across the board, from the federal funds rate up to corporate bonds.
      - erentz 6y ago
        Not buying directly yet. But they do now accept equities as collateral. And they are buying all the bonds of zombie companies which in effect props up the equities of those companies.
  - disease 6y ago
    Then the fed can just start buying equities outright. If equities continue to fall even after that, they can keep on buying them until they own enough that they can set the price themselves.
  - fzeroracer 6y ago
    Money printer could potentially prop up the market longer if we printed money for the people most hit by the crisis. IE, the small business owners and the poor/middle-class that will and are struggling to pay bills and rent. Nathan Tankus goes over this one facet quite well [1] which is that essentially landlords are going to burn themselves down trying to extract rent from tenants that will fundamentally be unable to pay due to the coronavirus. Once those people are forced out of their homes then we'll see the crisis hit full speed. [1] https://nathantankus.substack.com/p/suspending-evictions-is-about-saving https://nathantankus.substack.com/p/suspending-evictions-is-...
  - pjc50 6y ago
    > There's a flight to safety that happens when countries really start printing This is normally great for the dollar. Where else are you going to go? Switzerland has had a "negative rates, please go away" policy for a while now.
    - 3pt14159 6y ago
      In a stock market flight to safety you go to the greenback because the USG is the worlds primary reserve currency and is backed up by the power of the American financial system. I'm not talking about a stock market flight to safety. I'm talking about a hypothetical scenario that I do not think will come to pass: They keep running the printers even after the real economy is breaking down. They won't do it. They will let the stock market retract before they let inflation get over five percent because they know the power that they have keeping the USD as the world's primary reserve currency, even if it means the stock market is going to tank. That is my argument: The stock market is going to tank and these meme stonks only go up are going to look chilling in retrospect.
      - nikanj 6y ago
        Presently the glorious leader might not accept the stock market retracting, and would happily sacrifice the future of the USD to prop up the market short-term
- ISL 6y ago
  Bitcoin is, including its geographic scale, a once-in-a-century event. One may expect to find similar returns in small investments in one's life, but probably not in broader global markets. It was a fad that happened to have just-enough technological innovation baked in to yield (at least for now) spectacular success. For me, the real value in Bitcoin wasn't the small-dollars money I made in trading it for lunch money, but rather the exposure to the psychology of day-trading in a volatile market. Unless your friends are playing the game with leverage, a short-term speculative play will only yield spectacular financial success if the government decides to print a spectacular amount of money. If you can impart one idea to friends buying into this, or any, market, it might be this: "Don't play for more than you can afford to lose."
- cliffy 6y ago
  Saying you missed out on Bitcoin is like saying you missed out on a giant ponzi scheme.
  - Loughla 6y ago
    Yes, but at the top of the pyramid, in my case. . . The part where the money is.
- devalgo 6y ago
  >Many of my friends are posting the same things you state on their social media, and are making it clear they won't be left behind this time. The problem is that these people are just gambling. Do you really think they have some insight into the market that thousands of Quants and Traders on Wall St. don't have? Go to Vegas, you will see plenty of people flashing cash around when they win on the Roulette table or hit a streak in Blackjack. Are these guys genius players or are they the inevitably of table odds?
- opportune 6y ago
  Because options price in risk, assuming risk is accurately priced then there is never really a particularly great time to make money off of it. As a retail investor I highly doubt you would have enough information to beat the overall market at pricing in risk. With regular stocks, sure they might well be in a bubble but if you knowingly invest money in a bubble, you have to time the pop. If you bought bitcoin at $14k you made almost 50% in a few days but if you didn’t sell then, you’d have been underwater for years
atlgator 6y ago
Or real estate circa 2006. When your cab driver starts offering unsolicited stock tips, that's the time to get out.
- robjan 6y ago
  Isn't it the same when people on Hacker News start telling you to exit the market.
  - swinnipeg 6y ago
    HN is very bearish in general. Aka permabears. If you sold on sentiment here you would always be selling, or just not buying.
    - abstractbarista 6y ago
      Yep, it's overall quite pessimistic from my perspective. Despite them, I've been buying diversified indexes all throughout this year. The gains have been absolutely beautiful. :)
      - atlgator 6y ago
        Because we know too much.
        taurath 6y ago
        Because we still somehow believe the market is rational, when nobody truly understands whats going on in the financial economy.
  - anoraca 6y ago
    What, you think you the two accounts with only a few months of posting history might be trying to spread FUD?
  - starpilot 6y ago
    Yeah, at this most recent COVID bottom, HN was saying that buying was like catching a falling knife, that the average recession dropped n% more, that it was going to get worse. I am very glad I ignored HN commentary.
empath75 6y ago
One of my unemployed friends just told me he's putting everything into bitcoin.
- earthtolazlo 6y ago
  Has he heard of Tether? It might be worth telling him that the entire cryptocurrency market it being propped up by 10 billion “dollars” of what is essentially Monopoly money.
  - thisisnico 6y ago
    Market cap of Bitcoin is: 117.81 billion U.S. Market cap of Tether USDT: $9.16 billion Tether would account for 7.8% of all Bitcoin. Not sure if that would count as being propped up. It's significant but not entirely propped up, there is a ton of real money in there too.
    - mattmanser 6y ago
      Doesn't that make it much worse? Only a certain amount of the tether is real, making it a tiny chunk, that's propping up a small chunk, that's propping up the large chunk. If the tiny chunk goes, it all goes tumbling down?
      - tossAfterUsing 6y ago
        exactly. stay far away from bitcoin.
    - earthtolazlo 6y ago
      Market cap != market liquidity If I create 100 billion FakeCoins and sell one to my grandmother for $10, suddenly FakeCoin has a 1 trillion dollar market cap. It doesn’t mean there’s anywhere near that much money actually in the market to support that valuation.
      - tossAfterUsing 6y ago
devalgo 6y ago
Well you should be like Kennedy then, when the shoe shine boys were giving stock advice it was time to get out in 1929, perhaps High School dropouts and convenience store workers "getting rich" gambling with options on Robinhood might be a useful signal of things breaking down now.

