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>> A good economist ...can tell you what the economy will do. I was sipping a venti mocha when I read this and I laughed so hard there's mocha all over my keyb

by dxbydt 15y ago

>> A good economist ...can tell you what the economy will do. I was sipping a venti mocha when I read this and I laughed so hard there's mocha all over my keyboard. There are people here, actual paid economists, who are doubling up in laughter at your assertion.

irrumator 15y ago
I don't know what else to expect from a thread with an editorialized title taken from Reddit and ZeroHedge of all places.
silverbax88 15y ago
That's funny, because I have some actual paid economists who work for me and they are scarily accurate. But I could throttle back and say 'they know what the economy will LIKELY do'. I still think you are transposing economists and analysts.
- daeken 15y ago
  No, an economist knows what the economy should do, not what it will do or is likely to do.
  - silverbax88 15y ago
    Sure, I can accept that.
  - mattm 15y ago
    Or can explain what has happened in the past.
- steve8918 15y ago
  Just out of curiosity, did any of your economists predict the US recession back in 2007, or the US housing crisis? From what I recall, almost none did.
  - silverbax88 15y ago
    Actually, many did. Economists were telling us that the economy was shaky all through the 00's. Economists told us in 2006 that the market problems from Wall Street would spread into housing. Again, there is a difference between stock analysts and economists. Economists are looking at numbers, trends and history more like a computer scientist. Economists are even often specialized into various regions of the country. A stock analyst is going off of timing and trends more than data. If you've ever traded stocks heavily, you learn quickly that traders throw away yesterday...'that money's gone'. Having worked to make companies profitable, it's unsettling to realize that the stock market is full of people who know how stocks work but have no idea how business works. I think I've posted this before but in one past company we moved millions of dollars of product around before we did our annual inventory just so our numbers would match what Wall Street expected. We actually needed much more on hand than the stock market wanted just to do business, but they wouldn't have any idea about that.
    - steve8918 15y ago
      I've always found that economists for the most part have been extremely unreliable in forecasting things like recessions. (Also stock analysts are useless too) Case in point, an article from 2007, pre-recession: http://www.nytimes.com/2007/03/04/business/yourmoney/04view.html http://www.nytimes.com/2007/03/04/business/yourmoney/04view....
      - silverbax88 15y ago
        I remember that article. It had two glaring ommissions: 1. Economists were not aware that there would be a major terrorist attack six months later 2. Economists did predict the recession that occurred in March 2001 due to the Bush administration's desire to weaken the dollar. When polled, a few economists were polled if there would be a double dip recession and 95% said no- a fact that changed six months later.
    - lionhearted 15y ago
      I'm enjoying this discussion heavily, particularly your contributions to it which are great. Just a minor (but important) nitpick - > A stock analyst is going off of timing and trends more than data. Not necessarily. You can broadly divide analysis into two camps - "technical analysis" [1] which is what you're describing, and "fundamental analysis" [2] which is looking more at intrinsic value, numbers, assets, things like that. Warren Buffett, for instance, does plenty of stock analysis and he's not a technical trader at all. He repeatedly says he doesn't try to time the market. [3] The first book I read on trading - Technical Analysis of the Financial Markets [4] - was from a technical analysis perspective, and I lost money trying to implement it. Then I read about value investing and started trying to apply those principles - only buying fundamentally sound stocks trading at a favorable price earnings ratio, either in fundamentally defensible businesses or with lots of solid assets on their books, and buying with a big margin of safety. I haven't had a losing trade since then, though in fairness my sample size is small and I don't sell unless the price of a stock I bought gets over what I consider reasonable. I'm currently holding Microsoft and HP which are down, but both I think are way undervalued (Microsoft is extremely stable, has some upside in the way of a strong research division, and could potentially translate a hit like the Kinect into alternate input devices. HP is being