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Does this crash feel uniquely frustrating? Or is that the nature of these things. I was in high school in 2008 so I’m not sure if I’m ignorant here or not.

fullshark 4y ago
I am frustrated in that I have money but nowhere to put it, anxious over holding it because of inflation. Just kind of sitting around waiting, losing wealth.
- trey-jones 4y ago
  Losing wealth to inflation might be preferable to losing it to equities in the coming months. Obviously nobody knows, but it seems long overdue. There are also positions that are very, very lucrative in bear markets, and I'll assume you know about these, or know how to find out about them.
  - mistermann 4y ago
    I am certainly not aware, any chance you could share a few?
    - AnimalMuppet 4y ago
      Disclaimer: This is not financial advice. Consult a professional (or several), not some random muppet on HN. One way to play it is to buy long-term bonds at about the peak of the interest rates. Bond prices are inversely correlated with interest rates; as rates drop, bond prices rise. The longer term gives you a longer lever for the interest rate move to raise the price. Then, when rates bottom, sell the bonds and buy stocks. [Edit: Because that's the top for the bonds, and usually somewhere around the bottom for the stocks.] The observant will note that this requires you to know when the interest rates are peaking, and when they are at bottom. There are some technical markers that can give you hints, but the reality is that there is no absolute way of determining these things. They turn out to be informed judgment calls.
- deleted 4y ago
  [deleted]
- trgn 4y ago
  This is thermodynamically inevitable, at least, according to this https://en.wikipedia.org/wiki/Wealth,_Virtual_Wealth_and_Debt https://en.wikipedia.org/wiki/Wealth,_Virtual_Wealth_and_Deb... Storing wealth for later is one of the hardest things to do. It is an unsolved problem, even after thousands of years. Capitalism has a strong claim to hint at a workable solution: it formulates a process in which savings can be converted into capital, capital being the lever to increase productivity, thus increasing wealth. Funnily enough, the accountants responded by starting to depreciate the capital assets, bringing it back full circle. It also necessitates capital being deployed productively. And that too is apparently not that easy either, as the current meltdown is showing.
  - flyinglizard 4y ago
    Assets decay. Depreciating them seems more like a decision of a physicist rather than an account.
    - smokefoot 4y ago
      Tangible assets decay
  - Bubble_Pop_22 4y ago
- puranjay 4y ago
  Historically, gold has kept your purchasing power largely intact over long periods.
  - waterlaw 4y ago
    I'm the biggest gold bug ever. Been holding this awful asset for the last 12 years. This is the most manipulated, trash asset imaginable. The price of gold hasn't changed since 2011. It was $1900, still $1900. Worst investment of my life. Maybe 2024 - 2030 will see some returns in gold like we saw from 2001 - 2011. I'll keep investing in miners, because it's what I know and spend a lot of time reading drill results, balance sheets, etc. But diversifying my portfolio. Oil has done particularly well in the past two years. There are many other interesting commodities.
    - babyshake 4y ago
      It is interesting how 2011 until now lines up with the rise of BTC. Not to say there is causation but there may be.
      - deleted 4y ago
        [deleted]
    - puranjay 4y ago
      I mean my time frame was more like 50 years - assets you can pass onto your grandkids - but you’re fundamentally right if your time frame is 10-15 years
    - ycombinator5 4y ago
      Dont forget to buy/rebalance other metals when they seem cheap or gold seems expensive. Palladium has been great. Platinum is cheap now IMO.
    - bigDinosaur 4y ago
      Is looking at gold in terms of it's dollar value actually the point? I thought it was because it's a tangible asset that humans have always valued, i.e. a useful and rare metal, and that so long as people have food and water they'll probably still value it long past the point other assets have become worthless.
- tylerhou 4y ago
  Buy inflation protected bonds from the government (TreasuryDirect) if you haven’t already.
  - ghaff 4y ago
    While a decent recommendation, it has a fairly small cap for someone with a lot of money to invest.
    - verve_rat 4y ago
      And only applies to people in the US.
  - 55555 4y ago
    Can anyone explain to me why VTIP and other TIPS/FRNs ETFs have declined over the past year when a basket of TIPs should presumably be more valuable as CPI increases? I’m missing something crucial.
    - redisman 4y ago
      Check the dividend
      - 55555 4y ago
        Thank you!
JoeJonathan 4y ago
What do you mean by frustrating? In my memory of 2008, there was a real sense of panic, far beyond anything we're seeing right now. Before it was evident things had gone really wrong, plenty of people had a sense that something had to give—housing was going crazy, and I remember making $37k and qualifying for mortgages on NYC apartments—but inflation was <3% and unemployment was low. While I think we're headed for a whole new kind of disaster (albeit one I can't predict—unlike 2008, there's nothing fundamentally wrong with financing of housing, but I can't see how these prices are sustainable), I'm not sure it'll be 2008-level doom. The frustration, I think, comes from a real sense of the toll of inflation coupled with annoyance, sometimes unarticulated, that we could have put the breaks on by raising interest rates more aggressively long ago, circa 2015-2016, when the stock market started going crazy.
- BryanBeshore 4y ago
  I agree with this. Basically the fed 'rescued' the system in 2008 by injecting capital into the system. However, this 'rescue' became the norm and they decided to continue easy money policy for the next 14-years. Now, here we are! This has been a concern for a long time now.
  - cyberlurker 4y ago
    Rates were being raised before the pandemic. Don't you remember all the complaining by the President?
  - rbranson 4y ago
    What is fundamentally concerning about a central bank injecting capital into the system? If anything, you could say the same thing about fiat currency and fractional reserve banking as a whole. Money comes from nowhere!
- cyberlurker 4y ago
  I think the hesitation was there was a minor economic slowdown around that time and inflation was still flat, so it is unclear raising rates would have been the right call. Its easy to see there is a problem now, but I don't believe anyone knows what amount was caused by the pandemic. Despite gripes everywhere, I actually think Fed policy has been very reasonable given the circumstances. If not for the pandemic, steady rate hikes were already happening and set to continue.
csa 4y ago
> Does this crash feel uniquely frustrating? We are currently in a correction (at least officially). Whatever pain folks are feeling right now will feel trivial to what the pain will be like when an actual crash comes.