by ideals 6y ago

Loughla 6y ago

That's where the FOMO comes in. I, and many, many of my friends, missed out on Bitcoin in college. Many of my friends are posting the same things you state on their social media, and are making it clear they won't be left behind this time. Not sure what all that means, but it's fascinating.

3pt14159 6y ago
It means a massive crash is coming. Money printer go brrr is funny, but it's not capable of propping up the entire market forever. There's a flight to safety that happens when countries really start printing.
- lumost 6y ago
  If a money printer channels money directly into assets than its entirely feasible that the money printer can drive the asset to an arbitrary valuation e.g. asset hyperinflation. Great for making the economy appear solvent, terrible for everything else.
  - 3pt14159 6y ago
    If this were true, Zimbabwe would have a lucrative stockmarket. It's not true though. A high enough inflation rate damages investor confidence and makes business operations more complex. I means constantly needing to minimize cash on hand in the local currency, or having to price contracts in inflation adjusted dollars increasing risk and mental overhead of doing business. At extremis, it means many market participants refusing to do business in the currency at all. Large economies like Germany have gone to the printers before and it doesn't end well.
    - lumost 6y ago
      This is true when viewing from an external currency. If I only care about the nominal value of the S&P500 or the nominal price of oil/copper/steel/aluminum/Gold in dollars. Then the nominal price can inflate indefinitely. Historically no one has been able to inflate assets, without inflating the real economy. If the Fed's QE approach is having this effect then even as a dollar spender you would want to hold assets above all else.
      - blueblisters 6y ago
        Contracts and price tags of things you buy are also is nominal dollars. When they change daily, it becomes extremely frustrating for consumer or producers to manage the overheads of these price swings.
        lumost 6y ago
        This also depends on whether asset price inflation trickles into the real economy. Historical examples where asset prices were multiple orders of magnitude beyond the earning capability of workers include feudalism. From a pure economics standpoint it's feasible to have a society where only some people can afford an asset, and everyone else pays a comparatively small fee to rent the asset roughly equivalent to their entire disposable income. This is a pretty terrible system overall where assets are allocated to those with money and ROI is bounded by the amount that can be. extracted from a servitude class. The point of this example is that we should not constrain our economic concerns to simple hyper-inflation, as that can mislead us into thinking that as long as we aren't observing consumer price inflation we can print money indefinitely.
- marktangotango 6y ago
  I echo this sentiment, but when all major central banks are printing? And the Fed is buying equities? There's some sort of brinksmanship going on that I find highly disturbing. Also seems like there's a large amount of will to keeping the party going indefinitely.
  - hpkuarg 6y ago
    The Fed isn't buying equities. You could maybe argue that the bond ETFs that the Fed bought are "equities", but they aren't really. They're just working to keep interest rates low across the board, from the federal funds rate up to corporate bonds.
    - erentz 6y ago
      Not buying directly yet. But they do now accept equities as collateral. And they are buying all the bonds of zombie companies which in effect props up the equities of those companies.
- disease 6y ago
  Then the fed can just start buying equities outright. If equities continue to fall even after that, they can keep on buying them until they own enough that they can set the price themselves.
- fzeroracer 6y ago
  Money printer could potentially prop up the market longer if we printed money for the people most hit by the crisis. IE, the small business owners and the poor/middle-class that will and are struggling to pay bills and rent. Nathan Tankus goes over this one facet quite well [1] which is that essentially landlords are going to burn themselves down trying to extract rent from tenants that will fundamentally be unable to pay due to the coronavirus. Once those people are forced out of their homes then we'll see the crisis hit full speed. [1] https://nathantankus.substack.com/p/suspending-evictions-is-about-saving https://nathantankus.substack.com/p/suspending-evictions-is-...
- pjc50 6y ago
  > There's a flight to safety that happens when countries really start printing This is normally great for the dollar. Where else are you going to go? Switzerland has had a "negative rates, please go away" policy for a while now.
  - 3pt14159 6y ago
    In a stock market flight to safety you go to the greenback because the USG is the worlds primary reserve currency and is backed up by the power of the American financial system. I'm not talking about a stock market flight to safety. I'm talking about a hypothetical scenario that I do not think will come to pass: They keep running the printers even after the real economy is breaking down. They won't do it. They will let the stock market retract before they let inflation get over five percent because they know the power that they have keeping the USD as the world's primary reserve currency, even if it means the stock market is going to tank. That is my argument: The stock market is going to tank and these meme stonks only go up are going to look chilling in retrospect.
    - nikanj 6y ago
      Presently the glorious leader might not accept the stock market retracting, and would happily sacrifice the future of the USD to prop up the market short-term
ISL 6y ago
Bitcoin is, including its geographic scale, a once-in-a-century event. One may expect to find similar returns in small investments in one's life, but probably not in broader global markets. It was a fad that happened to have just-enough technological innovation baked in to yield (at least for now) spectacular success. For me, the real value in Bitcoin wasn't the small-dollars money I made in trading it for lunch money, but rather the exposure to the psychology of day-trading in a volatile market. Unless your friends are playing the game with leverage, a short-term speculative play will only yield spectacular financial success if the government decides to print a spectacular amount of money. If you can impart one idea to friends buying into this, or any, market, it might be this: "Don't play for more than you can afford to lose."
cliffy 6y ago
Saying you missed out on Bitcoin is like saying you missed out on a giant ponzi scheme.
- Loughla 6y ago
  Yes, but at the top of the pyramid, in my case. . . The part where the money is.
devalgo 6y ago
>Many of my friends are posting the same things you state on their social media, and are making it clear they won't be left behind this time. The problem is that these people are just gambling. Do you really think they have some insight into the market that thousands of Quants and Traders on Wall St. don't have? Go to Vegas, you will see plenty of people flashing cash around when they win on the Roulette table or hit a streak in Blackjack. Are these guys genius players or are they the inevitably of table odds?
opportune 6y ago
Because options price in risk, assuming risk is accurately priced then there is never really a particularly great time to make money off of it. As a retail investor I highly doubt you would have enough information to beat the overall market at pricing in risk. With regular stocks, sure they might well be in a bubble but if you knowingly invest money in a bubble, you have to time the pop. If you bought bitcoin at $14k you made almost 50% in a few days but if you didn’t sell then, you’d have been underwater for years