treated as toxic despite owning some nice high margin businesses that most people don't think about when they think of HP, as well as a huge patent portfolio and some good assets... yeah, their management sucks lately, but who cares if a company is trading below its liquidation value? anyways, do your own research, check the financials, etc, etc) Anyways. Not all traders are technical traders. Fundamental analysis is also analysis, and probably easier to implement to be consistently successful. The top book on that is "The Intelligent Investor" [5] by Ben Graham, which Warren Buffets calls the best book on finance ever written (I agree). [1] http://en.wikipedia.org/wiki/Technical_analysis http://en.wikipedia.org/wiki/Technical_analysis [2] http://en.wikipedia.org/wiki/Fundamental_analysis http://en.wikipedia.org/wiki/Fundamental_analysis [3] “If you’re an investor, you’re looking on what the asset is going to do, if you’re a speculator, you’re commonly focusing on what the price of the object is going to do, and that’s not our game.” (1997 Berkshire Hathaway Annual Meeting) [4] Generally considered one of the best intro books to technical analysis. http://www.amazon.com/gp/product/0735200661/ref=as_li_ss_tl?ie=UTF8&tag=sebastianmcom-20&linkCode=as2&camp=217145&creative=399369&creativeASIN=0735200661 http://www.amazon.com/gp/product/0735200661/ref=as_li_ss_tl?... [5] http://www.amazon.com/gp/product/0060555661/ref=as_li_ss_tl?ie=UTF8&tag=sebastianmcom-20&linkCode=as2&camp=217145&creative=399369&creativeASIN=0060555661 http://www.amazon.com/gp/product/0060555661/ref=as_li_ss_tl?...
cynicalkane 15y ago
As economics, as a field, becomes more powerful, the economy becomes more stable. I think this is probably a positive indicator for the value of economics. This recession is severe, but it has nothing on the recessions of the past. Let's not throw out this knowledge; it was won by the accumulated experience of economic hardship unimaginable to modern Americans. I have a hard time believing there are any "actual paid economists... doubling up in laughter" in your vicinity. Something about the attitude of your post.
- arethuza 15y ago
  "As economics, as a field, becomes more powerful, the economy becomes more stable" So you are asserting that economics as a field causes stability in the economy?
- byrneseyeview 15y ago
  People entering the workforce forty years ago could reasonably guess when they'd retire and what they'd be doing at the time. I know very few people who think they'll have the same job five years from now. It seems very likely that the argument that the economy is getting more stable is false. Here's why: underlying predictability probably increases volatily. People love to lever up when they're certain; "Private Equity" as an asset class refers to both VC deals and leveraged buyouts because in both cases, they fine-tune their leverage to get the same (high) volatility. Increased certainty makes bankers more willing to lend, and speculative buyers are always willing to borrow. In my experience, speculative borrowers and the marginal banker overestimate decreases in volatility. Thus, a more superficially predictable economy will lever up fast enough to more than counteract that (sort of like the theory that airbags increase traffic fatalities because drivers overestimate how safe they are and thus take extra risks). For economic volatility to actually dampen, you'd need economists to come up with better predictions that sound really stupid, so bankers and speculators would disregard them.
- scarmig 15y ago
  This is inaccurate, or misleading at best. "It has nothing on the recessions of the past" is only true if you're looking at the pre-WW2 period. Compared to recessions since then, this is the most severe and long-lasting. There has been no recession since the Great Depression where unemployment has stayed as high as it is for so long. Economists spoke of a Great Moderation that had occurred thanks to their ideological theorizing, but that is just an unfunny punchline to a joke now.
grammaton 15y ago
"Mainstream economists are masters of the ad hoc explanation for whatever happened yesterday." - John Michael Greer
16s 15y ago
Yes, they are like weathermen. The best they can do is make an educated guess.
smallblacksun 15y ago
The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They're both wrong.
- ph0rque 15y ago
  So the trick is to find a direction orthogonal to all economists, and thus find out what the economy really is going to do? Not a bad idea. I guess the hardest part about it is not letting an economist read about this direction, and claim it as his own...
  - rasur 15y ago
    Sounds like we need an Economist in the Complex plane.. Hmm, an Imaginary Economist.. Sounds somehow apt?