- xivzgrev 4y ago
  This. I remember the 2008 crash and it was panic. Banks collapsing, large layoffs, hiring freezes, and a quick downturn. Hell the pandemic downturn in spring 2020 felt worse than this. Unemployment went way up, banks were pulling back, people were being laid off. That was an artificial crash with a fairly defined end time. A normal crash does not have that. Whatever this is, not a crash. Or at least yet.
  - BryanBeshore 4y ago
    Tech has crashed, and is very much in a recession, while the rest of the economy has been operating (decently) smoothly. This said, other parts of the economy are starting to feel knock-on effects of inflation, higher rates, and supply issues. Things could certainly get a lot worse. 2008 was brutal, though.
- puranjay 4y ago
  Yeah this is not even remotely a crash. Even laggards who bought anything in late 2020 are still in profit. Anyone who bought anything pre 2020 is wildly in profit. In 2008, SPX eventually crashed to 700ish - a level it had last seen in 1997. A whole decade of investor wealth was wiped out Right now, we haven’t even seen the pandemic era wealth wiped out. This is honestly a paper cut compared to a proper 2008-like crash
hahaxdxd123 4y ago
This feels extremely cathartic for me. Like we've all returned to our senses and are no longer pretending it's possible to have 100% YoY growth indefinitely for every vaguely tech related company.
- mdm12 4y ago
  Fundamentals matter again. It would be more cathartic if my portfolio wasn't down as much as it was!
gumby 4y ago
I’ve lived through worse, 2008 among them. I obviously don’t know where the bottom is but I do see multiple simultaneous contributing problems (war -> food problems; supply and transport problems exacerbated by Covid; artificially (“profiteering”) high prices; a tardy (but firm) response from the fed — though it is the nature of such responses is that they have to be tardy). Ironically the multiple causes is a positive sign: they can start to turn upwards independently. While the 2008 crash was a secular failure of a singular asset class, or perhaps more correctly two coupled asset classes (mortgages and CDOs). That was hard to work it’s way out of the system, though unorthodox actual by the fed and other central banks helped cushion the shock…at a cost. So for example the crypto collapse is high profile but minor, even trivial, in the scheme of things.
- bcrosby95 4y ago
  Ah, yes, but the cracks first started appearing in 2006. That was when the easy loan and refinance spigot was turned off. 2022 could be this downturn's 2006. In other words, maybe, you ain't seen nothin' yet.
  - redisman 4y ago
    Or it was 2020 already. Crashes don’t need to look the same each time
- tenpies 4y ago
  The most fascinating part to me is how not like 2008 at all this one will be. I'm talking to every Boomer and gray beard I can - and even they can only go far so back. We have elements of every great financial, social, and demographic downfall in our midst right now, and a political class that seems desperate to start WW3. I cannot help but remember how a Japanese Boomer once described the situation leading to WW2 in Japan: "it was like everybody lost their mind for a very long time". The very scary part is how utterly incapable current Western leaders are. Sure, occasionally a good law or policy sneaks through, but by and large the best way to emulate their actions is by asking "what would a saboteur do?". It has been flawless and continues to be as seen by this morning's US bill about making price increases in fuel illegal. Then there's how utterly over-financialized our system has become and it's everywhere, from housing to sovereign debt. If anything, it's scarier because while the consumer balance sheet is not-that-awful, the sovereign ones that matter are catastrophic. That confluence of incompetent decision makers + desperation + big stages usually ends in catastrophe. If we're exceedingly lucky this would be a 2008, but I suspect we're still years away from any sort of "bottom" in either finance, demographics, or societal well-being.
ardit33 4y ago
2008-2009 was bad world wide, except for Tech. Tech had a hiring freeze for late 2008-2009 and then things rebounded fast. Most large companies had minor layoffs (Except Apple and Facebook). Even Microsoft had layoffs, and Google (stealth shut down of products). Some smaller startups couldn't raise money and had to shut down. But things picked up full steam by 2009 again. What saved tech? It was mobile. 2008 was the first year when you could write apps for the iPhone, and they were a hit. Same with Android later in 2008 early 2009. It started a boom of new companies, and then competition for talent. Also Google and Facebook got into a bidding war for engineers, which started driving up salaries. Also, a lot of the large tech companies today, were started or took off around that area (AirBnb, DropBox, Uber, Lyft, etc). Is this going to be another small bump 2008 for tech (a correction, hiring freeze, and then upwards), or a long drawn 2001 style bust? My bet it is going to be a 2008-2009 style of correction for tech (job market at least), with the 2001 style of correction for stocks. Why? 1. Stock were way overhauled, and coming back to pre-pandemic levels (almost half off for many companies). 2. Most large companies are still very profitable right now and have healthy margins. 3. Some will try to rein in costs, and have minor layoffs or hiring freezes, but no near 2001 style of busts 4. Tech is in a long term upswing trend that will last at least another 50 years.
- avrionov 4y ago
  I hope you are right. We still don't know the full extend of the current problems. The housing market, the crypto, the bad loans, the unicorns without profits.
- nwiswell 4y ago
  After 2009, long term risk free rates continued their secular decline which culminated in March 2020 at an all time low of 0.54% for the 10 year Treasury yield. This was a major factor in the tech story. Rather than valuation being focused on current profits, as is the case for most industrial stocks, valuation for tech is based on expectations of future profits, i.e. growth. When long term interest rates are very low, these future cash flows are not discounted very much. Therefore, good growth numbers for tech in a low interest rate environment resulted in face-melting performance as all of that expected future profit is basically just assigned to the current value of the equity. That era is clearly ending. Long term interest rates hit the all time low and are rebounding in a way that is very distinct from 2009. I would not be surprised if tech stocks fundamentally reprice and never completely recover. Zoom out here: https://fred.stlouisfed.org/series/DGS10 https://fred.stlouisfed.org/series/DGS10
timr 4y ago