atlgator 6y ago

Or real estate circa 2006. When your cab driver starts offering unsolicited stock tips, that's the time to get out.

robjan 6y ago
Isn't it the same when people on Hacker News start telling you to exit the market.
- swinnipeg 6y ago
  HN is very bearish in general. Aka permabears. If you sold on sentiment here you would always be selling, or just not buying.
  - abstractbarista 6y ago
    Yep, it's overall quite pessimistic from my perspective. Despite them, I've been buying diversified indexes all throughout this year. The gains have been absolutely beautiful. :)
    - atlgator 6y ago
      Because we know too much.
      - taurath 6y ago
        Because we still somehow believe the market is rational, when nobody truly understands whats going on in the financial economy.
- anoraca 6y ago
  What, you think you the two accounts with only a few months of posting history might be trying to spread FUD?
- starpilot 6y ago
  Yeah, at this most recent COVID bottom, HN was saying that buying was like catching a falling knife, that the average recession dropped n% more, that it was going to get worse. I am very glad I ignored HN commentary.

empath75 6y ago

One of my unemployed friends just told me he's putting everything into bitcoin.

earthtolazlo 6y ago
Has he heard of Tether? It might be worth telling him that the entire cryptocurrency market it being propped up by 10 billion “dollars” of what is essentially Monopoly money.
- thisisnico 6y ago
  Market cap of Bitcoin is: 117.81 billion U.S. Market cap of Tether USDT: $9.16 billion Tether would account for 7.8% of all Bitcoin. Not sure if that would count as being propped up. It's significant but not entirely propped up, there is a ton of real money in there too.
  - mattmanser 6y ago
    Doesn't that make it much worse? Only a certain amount of the tether is real, making it a tiny chunk, that's propping up a small chunk, that's propping up the large chunk. If the tiny chunk goes, it all goes tumbling down?
    - tossAfterUsing 6y ago
      exactly. stay far away from bitcoin.
  - earthtolazlo 6y ago
    Market cap != market liquidity If I create 100 billion FakeCoins and sell one to my grandmother for $10, suddenly FakeCoin has a 1 trillion dollar market cap. It doesn’t mean there’s anywhere near that much money actually in the market to support that valuation.
    - tossAfterUsing 6y ago

devalgo 6y ago

Well you should be like Kennedy then, when the shoe shine boys were giving stock advice it was time to get out in 1929, perhaps High School dropouts and convenience store workers "getting rich" gambling with options on Robinhood might be a useful signal of things breaking down now.