by dxbydt 15y ago

irrumator 15y ago

I don't know what else to expect from a thread with an editorialized title taken from Reddit and ZeroHedge of all places.

silverbax88 15y ago

That's funny, because I have some actual paid economists who work for me and they are scarily accurate. But I could throttle back and say 'they know what the economy will LIKELY do'. I still think you are transposing economists and analysts.

daeken 15y ago
No, an economist knows what the economy should do, not what it will do or is likely to do.
- silverbax88 15y ago
  Sure, I can accept that.
- mattm 15y ago
  Or can explain what has happened in the past.
steve8918 15y ago
Just out of curiosity, did any of your economists predict the US recession back in 2007, or the US housing crisis? From what I recall, almost none did.
- silverbax88 15y ago
  Actually, many did. Economists were telling us that the economy was shaky all through the 00's. Economists told us in 2006 that the market problems from Wall Street would spread into housing. Again, there is a difference between stock analysts and economists. Economists are looking at numbers, trends and history more like a computer scientist. Economists are even often specialized into various regions of the country. A stock analyst is going off of timing and trends more than data. If you've ever traded stocks heavily, you learn quickly that traders throw away yesterday...'that money's gone'. Having worked to make companies profitable, it's unsettling to realize that the stock market is full of people who know how stocks work but have no idea how business works. I think I've posted this before but in one past company we moved millions of dollars of product around before we did our annual inventory just so our numbers would match what Wall Street expected. We actually needed much more on hand than the stock market wanted just to do business, but they wouldn't have any idea about that.
  - steve8918 15y ago
    I've always found that economists for the most part have been extremely unreliable in forecasting things like recessions. (Also stock analysts are useless too) Case in point, an article from 2007, pre-recession: http://www.nytimes.com/2007/03/04/business/yourmoney/04view.html http://www.nytimes.com/2007/03/04/business/yourmoney/04view....
    - silverbax88 15y ago
      I remember that article. It had two glaring ommissions: 1. Economists were not aware that there would be a major terrorist attack six months later 2. Economists did predict the recession that occurred in March 2001 due to the Bush administration's desire to weaken the dollar. When polled, a few economists were polled if there would be a double dip recession and 95% said no- a fact that changed six months later.
  - lionhearted 15y ago
    I'm enjoying this discussion heavily, particularly your contributions to it which are great. Just a minor (but important) nitpick - > A stock analyst is going off of timing and trends more than data. Not necessarily. You can broadly divide analysis into two camps - "technical analysis" [1] which is what you're describing, and "fundamental analysis" [2] which is looking more at intrinsic value, numbers, assets, things like that. Warren Buffett, for instance, does plenty of stock analysis and he's not a technical trader at all. He repeatedly says he doesn't try to time the market. [3] The first book I read on trading - Technical Analysis of the Financial Markets [4] - was from a technical analysis perspective, and I lost money trying to implement it. Then I read about value investing and started trying to apply those principles - only buying fundamentally sound stocks trading at a favorable price earnings ratio, either in fundamentally defensible businesses or with lots of solid assets on their books, and buying with a big margin of safety. I haven't had a losing trade since then, though in fairness my sample size is small and I don't sell unless the price of a stock I bought gets over what I consider reasonable. I'm currently holding Microsoft and HP which are down, but both I think are way undervalued (Microsoft is extremely stable, has some upside in the way of a strong research division, and could potentially translate a hit like the Kinect into alternate input devices. HP is being treated as toxic despite owning some nice high margin businesses that most people don't think about when they think of HP, as well as a huge patent portfolio and some good assets... yeah, their management sucks lately, but who cares if a company is trading below its liquidation value? anyways, do your own research, check the financials, etc, etc) Anyways. Not all traders are technical traders. Fundamental analysis is also analysis, and probably easier to implement to be consistently successful. The top book on that is "The Intelligent Investor" [5] by Ben Graham, which Warren Buffets calls the best book on finance ever written (I agree). [1] http://en.wikipedia.org/wiki/Technical_analysis http://en.wikipedia.org/wiki/Technical_analysis [2] http://en.wikipedia.org/wiki/Fundamental_analysis http://en.wikipedia.org/wiki/Fundamental_analysis [3] “If you’re an investor, you’re looking on what the asset is going to do, if you’re a speculator, you’re commonly focusing on what the price of the object is going to do, and that’s not our game.” (1997 Berkshire Hathaway Annual Meeting) [4] Generally considered one of the best intro books to technical analysis. http://www.amazon.com/gp/product/0735200661/ref=as_li_ss_tl?ie=UTF8&tag=sebastianmcom-20&linkCode=as2&camp=217145&creative=399369&creativeASIN=0735200661 http://www.amazon.com/gp/product/0735200661/ref=as_li_ss_tl?... [5] http://www.amazon.com/gp/product/0060555661/ref=as_li_ss_tl?ie=UTF8&tag=sebastianmcom-20&linkCode=as2&camp=217145&creative=399369&creativeASIN=0060555661 http://www.amazon.com/gp/product/0060555661/ref=as_li_ss_tl?...