Lived through the first dot-com crash, the 2008 crash, and now this. The current reality, today, is nowhere near either one -- speculative bubble tech has crashed, but the rest of the market is around February 2021 prices. The S&P500 is only just now entering "correction" territory. The only thing similar is that we have a ton of drama from people claiming that the end is near. But in 2008, the financial system really was close to systemic collapse. Banks were having runs and being rescued by the FDIC. Money market accounts were dropping below a dollar. That was crazy. Seeing Terra break the buck is...not the same. Yes, inflation is high and that's concerning, but what's fundamentally driving a lot of the panic are the "high" interest rates (i.e. rates that haven't been "this high" since...spring of 2020). This too shall pass. Parts of the market that were wildly irrational will gain sanity, or they will go away. Fake wealth will be lost. It will be painful for the few who dove head-first into the froth, but to me, right now, this doesn't look like a moment for panic. For contrast, I was genuinely freaked out by what was happening in 2008.
- puranjay 4y ago
  How do you think it will impact startups that essentially grew by incentivizing users and never achieved unit profitability? A funding crunch can’t be good for their survival
  - timr 4y ago
    I think the other thread from YC on what it means for startups is on point. "Survival of startups", plural, is not the metric of relevance. The strong will survive. The ones who were/are running on fumes are gonna have a bad time.
  - ghaff 4y ago
    In an era of belt-tightening, it's reasonable to expect that companies that can't even achieve a profit, including companies like Uber, will have to make changes and the people who have created lifestyles based on VC subsidies will have to face reality as well.
  - jghn 4y ago
    This is where I worry. My recollection of how the dot com crash unfolded was that first the bogus startups folded as expected. But they're part of a larger food chain. There were other b2b companies who had them as customers. And now they're out of money so they fold. Which affects other companies. And so on.
boringg 4y ago
Equity crash has been expected for awhile - the unsettling nature is how long will it go combined with the resurgence of inflation that we haven't since the 70s. Fed didn't manage that well and the 70s were tricky. The fed is a different animal now and so is the macro environment. Agree with a lot of sentiment - glad to see some of the hot air escape - there's some terrible companies and shady businesses out there right now. Hope we don't go into some global recession though - thats my concern (if all central banks work in lockstep).
lordnacho 4y ago
I'm only in my early 40s but as a young trader I sat next to people who traded the 1987 crash, Asia, Russia (90s), and the dotcom crash plus 9/11. Hindsight changes a lot of things. For one the market recovered from all previous crashes, with one major exception. I traded through 2008. It felt apocalyptic. I got a text message from a guy at Lehman on the Monday, surprised he was now out of a job. There was a queue of people at Northern Rock. We knew that a lot of bad things were about to come out, basically things that had been papered over to fix dotcom. The whole subprime thing was predictable, I went to a lunch at Goldman's where they basically just said it out loud, the subprime market is gonna explode and maybe take some other things with it. But what we have now feels like it's sweeping even that under the rug. Growth didn't bounce back hugely afterwards, it's been mild. But interest rates have hit a low nobody that imagined. The whole period since 2008 has been exceptional. A lot of things that seemed like frothy excess went on for a long time. A lot of stuff that should have died in 2008 got to live. So yeah it feels really big, but no climax thus far. No Lehman yet, and no Madoff. A couple of things sort of felt like maybe they would cascade, but didn't, eg Bill Huang's fund going down. For the GFC we had the two Bear Stearns funds going down as a preshock. Not sure if Luna really qualifies, given the amount of crazy things that happen in crypto.
- cbozeman 4y ago
  I know what I'm about to say will seem perverse, but frankly I'm looking forward to shit really hitting the fan. I'm talking 1930s Depression era fuckery. The modern world needs it. We've created ridiculous systems that - wrongly - believe they're beyond specific forces of both human nature and market economics, and I can't wait for the shit to hit the fan and the music to stop. A sharp, harsh, painful, miserable, unbearable correction needs to happen to remind wealthy, middle-class, and poor people that fundamental economics cannot be ignored. The more painful it is for every group, the better. Trauma is the best teacher.
  - mym1990 4y ago
    Has it not dawned on you that after countless examples of fraud, speculation, scheming, and profiteering...that nothing ever changes, and no one learns? I would love for you to get dropped into the 1930s and go have a good time.
dvirsky 4y ago
I don't know if this is just the start of a bigger thing, but this is nothing like 2008 for sure; in 2000 I was around but didn't work in tech directly so it affected me less. 2008 was a complete panic, people thought it was literally the end of the financial world as we know it, the market collapse was just the tip of the iceberg. In 2008 I was working at a start-up that had plenty of cash, but pretty crappy investors who panicked and decided they want their money back, and through the board forced the company to basically shut down, didn't even pay us our last paycheck or the severance required by law in my country. So I found myself unemployed (with a baby BTW), my wife was also laid off, we pretty quickly had to withdraw money from our not-that-big savings, my company was car gone and I needed a new car, and no company around even thinking of hiring. It was extremely scary. I did some freelance work for a couple of months, then found a job at a pre-seed start-up that managed to scrape a couple hundred K somehow, and got by for a bit. After a year things started to turn around and things went great up until now. But it was really traumatic.
baal80spam 4y ago
In 2008 I was 28 and I barely registered something is happening. Mind you, that was in Europe.
- BryanBeshore 4y ago
  In 2008, I was 25 and in NYC. Seeing professionals with boxes full of work stuff, on their last days of work, was the norm. It felt like what I imagined the crash of 1929 and the dustbowl would be like.
- t-3 4y ago
  2008 wasn't as bad as the 4-5 years of "echoes" it caused to roll through the economy here in the US. We had a long, major recession and people on unemployment for years without being able to find work. Actually, in a lot of ways 2008 felt very hopeful, like we could see the possibility for great changes and a road to a brighter future. Today, it feels like we're at peak cynicism and pushing higher, I don't know anyone that thinks things are going to get better.
svachalek 4y ago
