5 ms·

> That's a bad example I don't think it's a bad example, because if you spend some time on that subreddit, you'll quickly realize people are literally gambling

by dvt 6y ago

> That's a bad example I don't think it's a bad example, because if you spend some time on that subreddit, you'll quickly realize people are literally gambling with their life savings. In no small part due to disillusionment and cynicism with the current economic realities -- we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k.

v64 6y ago
> you'll quickly realize people are literally gambling with their life savings Gambling, yes. But the stock market is not a ponzi scheme.
- CharlesW 6y ago
  > But the stock market is not a ponzi scheme. That depends on who you ask. https://www.hughescapital.com/the-stock-market-is-a-ponzi-scheme/ https://www.hughescapital.com/the-stock-market-is-a-ponzi-sc...
  - dmoy 6y ago
    From that link: > In 2010, its stock price was $20 and by 2017 had risen to $380 a share, yet Tesla reported a loss of $4.3 billion. How is this possible? The only way to explain this bizarre scenario is to recognize that the market is not efficient I will pass on buying/reading that book based on this excerpt alone. I am far away from a tesla fan (I actively encourage my friends/family to not buy teslas, or invest in tesla, etc), but saying "the only way to explain this" is pretty unbelievable.
    - ZephyrBlu 6y ago
      How would you explain it then? I don't believe Tesla would be valued so highly or fluctuate so violently if the market was actually efficient.
      - exged 6y ago
        The market is efficient in the sense that it aggregates all knowledge between market participants. Nevertheless, no one actually has a crystal ball to predict events far in the future. Tesla's valuation and volatility can both be explained by some market participants expecting huge growth over a long period of time, with a correspondingly huge uncertainty over the actual outcome. Just to put some simple numbers on things, a commonly held expectation is that Tesla will grow revenue at ~50% a year until 2030 while maintaining high margins. At that point Tesla's revenue would be approximately 1T with perhaps 100B in net income. A fair valuation would then be around 3T, assuming there is still some future growth left. This largely explains today's 500B valuation - if there is a 30% chance of this scenario playing out (and Tesla goes bankrupt in the other 70%) then this is a reasonable bet compared to buying other stocks. As for the volatility, imagine if the average market participant changes their mind and believes that Tesla is only likely to achieve a 40% growth rate over the next decade. This would drop 2030 revenue and profits by more than 40% compared to the previous scenario, and today's stock price would fall significantly as well.
      - dmoy 6y ago
        > How would you explain it then? I am not expert enough to know, but just off hand declaring that something is "the only way" with literally no justification or reasoning puts a really bad taste in my mouhth
- ajmadesc 6y ago
  It kind of is. 1. Debt accumulates 2. Return on investment grows faster than the economy 3. Capital starts to strangle economy through rent causing political tensions. 4. Suffering 5. Economic reset through war, revolution, plague.
  - v64 6y ago
    If you're willing to dilute the meaning of "ponzi scheme" so broadly, then yes, the economy is a ponzi scheme.
alisonkisk 6y ago
Come on. WSB is people goofing with real or fake money for fun and lulz. It's not for desperate people trying to survive.
- giantg2 6y ago
  For most on there it is with a small amount of disposable income or house money. But there are some doing it with the money they need to survive or retire. Or just don't understand the naked position they just screwed themselves with.
- dvt 6y ago
  I think that's debatable, but it's most definitely people being cynical about the current state of the economic realities we face. It's all fun and games, until someone commits suicide[1] [1] https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide-after-thinking-he-racked-up-big-losses-on-robinhood.html https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide...
- bsanr2 6y ago
  I dropped ~$1000 of my last savings into options earlier this year because "DIS is going to print." Actually, it's because I was unemployed and staring down the barrel of a rent payment that that money would not be able to cover. I figure I lose the money and not make rent, just as if I'd done nothing, or it makes the money back and then some, and I'm able to cover another month. If I'd sold about a week into holding, I'd have made ~50%. Then our Fed Chairman made the totally sane and not completely unprecedented decision to pump $2 trillion dollars into the economy. The underlying stock shot up and my options values evaporated overnight, amidst the issuing corporation announcing that all of its revenue streams would be effectively dead for the foreseeable future. Just sensible market behavior.
  - tasuki 6y ago
    I think the second half of your comment is sarcastic but also... entirely correct?
    - 6y ago
throwaway0a5e 6y ago
>we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k. This is what nearly everyone in tech who isn't spending their free time shitposting about their side projects and the nuances of programming languages is doing. Sure you can't work your whole career at one company anymore but that's just a reflection of macroeconomic conditions, the stability is still there for the people who's skills are in demand. Pretty much no competent programmer, or electrician for that matter, is unwillingly unemployed for long enough to matter.
- dvt 6y ago
  > the stability is still there for the people who's skills are in demand Saying this after 2008 is just empirically false. You do realize that people lost their entire 401(k)s, right? My dad worked at IBM for over a decade and was laid off. More recently, my buddy (late 20s) was laid off by IBM after working there for the past 7 years; I know people in their 40s and 50s (at big companies and startups alike) that were laid off at the drop of a hat once the pandemic hit. I live in West LA and make a "comfortable" engineer's salary. Guess what, I'll never be able to afford a house here (unless one of my startups takes off or some other equally-unlikely miracle happens). I don't care if you blame this on "macroeconomic conditions," it just happens to be the reality of my generation. To touch on the loneliness/isolation angle, while doing the whole startup thing, particularly in my 20s, I was putting off dating; although I've recently said screw it: even if I die poor†, I'd rather be with someone. I'm very much a libertarian "pull-yourself-up-by-the-bootstraps" entrepreneur's entrepreneur but let's be real: it's not surprising there's so much cynicism. † Relatively, of course. I grew up in post-Communist Eastern Europe in actual poverty, so my life is much better than it used to be.
  - dannyw 6y ago
    Have you thought about cutting down your expenses, living frugally to build up your investments? I find it hard to imagine someone making an engineer’s salary can not afford a house, even in LA.
    - 6y ago
numpad0 6y ago
> can no longer work at a stable company Been wondering lately, why is a position in a stable company also generally considered stable? I mean, it’s a scalable system designed to survive, running on cash flow. Say load reduces, or flow reduces, wouldn’t it be only sane to immediately cut down on worker nodes? Why keep, except as strategic reserves? I suppose because strategic planning up top used to be harder in the past so reserves tended to be large?

