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This is a great article. Note it's from January 5th, and it's extremely speculative. But certainly at least worth adding to the overall amount of signals that

This is a great article. Note it's from January 5th, and it's extremely speculative. But certainly at least worth adding to the overall amount of signals that stock investors are thinking. I think I remember someone saying that in 1929 when the shoeshine boys were giving stock advice that that's how someone knew the bubble was about to burst. Lately I've been discussing investment strategies with the people that work at the gyms I'm going to. Is this the equivalent signal? The 2021 equivalent might be "When your personal trainer is giving you investment advice, that's how you know to get out?"

papabrown 6y ago
Or, it could just be that far more people are investors today than there were in 1929. According to this site, only about 10% of Americans owned stock or speculated in the markets in 1929. >In fact, only approximately 10 percent of American households held stock investments and speculated in the market; yet nearly a third would lose their lifelong savings and jobs in the ensuing depression. https://courses.lumenlearning.com/atd-hostos-ushistory/chapter/the-stock-market-crash-of-1929/ https://courses.lumenlearning.com/atd-hostos-ushistory/chapt... Yet, this poll seems to indicate that around 55% of Americans now hold stocks. >Thus far in 2020, Gallup finds 55% of Americans reporting that they own stock, based on polls conducted in March and April. This is identical to the average 55% recorded in 2019 and similar to the average of 54% Gallup has measured since 2010. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own... So if slightly more than one out of every two people you meet owns stocks, I would assume you're bound to run into a lot of people talking about stocks.
- xyzzyz 6y ago
  I presume most of today’s stock owners are actually owners of 401k account which invests in something like Vanguard Target retirement fund. As a result, they know pretty much nothing about stocks, yet they do own them.
  - papabrown 6y ago
    I would presume that as well. However, that doesn't negate the fact that 10% vs 55% is a considerable gap. In 1929 if the shoeshine guy was giving you stock tips, it signaled a very different level of market euphoria than today when your gym trainer is talking about stocks. Also, today we live in a world where there's just so much more accessibility to information. Only about 1.3% of the planet has ever owned Bitcoin. About 13% of Americans have ever owned Bitcoin but 90% of Americans surveyed have heard of Bitcoin. I don't mean this to be about Bitcoin, only trying to point out the massive gap between something that is relatively niche, and the number of news articles/stories, discussion, etc about it.
    - gverrilla 6y ago
      > Only about 1.3% of the planet has ever owned Bitcoin. Source?
      - papabrown 6y ago
        https://www.buybitcoinworldwide.com/how-many-bitcoin-users/ https://www.buybitcoinworldwide.com/how-many-bitcoin-users/ >With one study suggesting ~25 million cryptocurrency traders outside the USA & Europe, it seems quite likely there are over 100 million owners of bitcoins. >If true, it means about 1.3% of the world's population owns bitcoin. I've seen a few other sources make a similar estimate using different methodologies.
throw0101a 6y ago
> I think I remember someone saying that in 1929 when the shoeshine boys were giving stock advice that that's how someone knew the bubble was about to burst. President JFK's father: > While sitting in the shoeshine chair, Kennedy Sr. was alarmed to have the shoeshine boy gift him with several tips on which stocks he should own — yes, a shoeshine boy playing the stock market. > This unsolicited advice resulted in a life-changing moment for Kennedy Sr. who promptly went back to his office and started unloading his stock portfolio. > In fact, he didn’t just get out of the market, he aggressively shorted it — and got filthy rich because of it during the epic crash that soon followed. * https://www.businessinsider.com/how-to-spot-stock-market-bubbles-2017-10 https://www.businessinsider.com/how-to-spot-stock-market-bub... * https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#1929_Wall_Street_Crash https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#1929_Wal...
Negitivefrags 6y ago
The 2021 signal is all the high school students telling you what altcoins to buy. And just wait till you see what is going on with Decentralised Finance. https://coinmarketcap.com/yield-farming/ https://coinmarketcap.com/yield-farming/ Sort that by Highest APYs. It fluctuates all the time but the numbers are getting as high as 1,000,000% APY. There is no world in which that can be anything but a Ponzi scheme. People are actually buying into these things.
- koolba 6y ago
  Wtf is a pancake swap?
  - LittlePeter 6y ago
    Or another one: sushi swap. Perhaps this should be a measure of a bubble too: when you ran out of names and you start using food to name financial contracts.
- PragmaticPulp 6y ago
  The strange thing about Ponzi schemes is that they can be very popular, even if participants know they're join a Ponzi scheme. The MMM Global ponzi scheme has been operating in the open for about a decade: https://en.wikipedia.org/wiki/MMM_Global https://en.wikipedia.org/wiki/MMM_Global Ponzi schemes benefit greatly from a public perception that "all markets are rigged". Ponzi schemes can feel like a rigged game where they have a chance to get in on the ground floor of a rigged game. They also benefit from false equivalencies such as "after all, nothing good lasts forever" to make ponzi schemes feel like just another bull market opportunity that won't last forever. It's akin to gambling. Many entrants tell themselves they'll only allocate as much money as they have to lose, or that they'll withdraw their initial investment after the first 100% gain. Sadly, they usually get overconfident when the scheme doesn't immediately collapse and end up investing far more than they would normally be willing to risk.
  - AngrySkillzz 6y ago
    Yeah, the unfortunate consequence of the widespread misunderstanding and demonization of finance is that everyone thinks its all "made up" or "rigged," and then when they see something that REALLY IS rigged they think it's normal.
aaronbrethorst 6y ago
If I'd taken the advice of one of the guys I hired to move my home back in 2017 and bought Bitcoin like he had, I'd be up 25x today. I thought he was nuts, and still do, but if he's still holding on to his Bitcoin then the joke's on me. Shrug.
- ethbr0 6y ago
  That's hindsight though. I assume if you'd solicited investment advice from 1,000 home movers in 2017, most probably wouldn't have said Bitcoin.
cs702 6y ago
The quote at the beginning of the article is right: > The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both – and the price we pay for having this market go higher and higher is a lower 10-year return from the peak. With a bit more mathematical rigor: For each of us there will be only one future. In that future, each asset -- company, property, etc. -- will earn a finite cash flow yield. If we pay more for that future cash flow now, our rate of return will be lower in the future.
- ethbr0 6y ago
  This is terrifying when you apply it to the housing market: the single largest investment for a large number of Americans. If they're buying now when prices are historically high, what does that say about their ability to generate home equity returns in the future?