I'm 50 and I've learned about every 5-15 years banks pull something that melts down the world economy. It's called "financial innovation". As others have mentioned, this episode is pretty painless and innocent so far, to the point that I personally am not sure we're actually in an episode yet. These little hiccups happen a lot more often than that, and we often forget about them a few months later. Actual meltdowns don't just make you feel worried and annoyed, they hurt a lot. Unless you're a bank.
- fartcannon 4y ago
  If you're a bank, you make money before, during and after the meltdowns that you create. And if it looks like youre ever in trouble, you get bailed out by the same people whose money you gambled away. It's dark.
  - streetcat1 4y ago
    Actually, if you read Nissim Taleb, banks are the most fragile companies. They have capped upside (basically interest rate) , and indefinite downside.
    - 55555 4y ago
      Which of his books is this from?
      - streetcat1 4y ago
        The Black Swan, Second Edition. he added a chapter.
    - fartcannon 4y ago
      In reality, they get bailed out. So there is no downside? They can literally do whatever the they want, get small fines, and if it all falls apart, we just give them more. How many bonuses got paid out of the bailout money?
  - thelamest 4y ago
streetcat1 4y ago
There is no crash. Unemployment rate is 3.6% Most of the former crashes hit the financial sector first and than hit the real economy. This one hit the financial sector and will stay there. This is why you see wallstreet / vc panic, but the real economy cannot find employees.
bcantrill 4y ago
You sweet summer child! First, this thing hasn't even started. My fellow vets of the dot com bust will remember that period in the summer of 2000 where we all called it "the correction": the sentiment was that some companies that never should have been funded in the first place would (obviously!) perish, but that those companies that "made picks and shovels" would endure. (A Gold Rush-era metaphor that I heard countless times.) At least in 2000, that optimism turned out to be misguided: when there are NO MINERS AT ALL there is little need for picks and shovels -- and the big tech companies all saw their businesses severely adversely affected by the end of 2000. And of course, it took years to find a bottom: the bust went so deep that EVERY significant tech company in ~2000 went through layoff after layoff after layoff over the first half of the next decade, as documented by the HN of the day, fuckedcompany.com[0]. Yes, the housing bubble started to form mid-decade, but tech itself hadn't really meaningfully recovered when 2008 arrived (and this famous Sequoia memo!) -- and it was only from the embers of THAT bust (broadly deeper but much less acute in tech) that the next bubble began to form. So in terms of now: it's hard to know where this thing is going, but there are more parallels (to me) to the Dot Com Bust than to the 2008 Recession. I expect this thing to run pretty deep in tech, and I think some sectors (ahem, web3) may well face extinction. If it does run that deep, you will only know that it's over in hindsight: it will take years to recover, and it's only when everyone stops thinking about it that the seeds of a true recovery will be planted. So, get comfortable: it may be a while. One final note. Back in the depths of the bust (maybe 2003?), I saw a bumper sticker on the 101 that stuck with me: "Please God, Just One More Bubble." I remember thinking at that time that there would be no more bubbles forthcoming -- that nothing could possibly be as frothy as what I had lived through. I was wrong, of course, and I really hope the driver of that car cashed out on their NFT marketplace or whatever! [0] https://en.wikipedia.org/wiki/Fucked_Company https://en.wikipedia.org/wiki/Fucked_Company
- jupp0r 4y ago
  Thanks for writing that up! I was still in high school during the 2000 crash but I still think some things are different today. There are miners (to use the shovel terminology). They are watching Netflix series, running businesses, drive electric bikes around, monitor airplane traffic and all sorts of things. The internet today is just fundamentally required for so much of the economy to function that tech companies are much less bound to crash than in 2000.
yucky 4y ago
2008 was called the Great Recession for a reason. This ain't that. Nowhere near as scary. Now if we can stop this drumbeat for WWIII that would be nice. I feel bad for Ukraine and all that, but it's not worth starting a world war over. Assuming we come to our senses on that front, this is nothing.
foobiekr 4y ago
The issue is you don't have perspective. I lived through the Japan crash, which is the biggest crash in my lifetime, as well as the early 80s government layoffs (where my dad really thought he would be unemployed), 1992 (when I thought I would lose my job), the dotcom (where I knew good people who were out of work for a year or more), and 2008. So far this is exceptionally mild. There are not mass layoffs - there are layoffs and hiring freezes, but nothing like 2001 - and there are not people taking pay cuts or worried that if they have to leave their job they will need to take one. We are far, far from 2008 and even farther from 2001. I have tried to explain what the dotcom was like to young people and the usual response has been: "What is the big deal? I would just find a new job and probably get a pay bump as well." I am not saying this to pick on young people in technology but rather to help illustrate how far from reality they are when they talk about how unfortunate they've been graduating into tech in the aftermath of 2008. 2008 was barely a blip on the tech scene. A real down market is something most of them have never experienced and not one that they are internalizing. There has been a ton of "we graduated into the worst job market ever!" propaganda pointed at millennials who have internalized it. It isn't true unless you were in finance or real estate.
- tylerfontaine 4y ago
  > There has been a ton of "we graduated into the worst job market ever!" propaganda pointed at millennials who have internalized it. It isn't true unless you were in finance or real estate. It was true for a lot of us who weren’t in tech at the time. I graduated in December 2008. I was unemployed for a year, eventually finding a job as a bank teller. I applied for literally hundreds of jobs from waiting tables to retail to grant writing to substitute teaching. I was either “too qualified” because I had a degree or I was “too inexperienced” because a lot of folks who had recently retired were going back to work because they just became upside down on their house. When you’re freshly graduated and broke, a year is a long time. Worst ever of all time? Nah. But it was pretty traumatizing.
- babyshake 4y ago
  It is admittedly very difficult to imagine a world where suddenly there would be no job opportunities for software engineers. It's a lot easier to imagine the inverse, where there are no job opportunities except for software developers.