cynicalkane 15y ago

As economics, as a field, becomes more powerful, the economy becomes more stable. I think this is probably a positive indicator for the value of economics. This recession is severe, but it has nothing on the recessions of the past. Let's not throw out this knowledge; it was won by the accumulated experience of economic hardship unimaginable to modern Americans. I have a hard time believing there are any "actual paid economists... doubling up in laughter" in your vicinity. Something about the attitude of your post.

arethuza 15y ago
"As economics, as a field, becomes more powerful, the economy becomes more stable" So you are asserting that economics as a field causes stability in the economy?
byrneseyeview 15y ago
People entering the workforce forty years ago could reasonably guess when they'd retire and what they'd be doing at the time. I know very few people who think they'll have the same job five years from now. It seems very likely that the argument that the economy is getting more stable is false. Here's why: underlying predictability probably increases volatily. People love to lever up when they're certain; "Private Equity" as an asset class refers to both VC deals and leveraged buyouts because in both cases, they fine-tune their leverage to get the same (high) volatility. Increased certainty makes bankers more willing to lend, and speculative buyers are always willing to borrow. In my experience, speculative borrowers and the marginal banker overestimate decreases in volatility. Thus, a more superficially predictable economy will lever up fast enough to more than counteract that (sort of like the theory that airbags increase traffic fatalities because drivers overestimate how safe they are and thus take extra risks). For economic volatility to actually dampen, you'd need economists to come up with better predictions that sound really stupid, so bankers and speculators would disregard them.
scarmig 15y ago
This is inaccurate, or misleading at best. "It has nothing on the recessions of the past" is only true if you're looking at the pre-WW2 period. Compared to recessions since then, this is the most severe and long-lasting. There has been no recession since the Great Depression where unemployment has stayed as high as it is for so long. Economists spoke of a Great Moderation that had occurred thanks to their ideological theorizing, but that is just an unfunny punchline to a joke now.

grammaton 15y ago

"Mainstream economists are masters of the ad hoc explanation for whatever happened yesterday." - John Michael Greer

16s 15y ago

Yes, they are like weathermen. The best they can do is make an educated guess.

smallblacksun 15y ago

The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They're both wrong.

ph0rque 15y ago
So the trick is to find a direction orthogonal to all economists, and thus find out what the economy really is going to do? Not a bad idea. I guess the hardest part about it is not letting an economist read about this direction, and claim it as his own...
- rasur 15y ago
  Sounds like we need an Economist in the Complex plane.. Hmm, an Imaginary Economist.. Sounds somehow apt?