papabrown 6y ago

Or, it could just be that far more people are investors today than there were in 1929. According to this site, only about 10% of Americans owned stock or speculated in the markets in 1929. >In fact, only approximately 10 percent of American households held stock investments and speculated in the market; yet nearly a third would lose their lifelong savings and jobs in the ensuing depression. https://courses.lumenlearning.com/atd-hostos-ushistory/chapter/the-stock-market-crash-of-1929/ https://courses.lumenlearning.com/atd-hostos-ushistory/chapt... Yet, this poll seems to indicate that around 55% of Americans now hold stocks. >Thus far in 2020, Gallup finds 55% of Americans reporting that they own stock, based on polls conducted in March and April. This is identical to the average 55% recorded in 2019 and similar to the average of 54% Gallup has measured since 2010. https://news.gallup.com/poll/266807/percentage-americans-owns-stock.aspx https://news.gallup.com/poll/266807/percentage-americans-own... So if slightly more than one out of every two people you meet owns stocks, I would assume you're bound to run into a lot of people talking about stocks.

xyzzyz 6y ago
I presume most of today’s stock owners are actually owners of 401k account which invests in something like Vanguard Target retirement fund. As a result, they know pretty much nothing about stocks, yet they do own them.
- papabrown 6y ago
  I would presume that as well. However, that doesn't negate the fact that 10% vs 55% is a considerable gap. In 1929 if the shoeshine guy was giving you stock tips, it signaled a very different level of market euphoria than today when your gym trainer is talking about stocks. Also, today we live in a world where there's just so much more accessibility to information. Only about 1.3% of the planet has ever owned Bitcoin. About 13% of Americans have ever owned Bitcoin but 90% of Americans surveyed have heard of Bitcoin. I don't mean this to be about Bitcoin, only trying to point out the massive gap between something that is relatively niche, and the number of news articles/stories, discussion, etc about it.
  - gverrilla 6y ago
    > Only about 1.3% of the planet has ever owned Bitcoin. Source?
    - papabrown 6y ago
      https://www.buybitcoinworldwide.com/how-many-bitcoin-users/ https://www.buybitcoinworldwide.com/how-many-bitcoin-users/ >With one study suggesting ~25 million cryptocurrency traders outside the USA & Europe, it seems quite likely there are over 100 million owners of bitcoins. >If true, it means about 1.3% of the world's population owns bitcoin. I've seen a few other sources make a similar estimate using different methodologies.