fullshark 4y ago

I am frustrated in that I have money but nowhere to put it, anxious over holding it because of inflation. Just kind of sitting around waiting, losing wealth.

trey-jones 4y ago
Losing wealth to inflation might be preferable to losing it to equities in the coming months. Obviously nobody knows, but it seems long overdue. There are also positions that are very, very lucrative in bear markets, and I'll assume you know about these, or know how to find out about them.
- mistermann 4y ago
  I am certainly not aware, any chance you could share a few?
  - AnimalMuppet 4y ago
    Disclaimer: This is not financial advice. Consult a professional (or several), not some random muppet on HN. One way to play it is to buy long-term bonds at about the peak of the interest rates. Bond prices are inversely correlated with interest rates; as rates drop, bond prices rise. The longer term gives you a longer lever for the interest rate move to raise the price. Then, when rates bottom, sell the bonds and buy stocks. [Edit: Because that's the top for the bonds, and usually somewhere around the bottom for the stocks.] The observant will note that this requires you to know when the interest rates are peaking, and when they are at bottom. There are some technical markers that can give you hints, but the reality is that there is no absolute way of determining these things. They turn out to be informed judgment calls.
deleted 4y ago
[deleted]
trgn 4y ago
This is thermodynamically inevitable, at least, according to this https://en.wikipedia.org/wiki/Wealth,_Virtual_Wealth_and_Debt https://en.wikipedia.org/wiki/Wealth,_Virtual_Wealth_and_Deb... Storing wealth for later is one of the hardest things to do. It is an unsolved problem, even after thousands of years. Capitalism has a strong claim to hint at a workable solution: it formulates a process in which savings can be converted into capital, capital being the lever to increase productivity, thus increasing wealth. Funnily enough, the accountants responded by starting to depreciate the capital assets, bringing it back full circle. It also necessitates capital being deployed productively. And that too is apparently not that easy either, as the current meltdown is showing.
- flyinglizard 4y ago
  Assets decay. Depreciating them seems more like a decision of a physicist rather than an account.
  - smokefoot 4y ago
    Tangible assets decay
- Bubble_Pop_22 4y ago
puranjay 4y ago
Historically, gold has kept your purchasing power largely intact over long periods.
- waterlaw 4y ago
  I'm the biggest gold bug ever. Been holding this awful asset for the last 12 years. This is the most manipulated, trash asset imaginable. The price of gold hasn't changed since 2011. It was $1900, still $1900. Worst investment of my life. Maybe 2024 - 2030 will see some returns in gold like we saw from 2001 - 2011. I'll keep investing in miners, because it's what I know and spend a lot of time reading drill results, balance sheets, etc. But diversifying my portfolio. Oil has done particularly well in the past two years. There are many other interesting commodities.
  - babyshake 4y ago
    It is interesting how 2011 until now lines up with the rise of BTC. Not to say there is causation but there may be.
    - deleted 4y ago
      [deleted]
  - puranjay 4y ago
    I mean my time frame was more like 50 years - assets you can pass onto your grandkids - but you’re fundamentally right if your time frame is 10-15 years
  - ycombinator5 4y ago
    Dont forget to buy/rebalance other metals when they seem cheap or gold seems expensive. Palladium has been great. Platinum is cheap now IMO.
  - bigDinosaur 4y ago
    Is looking at gold in terms of it's dollar value actually the point? I thought it was because it's a tangible asset that humans have always valued, i.e. a useful and rare metal, and that so long as people have food and water they'll probably still value it long past the point other assets have become worthless.
tylerhou 4y ago
Buy inflation protected bonds from the government (TreasuryDirect) if you haven’t already.
- ghaff 4y ago
  While a decent recommendation, it has a fairly small cap for someone with a lot of money to invest.
  - verve_rat 4y ago
    And only applies to people in the US.
- 55555 4y ago
  Can anyone explain to me why VTIP and other TIPS/FRNs ETFs have declined over the past year when a basket of TIPs should presumably be more valuable as CPI increases? I’m missing something crucial.
  - redisman 4y ago
    Check the dividend
    - 55555 4y ago
      Thank you!

JoeJonathan 4y ago

What do you mean by frustrating? In my memory of 2008, there was a real sense of panic, far beyond anything we're seeing right now. Before it was evident things had gone really wrong, plenty of people had a sense that something had to give—housing was going crazy, and I remember making $37k and qualifying for mortgages on NYC apartments—but inflation was <3% and unemployment was low. While I think we're headed for a whole new kind of disaster (albeit one I can't predict—unlike 2008, there's nothing fundamentally wrong with financing of housing, but I can't see how these prices are sustainable), I'm not sure it'll be 2008-level doom. The frustration, I think, comes from a real sense of the toll of inflation coupled with annoyance, sometimes unarticulated, that we could have put the breaks on by raising interest rates more aggressively long ago, circa 2015-2016, when the stock market started going crazy.

BryanBeshore 4y ago
I agree with this. Basically the fed 'rescued' the system in 2008 by injecting capital into the system. However, this 'rescue' became the norm and they decided to continue easy money policy for the next 14-years. Now, here we are! This has been a concern for a long time now.
- cyberlurker 4y ago
  Rates were being raised before the pandemic. Don't you remember all the complaining by the President?
- rbranson 4y ago
  What is fundamentally concerning about a central bank injecting capital into the system? If anything, you could say the same thing about fiat currency and fractional reserve banking as a whole. Money comes from nowhere!
cyberlurker 4y ago
I think the hesitation was there was a minor economic slowdown around that time and inflation was still flat, so it is unclear raising rates would have been the right call. Its easy to see there is a problem now, but I don't believe anyone knows what amount was caused by the pandemic. Despite gripes everywhere, I actually think Fed policy has been very reasonable given the circumstances. If not for the pandemic, steady rate hikes were already happening and set to continue.

