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>Economists are as effective as astrologists at predicting the future. [citation needed] >I see this assured economic doom repeated so much without being ques

>Economists are as effective as astrologists at predicting the future. [citation needed] >I see this assured economic doom repeated so much without being questioned as anything but guaranteed I wonder where this incredible confidence is coming from? All the stock market gains are from big tech. Any other markets are flat or down. ( https://finviz.com/map.ashx?t=sec&st=ytd https://finviz.com/map.ashx?t=sec&st=ytd )

Guzba 6y ago
Quick Google search, nearly top result. Committing the sin of just reading the headline but man this is not hard to find evidence: https://www.bloomberg.com/news/articles/2019-03-28/economists-are-actually-terrible-at-forecasting-recessions https://www.bloomberg.com/news/articles/2019-03-28/economist... Or maybe? https://fivethirtyeight.com/features/economists-are-bad-at-predicting-recessions/ https://fivethirtyeight.com/features/economists-are-bad-at-p... "All of the gains are from big tech". All of the gains are always from some companies and all of the losses are always from others. This is just how the pie got sliced 2020. I don't think it has any special meaning we can divine from it?
- Fellshard 6y ago
  Economics isn't a sliced pie like that.
  - Guzba 6y ago
    I just used that as an expression, no special meaning intended.
- tylerhou 6y ago
  (2013) https://www.cbsnews.com/news/stock-market-gains-come-from-few-top-performers/ https://www.cbsnews.com/news/stock-market-gains-come-from-fe...
- victorfriedrich 6y ago
  The market cap of the five largest companies as share of the S&P 500 hasn't been higher in more than four decades.[1] The way the pie is sliced currently isn't really an indicator of stability. [1]: https://www.isabelnet.com/wp-content/uploads/2020/08/Market-Capitalization-of-Largest-Companies-as-Share-of-SP-500-Total.jpg https://www.isabelnet.com/wp-content/uploads/2020/08/Market-...
polote 6y ago
> https://finviz.com/map.ashx?t=sec&st=ytd https://finviz.com/map.ashx?t=sec&st=ytd This viz is amazing
the-dude 6y ago
The stock market gains are because TINA ( https://en.wikipedia.org/wiki/There_is_no_alternative https://en.wikipedia.org/wiki/There_is_no_alternative ). It doesn't really matter that it is big tech, if the ROI would have been highest in Agri, it would be those stocks.
- coliveira 6y ago
  Exactly. The Fed has pumped trillions of dollars in an economy that is stuck, nothing new is being done except for tech. No wonder this money has to flow into tech stocks, and I tell you that it won't stop until something changes in the economic scenario, or the Fed for some reason decides to stop its super-easy-money policy.
  - maerF0x0 6y ago
    I'd love to see a multi-currency valuation of the S&P 500 over the next few years. Part of the issue of saying the Market is "up" is that we keep changing the size of the unit. Is the market worth more now in Yen, Indian Rupees etc? Or are people just willing to part with more USD (that asset specifically) for the underlying asset (the stock)?
    - danhak 6y ago
      > Is the market worth more now in Yen, Indian Rupees etc? Or are people just willing to part with more USD (that asset specifically) for the underlying asset (the stock)? Those are...pretty easy questions to answer. The dollar is down about 10% since its March high compared to a basket of other major currencies: https://www.marketwatch.com/investing/index/dxy https://www.marketwatch.com/investing/index/dxy
      - maerF0x0 6y ago
        Can you help me figure out the maths on that. So how much of the stock gain is from currency devaluation (against other currencies) and how much is due to appreciation (of investors willing to pay more real value) ? Say .INX was 3250 in Jan and is 3500 now. -> 7.7% increase. But currency has lost about 10% of its underlying value. If something loses 1/10th of it's value we expect people to pay 11% (1/.9) more of that currency. So the 7.7% increase in stock market is actually a 3.3% decrease in a mixed currency basket?
beefman 6y ago
https://www.economist.com/finance-and-economics/2016/01/09/a-mean-feat https://www.economist.com/finance-and-economics/2016/01/09/a... "The only function of economic forecasting is to make astrology look respectable," John Kenneth Galbraith, an irreverent economist, once said. ... Over the period [1999-2014] there were 220 instances in which an economy grew in one year before shrinking in the next. In its April forecasts the IMF never once foresaw the contraction looming in the next year. Even in October of the year in question, the IMF predicted that a recession had begun only half the time. To be fair, an average-growth prediction also misses 100% of recessions. One model does better, though. Our random-number generator correctly forecast the start of a recession 18% of the time."
skybrian 6y ago
Theoretically, predicting what the economy will do depends on also predicting most other major events. For example, to know in advance how the economy would do in 2020, you would have had to predict the pandemic. You also need to predict wars, natural disasters, the weather (snowstorms affect the economy), elections, and which new laws will pass for things like stimulus bills. Sure, sometimes it averages out. But often it's the opposite, more like catastrophic cancellation. The outcome of a close election is inherently unpredictable because large opposing forces mostly cancel out. It's odd how, whenever we talk about what will happen next year, we forget how we were blindsided this year.