by dvt 6y ago

v64 6y ago

> you'll quickly realize people are literally gambling with their life savings Gambling, yes. But the stock market is not a ponzi scheme.

CharlesW 6y ago
> But the stock market is not a ponzi scheme. That depends on who you ask. https://www.hughescapital.com/the-stock-market-is-a-ponzi-scheme/ https://www.hughescapital.com/the-stock-market-is-a-ponzi-sc...
- dmoy 6y ago
  From that link: > In 2010, its stock price was $20 and by 2017 had risen to $380 a share, yet Tesla reported a loss of $4.3 billion. How is this possible? The only way to explain this bizarre scenario is to recognize that the market is not efficient I will pass on buying/reading that book based on this excerpt alone. I am far away from a tesla fan (I actively encourage my friends/family to not buy teslas, or invest in tesla, etc), but saying "the only way to explain this" is pretty unbelievable.
  - ZephyrBlu 6y ago
    How would you explain it then? I don't believe Tesla would be valued so highly or fluctuate so violently if the market was actually efficient.
    - exged 6y ago
      The market is efficient in the sense that it aggregates all knowledge between market participants. Nevertheless, no one actually has a crystal ball to predict events far in the future. Tesla's valuation and volatility can both be explained by some market participants expecting huge growth over a long period of time, with a correspondingly huge uncertainty over the actual outcome. Just to put some simple numbers on things, a commonly held expectation is that Tesla will grow revenue at ~50% a year until 2030 while maintaining high margins. At that point Tesla's revenue would be approximately 1T with perhaps 100B in net income. A fair valuation would then be around 3T, assuming there is still some future growth left. This largely explains today's 500B valuation - if there is a 30% chance of this scenario playing out (and Tesla goes bankrupt in the other 70%) then this is a reasonable bet compared to buying other stocks. As for the volatility, imagine if the average market participant changes their mind and believes that Tesla is only likely to achieve a 40% growth rate over the next decade. This would drop 2030 revenue and profits by more than 40% compared to the previous scenario, and today's stock price would fall significantly as well.
    - dmoy 6y ago
      > How would you explain it then? I am not expert enough to know, but just off hand declaring that something is "the only way" with literally no justification or reasoning puts a really bad taste in my mouhth
ajmadesc 6y ago
It kind of is. 1. Debt accumulates 2. Return on investment grows faster than the economy 3. Capital starts to strangle economy through rent causing political tensions. 4. Suffering 5. Economic reset through war, revolution, plague.
- v64 6y ago
  If you're willing to dilute the meaning of "ponzi scheme" so broadly, then yes, the economy is a ponzi scheme.