csa 4y ago

> Does this crash feel uniquely frustrating? We are currently in a correction (at least officially). Whatever pain folks are feeling right now will feel trivial to what the pain will be like when an actual crash comes.

xivzgrev 4y ago
This. I remember the 2008 crash and it was panic. Banks collapsing, large layoffs, hiring freezes, and a quick downturn. Hell the pandemic downturn in spring 2020 felt worse than this. Unemployment went way up, banks were pulling back, people were being laid off. That was an artificial crash with a fairly defined end time. A normal crash does not have that. Whatever this is, not a crash. Or at least yet.
- BryanBeshore 4y ago
  Tech has crashed, and is very much in a recession, while the rest of the economy has been operating (decently) smoothly. This said, other parts of the economy are starting to feel knock-on effects of inflation, higher rates, and supply issues. Things could certainly get a lot worse. 2008 was brutal, though.
puranjay 4y ago
Yeah this is not even remotely a crash. Even laggards who bought anything in late 2020 are still in profit. Anyone who bought anything pre 2020 is wildly in profit. In 2008, SPX eventually crashed to 700ish - a level it had last seen in 1997. A whole decade of investor wealth was wiped out Right now, we haven’t even seen the pandemic era wealth wiped out. This is honestly a paper cut compared to a proper 2008-like crash

hahaxdxd123 4y ago

This feels extremely cathartic for me. Like we've all returned to our senses and are no longer pretending it's possible to have 100% YoY growth indefinitely for every vaguely tech related company.

mdm12 4y ago
Fundamentals matter again. It would be more cathartic if my portfolio wasn't down as much as it was!

gumby 4y ago

I’ve lived through worse, 2008 among them. I obviously don’t know where the bottom is but I do see multiple simultaneous contributing problems (war -> food problems; supply and transport problems exacerbated by Covid; artificially (“profiteering”) high prices; a tardy (but firm) response from the fed — though it is the nature of such responses is that they have to be tardy). Ironically the multiple causes is a positive sign: they can start to turn upwards independently. While the 2008 crash was a secular failure of a singular asset class, or perhaps more correctly two coupled asset classes (mortgages and CDOs). That was hard to work it’s way out of the system, though unorthodox actual by the fed and other central banks helped cushion the shock…at a cost. So for example the crypto collapse is high profile but minor, even trivial, in the scheme of things.

bcrosby95 4y ago
Ah, yes, but the cracks first started appearing in 2006. That was when the easy loan and refinance spigot was turned off. 2022 could be this downturn's 2006. In other words, maybe, you ain't seen nothin' yet.
- redisman 4y ago
  Or it was 2020 already. Crashes don’t need to look the same each time
tenpies 4y ago
The most fascinating part to me is how not like 2008 at all this one will be. I'm talking to every Boomer and gray beard I can - and even they can only go far so back. We have elements of every great financial, social, and demographic downfall in our midst right now, and a political class that seems desperate to start WW3. I cannot help but remember how a Japanese Boomer once described the situation leading to WW2 in Japan: "it was like everybody lost their mind for a very long time". The very scary part is how utterly incapable current Western leaders are. Sure, occasionally a good law or policy sneaks through, but by and large the best way to emulate their actions is by asking "what would a saboteur do?". It has been flawless and continues to be as seen by this morning's US bill about making price increases in fuel illegal. Then there's how utterly over-financialized our system has become and it's everywhere, from housing to sovereign debt. If anything, it's scarier because while the consumer balance sheet is not-that-awful, the sovereign ones that matter are catastrophic. That confluence of incompetent decision makers + desperation + big stages usually ends in catastrophe. If we're exceedingly lucky this would be a 2008, but I suspect we're still years away from any sort of "bottom" in either finance, demographics, or societal well-being.

ardit33 4y ago

2008-2009 was bad world wide, except for Tech. Tech had a hiring freeze for late 2008-2009 and then things rebounded fast. Most large companies had minor layoffs (Except Apple and Facebook). Even Microsoft had layoffs, and Google (stealth shut down of products). Some smaller startups couldn't raise money and had to shut down. But things picked up full steam by 2009 again. What saved tech? It was mobile. 2008 was the first year when you could write apps for the iPhone, and they were a hit. Same with Android later in 2008 early 2009. It started a boom of new companies, and then competition for talent. Also Google and Facebook got into a bidding war for engineers, which started driving up salaries. Also, a lot of the large tech companies today, were started or took off around that area (AirBnb, DropBox, Uber, Lyft, etc). Is this going to be another small bump 2008 for tech (a correction, hiring freeze, and then upwards), or a long drawn 2001 style bust? My bet it is going to be a 2008-2009 style of correction for tech (job market at least), with the 2001 style of correction for stocks. Why? 1. Stock were way overhauled, and coming back to pre-pandemic levels (almost half off for many companies). 2. Most large companies are still very profitable right now and have healthy margins. 3. Some will try to rein in costs, and have minor layoffs or hiring freezes, but no near 2001 style of busts 4. Tech is in a long term upswing trend that will last at least another 50 years.