throw0101a 6y ago

> I think I remember someone saying that in 1929 when the shoeshine boys were giving stock advice that that's how someone knew the bubble was about to burst. President JFK's father: > While sitting in the shoeshine chair, Kennedy Sr. was alarmed to have the shoeshine boy gift him with several tips on which stocks he should own — yes, a shoeshine boy playing the stock market. > This unsolicited advice resulted in a life-changing moment for Kennedy Sr. who promptly went back to his office and started unloading his stock portfolio. > In fact, he didn’t just get out of the market, he aggressively shorted it — and got filthy rich because of it during the epic crash that soon followed. * https://www.businessinsider.com/how-to-spot-stock-market-bubbles-2017-10 https://www.businessinsider.com/how-to-spot-stock-market-bub... * https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#1929_Wall_Street_Crash https://en.wikipedia.org/wiki/Joseph_P._Kennedy_Sr.#1929_Wal...

Negitivefrags 6y ago

The 2021 signal is all the high school students telling you what altcoins to buy. And just wait till you see what is going on with Decentralised Finance. https://coinmarketcap.com/yield-farming/ https://coinmarketcap.com/yield-farming/ Sort that by Highest APYs. It fluctuates all the time but the numbers are getting as high as 1,000,000% APY. There is no world in which that can be anything but a Ponzi scheme. People are actually buying into these things.

koolba 6y ago
Wtf is a pancake swap?
- LittlePeter 6y ago
  Or another one: sushi swap. Perhaps this should be a measure of a bubble too: when you ran out of names and you start using food to name financial contracts.
PragmaticPulp 6y ago
The strange thing about Ponzi schemes is that they can be very popular, even if participants know they're join a Ponzi scheme. The MMM Global ponzi scheme has been operating in the open for about a decade: https://en.wikipedia.org/wiki/MMM_Global https://en.wikipedia.org/wiki/MMM_Global Ponzi schemes benefit greatly from a public perception that "all markets are rigged". Ponzi schemes can feel like a rigged game where they have a chance to get in on the ground floor of a rigged game. They also benefit from false equivalencies such as "after all, nothing good lasts forever" to make ponzi schemes feel like just another bull market opportunity that won't last forever. It's akin to gambling. Many entrants tell themselves they'll only allocate as much money as they have to lose, or that they'll withdraw their initial investment after the first 100% gain. Sadly, they usually get overconfident when the scheme doesn't immediately collapse and end up investing far more than they would normally be willing to risk.
- AngrySkillzz 6y ago
  Yeah, the unfortunate consequence of the widespread misunderstanding and demonization of finance is that everyone thinks its all "made up" or "rigged," and then when they see something that REALLY IS rigged they think it's normal.

aaronbrethorst 6y ago

If I'd taken the advice of one of the guys I hired to move my home back in 2017 and bought Bitcoin like he had, I'd be up 25x today. I thought he was nuts, and still do, but if he's still holding on to his Bitcoin then the joke's on me. Shrug.

ethbr0 6y ago
That's hindsight though. I assume if you'd solicited investment advice from 1,000 home movers in 2017, most probably wouldn't have said Bitcoin.

cs702 6y ago

The quote at the beginning of the article is right: > The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can't have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both – and the price we pay for having this market go higher and higher is a lower 10-year return from the peak. With a bit more mathematical rigor: For each of us there will be only one future. In that future, each asset -- company, property, etc. -- will earn a finite cash flow yield. If we pay more for that future cash flow now, our rate of return will be lower in the future.

ethbr0 6y ago
This is terrifying when you apply it to the housing market: the single largest investment for a large number of Americans. If they're buying now when prices are historically high, what does that say about their ability to generate home equity returns in the future?