Guzba 6y ago

Quick Google search, nearly top result. Committing the sin of just reading the headline but man this is not hard to find evidence: https://www.bloomberg.com/news/articles/2019-03-28/economists-are-actually-terrible-at-forecasting-recessions https://www.bloomberg.com/news/articles/2019-03-28/economist... Or maybe? https://fivethirtyeight.com/features/economists-are-bad-at-predicting-recessions/ https://fivethirtyeight.com/features/economists-are-bad-at-p... "All of the gains are from big tech". All of the gains are always from some companies and all of the losses are always from others. This is just how the pie got sliced 2020. I don't think it has any special meaning we can divine from it?

Fellshard 6y ago
Economics isn't a sliced pie like that.
- Guzba 6y ago
  I just used that as an expression, no special meaning intended.
tylerhou 6y ago
(2013) https://www.cbsnews.com/news/stock-market-gains-come-from-few-top-performers/ https://www.cbsnews.com/news/stock-market-gains-come-from-fe...
victorfriedrich 6y ago
The market cap of the five largest companies as share of the S&P 500 hasn't been higher in more than four decades.[1] The way the pie is sliced currently isn't really an indicator of stability. [1]: https://www.isabelnet.com/wp-content/uploads/2020/08/Market-Capitalization-of-Largest-Companies-as-Share-of-SP-500-Total.jpg https://www.isabelnet.com/wp-content/uploads/2020/08/Market-...

polote 6y ago

> https://finviz.com/map.ashx?t=sec&st=ytd https://finviz.com/map.ashx?t=sec&st=ytd This viz is amazing

the-dude 6y ago

The stock market gains are because TINA ( https://en.wikipedia.org/wiki/There_is_no_alternative https://en.wikipedia.org/wiki/There_is_no_alternative ). It doesn't really matter that it is big tech, if the ROI would have been highest in Agri, it would be those stocks.

coliveira 6y ago
Exactly. The Fed has pumped trillions of dollars in an economy that is stuck, nothing new is being done except for tech. No wonder this money has to flow into tech stocks, and I tell you that it won't stop until something changes in the economic scenario, or the Fed for some reason decides to stop its super-easy-money policy.
- maerF0x0 6y ago
  I'd love to see a multi-currency valuation of the S&P 500 over the next few years. Part of the issue of saying the Market is "up" is that we keep changing the size of the unit. Is the market worth more now in Yen, Indian Rupees etc? Or are people just willing to part with more USD (that asset specifically) for the underlying asset (the stock)?
  - danhak 6y ago
    > Is the market worth more now in Yen, Indian Rupees etc? Or are people just willing to part with more USD (that asset specifically) for the underlying asset (the stock)? Those are...pretty easy questions to answer. The dollar is down about 10% since its March high compared to a basket of other major currencies: https://www.marketwatch.com/investing/index/dxy https://www.marketwatch.com/investing/index/dxy
    - maerF0x0 6y ago
      Can you help me figure out the maths on that. So how much of the stock gain is from currency devaluation (against other currencies) and how much is due to appreciation (of investors willing to pay more real value) ? Say .INX was 3250 in Jan and is 3500 now. -> 7.7% increase. But currency has lost about 10% of its underlying value. If something loses 1/10th of it's value we expect people to pay 11% (1/.9) more of that currency. So the 7.7% increase in stock market is actually a 3.3% decrease in a mixed currency basket?

beefman 6y ago

https://www.economist.com/finance-and-economics/2016/01/09/a-mean-feat https://www.economist.com/finance-and-economics/2016/01/09/a... "The only function of economic forecasting is to make astrology look respectable," John Kenneth Galbraith, an irreverent economist, once said. ... Over the period [1999-2014] there were 220 instances in which an economy grew in one year before shrinking in the next. In its April forecasts the IMF never once foresaw the contraction looming in the next year. Even in October of the year in question, the IMF predicted that a recession had begun only half the time. To be fair, an average-growth prediction also misses 100% of recessions. One model does better, though. Our random-number generator correctly forecast the start of a recession 18% of the time."

skybrian 6y ago

Theoretically, predicting what the economy will do depends on also predicting most other major events. For example, to know in advance how the economy would do in 2020, you would have had to predict the pandemic. You also need to predict wars, natural disasters, the weather (snowstorms affect the economy), elections, and which new laws will pass for things like stimulus bills. Sure, sometimes it averages out. But often it's the opposite, more like catastrophic cancellation. The outcome of a close election is inherently unpredictable because large opposing forces mostly cancel out. It's odd how, whenever we talk about what will happen next year, we forget how we were blindsided this year.