avrionov 4y ago
I hope you are right. We still don't know the full extend of the current problems. The housing market, the crypto, the bad loans, the unicorns without profits.
nwiswell 4y ago
After 2009, long term risk free rates continued their secular decline which culminated in March 2020 at an all time low of 0.54% for the 10 year Treasury yield. This was a major factor in the tech story. Rather than valuation being focused on current profits, as is the case for most industrial stocks, valuation for tech is based on expectations of future profits, i.e. growth. When long term interest rates are very low, these future cash flows are not discounted very much. Therefore, good growth numbers for tech in a low interest rate environment resulted in face-melting performance as all of that expected future profit is basically just assigned to the current value of the equity. That era is clearly ending. Long term interest rates hit the all time low and are rebounding in a way that is very distinct from 2009. I would not be surprised if tech stocks fundamentally reprice and never completely recover. Zoom out here: https://fred.stlouisfed.org/series/DGS10 https://fred.stlouisfed.org/series/DGS10

timr 4y ago

Lived through the first dot-com crash, the 2008 crash, and now this. The current reality, today, is nowhere near either one -- speculative bubble tech has crashed, but the rest of the market is around February 2021 prices. The S&P500 is only just now entering "correction" territory. The only thing similar is that we have a ton of drama from people claiming that the end is near. But in 2008, the financial system really was close to systemic collapse. Banks were having runs and being rescued by the FDIC. Money market accounts were dropping below a dollar. That was crazy. Seeing Terra break the buck is...not the same. Yes, inflation is high and that's concerning, but what's fundamentally driving a lot of the panic are the "high" interest rates (i.e. rates that haven't been "this high" since...spring of 2020). This too shall pass. Parts of the market that were wildly irrational will gain sanity, or they will go away. Fake wealth will be lost. It will be painful for the few who dove head-first into the froth, but to me, right now, this doesn't look like a moment for panic. For contrast, I was genuinely freaked out by what was happening in 2008.

puranjay 4y ago
How do you think it will impact startups that essentially grew by incentivizing users and never achieved unit profitability? A funding crunch can’t be good for their survival
- timr 4y ago
  I think the other thread from YC on what it means for startups is on point. "Survival of startups", plural, is not the metric of relevance. The strong will survive. The ones who were/are running on fumes are gonna have a bad time.
- ghaff 4y ago
  In an era of belt-tightening, it's reasonable to expect that companies that can't even achieve a profit, including companies like Uber, will have to make changes and the people who have created lifestyles based on VC subsidies will have to face reality as well.
- jghn 4y ago
  This is where I worry. My recollection of how the dot com crash unfolded was that first the bogus startups folded as expected. But they're part of a larger food chain. There were other b2b companies who had them as customers. And now they're out of money so they fold. Which affects other companies. And so on.

boringg 4y ago

Equity crash has been expected for awhile - the unsettling nature is how long will it go combined with the resurgence of inflation that we haven't since the 70s. Fed didn't manage that well and the 70s were tricky. The fed is a different animal now and so is the macro environment. Agree with a lot of sentiment - glad to see some of the hot air escape - there's some terrible companies and shady businesses out there right now. Hope we don't go into some global recession though - thats my concern (if all central banks work in lockstep).

lordnacho 4y ago

I'm only in my early 40s but as a young trader I sat next to people who traded the 1987 crash, Asia, Russia (90s), and the dotcom crash plus 9/11. Hindsight changes a lot of things. For one the market recovered from all previous crashes, with one major exception. I traded through 2008. It felt apocalyptic. I got a text message from a guy at Lehman on the Monday, surprised he was now out of a job. There was a queue of people at Northern Rock. We knew that a lot of bad things were about to come out, basically things that had been papered over to fix dotcom. The whole subprime thing was predictable, I went to a lunch at Goldman's where they basically just said it out loud, the subprime market is gonna explode and maybe take some other things with it. But what we have now feels like it's sweeping even that under the rug. Growth didn't bounce back hugely afterwards, it's been mild. But interest rates have hit a low nobody that imagined. The whole period since 2008 has been exceptional. A lot of things that seemed like frothy excess went on for a long time. A lot of stuff that should have died in 2008 got to live. So yeah it feels really big, but no climax thus far. No Lehman yet, and no Madoff. A couple of things sort of felt like maybe they would cascade, but didn't, eg Bill Huang's fund going down. For the GFC we had the two Bear Stearns funds going down as a preshock. Not sure if Luna really qualifies, given the amount of crazy things that happen in crypto.

cbozeman 4y ago
I know what I'm about to say will seem perverse, but frankly I'm looking forward to shit really hitting the fan. I'm talking 1930s Depression era fuckery. The modern world needs it. We've created ridiculous systems that - wrongly - believe they're beyond specific forces of both human nature and market economics, and I can't wait for the shit to hit the fan and the music to stop. A sharp, harsh, painful, miserable, unbearable correction needs to happen to remind wealthy, middle-class, and poor people that fundamental economics cannot be ignored. The more painful it is for every group, the better. Trauma is the best teacher.
- mym1990 4y ago
  Has it not dawned on you that after countless examples of fraud, speculation, scheming, and profiteering...that nothing ever changes, and no one learns? I would love for you to get dropped into the 1930s and go have a good time.

dvirsky 4y ago

I don't know if this is just the start of a bigger thing, but this is nothing like 2008 for sure; in 2000 I was around but didn't work in tech directly so it affected me less. 2008 was a complete panic, people thought it was literally the end of the financial world as we know it, the market collapse was just the tip of the iceberg. In 2008 I was working at a start-up that had plenty of cash, but pretty crappy investors who panicked and decided they want their money back, and through the board forced the company to basically shut down, didn't even pay us our last paycheck or the severance required by law in my country. So I found myself unemployed (with a baby BTW), my wife was also laid off, we pretty quickly had to withdraw money from our not-that-big savings, my company was car gone and I needed a new car, and no company around even thinking of hiring. It was extremely scary. I did some freelance work for a couple of months, then found a job at a pre-seed start-up that managed to scrape a couple hundred K somehow, and got by for a bit. After a year things started to turn around and things went great up until now. But it was really traumatic.

baal80spam 4y ago

In 2008 I was 28 and I barely registered something is happening. Mind you, that was in Europe.