alisonkisk 6y ago

Come on. WSB is people goofing with real or fake money for fun and lulz. It's not for desperate people trying to survive.

giantg2 6y ago
For most on there it is with a small amount of disposable income or house money. But there are some doing it with the money they need to survive or retire. Or just don't understand the naked position they just screwed themselves with.
dvt 6y ago
I think that's debatable, but it's most definitely people being cynical about the current state of the economic realities we face. It's all fun and games, until someone commits suicide[1] [1] https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide-after-thinking-he-racked-up-big-losses-on-robinhood.html https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide...
bsanr2 6y ago
I dropped ~$1000 of my last savings into options earlier this year because "DIS is going to print." Actually, it's because I was unemployed and staring down the barrel of a rent payment that that money would not be able to cover. I figure I lose the money and not make rent, just as if I'd done nothing, or it makes the money back and then some, and I'm able to cover another month. If I'd sold about a week into holding, I'd have made ~50%. Then our Fed Chairman made the totally sane and not completely unprecedented decision to pump $2 trillion dollars into the economy. The underlying stock shot up and my options values evaporated overnight, amidst the issuing corporation announcing that all of its revenue streams would be effectively dead for the foreseeable future. Just sensible market behavior.
- tasuki 6y ago
  I think the second half of your comment is sarcastic but also... entirely correct?
  - 6y ago

throwaway0a5e 6y ago

>we can no longer work at a stable company, marry a pretty wife, have a couple of kids, retire 40 years later, and live off of a plump 401k. This is what nearly everyone in tech who isn't spending their free time shitposting about their side projects and the nuances of programming languages is doing. Sure you can't work your whole career at one company anymore but that's just a reflection of macroeconomic conditions, the stability is still there for the people who's skills are in demand. Pretty much no competent programmer, or electrician for that matter, is unwillingly unemployed for long enough to matter.

dvt 6y ago
> the stability is still there for the people who's skills are in demand Saying this after 2008 is just empirically false. You do realize that people lost their entire 401(k)s, right? My dad worked at IBM for over a decade and was laid off. More recently, my buddy (late 20s) was laid off by IBM after working there for the past 7 years; I know people in their 40s and 50s (at big companies and startups alike) that were laid off at the drop of a hat once the pandemic hit. I live in West LA and make a "comfortable" engineer's salary. Guess what, I'll never be able to afford a house here (unless one of my startups takes off or some other equally-unlikely miracle happens). I don't care if you blame this on "macroeconomic conditions," it just happens to be the reality of my generation. To touch on the loneliness/isolation angle, while doing the whole startup thing, particularly in my 20s, I was putting off dating; although I've recently said screw it: even if I die poor†, I'd rather be with someone. I'm very much a libertarian "pull-yourself-up-by-the-bootstraps" entrepreneur's entrepreneur but let's be real: it's not surprising there's so much cynicism. † Relatively, of course. I grew up in post-Communist Eastern Europe in actual poverty, so my life is much better than it used to be.
- dannyw 6y ago
  Have you thought about cutting down your expenses, living frugally to build up your investments? I find it hard to imagine someone making an engineer’s salary can not afford a house, even in LA.
  - 6y ago

numpad0 6y ago

> can no longer work at a stable company Been wondering lately, why is a position in a stable company also generally considered stable? I mean, it’s a scalable system designed to survive, running on cash flow. Say load reduces, or flow reduces, wouldn’t it be only sane to immediately cut down on worker nodes? Why keep, except as strategic reserves? I suppose because strategic planning up top used to be harder in the past so reserves tended to be large?