5 ms·
Can’t be right every time
by chrisgd 6y ago
Can’t be right every time
- AzzieElbab 6y agoWould you bet against him?
- cko 6y agoI wouldn't, but I wouldn't bet with him either. I think some people (like myself) have the personality where they won't make a bet if there's too much uncertainty.
- chrisgd 6y agoOn inflation, absolutely. Nothing has changed since 2008 when people first brought up inflation
- AzzieElbab 6y agoI was reading his tweets and the point that it takes 3 debt dollars to create 1 dollar of value really did resonate with me. Wish I had access to analysis behind it though. And seriously, nothing has changed since 2008? We didn’t print a load of new money for one reason or another?
- chrisgd 6y agoYes, a lot of money printed since 2008 and yields at record lows, inflation not in sight.
- jopsen 6y agoHow do you bet on inflation? Hold stocks/stonks? Gold?
- fshbbdssbbgdd 6y agoTIPS (inflation-protected treasuries) are the purest bet on inflation.
- mshumi 6y agoTIPs adjusted by cpi determined by gov. Better off holding real assets. For retail, a large mortgage is a fantastic bet on inflation. For the more risk-loving, long gamma on any vehicles tracking real assets has really good risk/reward in a high inflation market.
- solaxun 6y agoOne thing has changed, and that is the amount of household debt. There is a class of bubble and related collapse that are driven primarily by debt fueled purchases. When debt bubbles collapse, stimulus doesn't have the intended effect because consumers use the stimulus funds to deleverage. This is what happened in 2008, and recoveries from these types of collapses tend to be much more sluggish. When you have consumers paying their mortgages down instead of spending that money on goods/services, inflation is not a concern and the money leaves the system as debts are paid down. There's much less debt this time. I'm not saying there will be massive inflation, but I'm definitely more concerned than I was 13 years ago. Debt deflation is a known phenomena since 1933 when Irving Fisher published: "The Debt-Deflation Theory of Great Depressions".
- adwi 6y agoHe’s predicting Tesla share price dropping 90% this year. Not going to argue its price is based on sound fundamentals, but yes, I’m currently betting against him.
- solaxun 6y agoI think what he actually said was that if the price dropped 90%, there would be no broader economic fallout, all else constant.
- wtf_is_up 6y agoHe's publicly short TSLA
- solaxun 6y agoWhat's your point? He can be short without betting on a 90% drop, my reply was strictly pointing out that his claim wasn't necessarily that a drop of that magnitude would happen, but if it did that the economic fallout on the rest of the system would be nil.
- AzzieElbab 6y agoIs he wrong?
- rsj_hn 6y agoAbsolutely. If you don't understand the mechanisms that create inflation and are still clinging to long discredited worries about the "money supply", then I'll bet against any opinion of yours on inflation. I'll win that bet much more often than not.
- rsj_hn 6y agoI realized some more information would be needed for people genuinely curious about the relationships between monetary aggregates and inflation. A good summary is this essay, by the Federal Reserve: https://www.federalreserve.gov/faqs/money_12845.htm https://www.federalreserve.gov/faqs/money_12845.htm Basically, in the beggining the Fed was charged with keeping the money supply from growing too quickly, but it found that 1) it was unable to control the size of the monetary aggregates because these are determined by the lending, repayment, and asset allocations of the private sector. All the central bank could do is encourage various allocations by adjusting the interest rate. For example when rates are low, there is not much point in keeping your money in bonds or savings accounts, so a greater proportion is kept in demand accounts as the extra flexibility outweighs the pittance in interest you'll earn. 2) the size of the money supply didn't have much to do with inflation anyway. By the 90s, they stopped trying to do this and they even stopped tracking some of the aggregates, as they were just irrelevant to managing inflation. Inflation is managed by interest rates and the money supply is endogenous, created or destroyed by the financial sector in response to consumer tastes so all the federal government can do is try to incentivize those tastes by adjusting interest rates. If people want to keep their money in bonds, they shift their assets to reduce deposit claims and increase bond claims. The result of this asset re-allocation is that any excess is pushed back onto the financial system and sits idle as excess reserves in banks, not creating any inflation, not "chasing goods", or causing any trouble for anyone except a small number of people who read the statistics about excess reserves and start worrying that the excess reserves will make a run for it, break out of the banks, and start bidding up the prices of goods and services. I can understand why a reporter would have this view, but really we should see things a bit more clearly. People spend more when their wages go up so they can afford to buy more, or when interest rates fall to encourage them to borrow to buy durable goods because the financing costs are cheaper. They don't spend more as a result of whether Citibank has 1 trillion or 4 trillion in excess reserves. That is completely irrelevant to anyone's spending decision, to any firm's investment or production plans, and thus to inflation.
- wtf_is_up 6y agoLook into how his TLRD bet went recently.
- kilroy123 6y agoYes, he's been wrong about many of his positions. I'll admit he's a damn good investor but he isn't right 100% of the time.