BryanBeshore 4y ago
In 2008, I was 25 and in NYC. Seeing professionals with boxes full of work stuff, on their last days of work, was the norm. It felt like what I imagined the crash of 1929 and the dustbowl would be like.
t-3 4y ago
2008 wasn't as bad as the 4-5 years of "echoes" it caused to roll through the economy here in the US. We had a long, major recession and people on unemployment for years without being able to find work. Actually, in a lot of ways 2008 felt very hopeful, like we could see the possibility for great changes and a road to a brighter future. Today, it feels like we're at peak cynicism and pushing higher, I don't know anyone that thinks things are going to get better.

svachalek 4y ago

I'm 50 and I've learned about every 5-15 years banks pull something that melts down the world economy. It's called "financial innovation". As others have mentioned, this episode is pretty painless and innocent so far, to the point that I personally am not sure we're actually in an episode yet. These little hiccups happen a lot more often than that, and we often forget about them a few months later. Actual meltdowns don't just make you feel worried and annoyed, they hurt a lot. Unless you're a bank.

fartcannon 4y ago
If you're a bank, you make money before, during and after the meltdowns that you create. And if it looks like youre ever in trouble, you get bailed out by the same people whose money you gambled away. It's dark.
- streetcat1 4y ago
  Actually, if you read Nissim Taleb, banks are the most fragile companies. They have capped upside (basically interest rate) , and indefinite downside.
  - 55555 4y ago
    Which of his books is this from?
    - streetcat1 4y ago
      The Black Swan, Second Edition. he added a chapter.
  - fartcannon 4y ago
    In reality, they get bailed out. So there is no downside? They can literally do whatever the they want, get small fines, and if it all falls apart, we just give them more. How many bonuses got paid out of the bailout money?
- thelamest 4y ago

streetcat1 4y ago

There is no crash. Unemployment rate is 3.6% Most of the former crashes hit the financial sector first and than hit the real economy. This one hit the financial sector and will stay there. This is why you see wallstreet / vc panic, but the real economy cannot find employees.

bcantrill 4y ago

You sweet summer child! First, this thing hasn't even started. My fellow vets of the dot com bust will remember that period in the summer of 2000 where we all called it "the correction": the sentiment was that some companies that never should have been funded in the first place would (obviously!) perish, but that those companies that "made picks and shovels" would endure. (A Gold Rush-era metaphor that I heard countless times.) At least in 2000, that optimism turned out to be misguided: when there are NO MINERS AT ALL there is little need for picks and shovels -- and the big tech companies all saw their businesses severely adversely affected by the end of 2000. And of course, it took years to find a bottom: the bust went so deep that EVERY significant tech company in ~2000 went through layoff after layoff after layoff over the first half of the next decade, as documented by the HN of the day, fuckedcompany.com[0]. Yes, the housing bubble started to form mid-decade, but tech itself hadn't really meaningfully recovered when 2008 arrived (and this famous Sequoia memo!) -- and it was only from the embers of THAT bust (broadly deeper but much less acute in tech) that the next bubble began to form. So in terms of now: it's hard to know where this thing is going, but there are more parallels (to me) to the Dot Com Bust than to the 2008 Recession. I expect this thing to run pretty deep in tech, and I think some sectors (ahem, web3) may well face extinction. If it does run that deep, you will only know that it's over in hindsight: it will take years to recover, and it's only when everyone stops thinking about it that the seeds of a true recovery will be planted. So, get comfortable: it may be a while. One final note. Back in the depths of the bust (maybe 2003?), I saw a bumper sticker on the 101 that stuck with me: "Please God, Just One More Bubble." I remember thinking at that time that there would be no more bubbles forthcoming -- that nothing could possibly be as frothy as what I had lived through. I was wrong, of course, and I really hope the driver of that car cashed out on their NFT marketplace or whatever! [0] https://en.wikipedia.org/wiki/Fucked_Company https://en.wikipedia.org/wiki/Fucked_Company

jupp0r 4y ago
Thanks for writing that up! I was still in high school during the 2000 crash but I still think some things are different today. There are miners (to use the shovel terminology). They are watching Netflix series, running businesses, drive electric bikes around, monitor airplane traffic and all sorts of things. The internet today is just fundamentally required for so much of the economy to function that tech companies are much less bound to crash than in 2000.

yucky 4y ago

2008 was called the Great Recession for a reason. This ain't that. Nowhere near as scary. Now if we can stop this drumbeat for WWIII that would be nice. I feel bad for Ukraine and all that, but it's not worth starting a world war over. Assuming we come to our senses on that front, this is nothing.

foobiekr 4y ago

The issue is you don't have perspective. I lived through the Japan crash, which is the biggest crash in my lifetime, as well as the early 80s government layoffs (where my dad really thought he would be unemployed), 1992 (when I thought I would lose my job), the dotcom (where I knew good people who were out of work for a year or more), and 2008. So far this is exceptionally mild. There are not mass layoffs - there are layoffs and hiring freezes, but nothing like 2001 - and there are not people taking pay cuts or worried that if they have to leave their job they will need to take one. We are far, far from 2008 and even farther from 2001. I have tried to explain what the dotcom was like to young people and the usual response has been: "What is the big deal? I would just find a new job and probably get a pay bump as well." I am not saying this to pick on young people in technology but rather to help illustrate how far from reality they are when they talk about how unfortunate they've been graduating into tech in the aftermath of 2008. 2008 was barely a blip on the tech scene. A real down market is something most of them have never experienced and not one that they are internalizing. There has been a ton of "we graduated into the worst job market ever!" propaganda pointed at millennials who have internalized it. It isn't true unless you were in finance or real estate.

tylerfontaine 4y ago
> There has been a ton of "we graduated into the worst job market ever!" propaganda pointed at millennials who have internalized it. It isn't true unless you were in finance or real estate. It was true for a lot of us who weren’t in tech at the time. I graduated in December 2008. I was unemployed for a year, eventually finding a job as a bank teller. I applied for literally hundreds of jobs from waiting tables to retail to grant writing to substitute teaching. I was either “too qualified” because I had a degree or I was “too inexperienced” because a lot of folks who had recently retired were going back to work because they just became upside down on their house. When you’re freshly graduated and broke, a year is a long time. Worst ever of all time? Nah. But it was pretty traumatizing.
babyshake 4y ago
It is admittedly very difficult to imagine a world where suddenly there would be no job opportunities for software engineers. It's a lot easier to imagine the inverse, where there are no job opportunities except for software developers.