7 ms·

Everybody's Lying to You

33 points by landist 17y ago

TomOfTTB 17y ago
Basically this article boils down to one central point: This isn't a downturn it's a correction so don't expect things to "bounce back". My opinion is they're probably half right. I don't think anything is going to bounce back to where it was but I also think panic caused things to drop further than they needed to. So we'll probably see a small bounce eventually but from there it'll probably be a decade before we reach pre-bust levels.
- villageidiot 17y ago
  -> it'll probably be a decade before we reach pre-bust levels. How do you know? The same people who didn't see it coming are all of a sudden experts on when it's going to end.
  - TomOfTTB 17y ago
    OK, pardon the sarcasm here, but what exactly do you think the word "probably" means? Because to me it means "the author is stating an opinion and is in no way saying that opinion is authoritative" In other words I don't "know", I never claimed to "know" so you shouldn't accuse me of it. If you're going to go so far as to quote the line at least read it first and try to look at what the author's actual meaning was. For the record I based my opinion on the simple fact that things around me shouldn't cost as much as they do. The house two doors down from me is 2 bedroom, needs a new roof and was still valued at $750,000. In my opinion a two bedroom house simply isn't worth that so I don't expect it to bounce back to that value.
    - joechung 17y ago
      The irony is that that 2-bedroom house will be worth $750,000 someday but only because $750,000 will be worth a lot less by then.
    - ryanwaggoner 17y ago
      A house (or anything else) is only worth what someone will pay for it. If houses are selling for $750k, by definition they are worth $750k. You can hate it and refuse to think that anyone should ever pay more than $100k for such a house, but as long as people are willing to pay the price, that's the value.
      - TomOfTTB 17y ago
        But that's the point, no one was paying that much for it. It was inflated by a speculator's market. That's what a correction is. It's the market re-evaluating assets and reassessing their price based on what people are actually willing to pay and not what some real estate speculator or junk bond salesman said it was worth.
      - HSO 17y ago
        This is a very naive (or doctrinaire) view. Please read one of the canonical value investing books, or Cunningham's book of excerpts from Berkshire Hathaway's annual letters by the chairman. For a more scientifically minded angle to this topic, please see Didier Sornette's "Why stock markets crash" (PUP 2003). Price and value are two different things, at least in my representation of the world...
        jbm 17y ago
        I can't comprehend why this was modded down. The book is fascinating and provides us with an insight into valuation. It really is a topic that is difficult to sum up in any reasonable time. I wish I could find a free source for it, but I found the google preview. http://books.google.ca/books?id=F3WpzcinFc4C&dq=Didier+Sornette%27s+%22Why+stock+markets+crash%22&printsec=frontcover&source=bl&ots=Wd5SQyDkFV&sig=_XcapjYoUyG2T5abV0GD9lW_KM8&hl=en&ei=bK4SSoq_NqCY8wS2iLmABA&sa=X&oi=book_result&ct=result&resnum=1#PPR10,M1 http://books.google.ca/books?id=F3WpzcinFc4C&dq=Didier+S... Please go easier on the thumbs down stuff.
        HSO 17y ago
        Thanks. You guys might want to check this here: http://arxiv.org/abs/cond-mat/0301543 http://arxiv.org/abs/cond-mat/0301543
  - mynameishere 17y ago
    Quick point: Having money, a depreciating asset, forces everyone into being a speculator. You have to make prophecies, because the alternative is an assured -2.0 percent return (roughly). Here's why the long term outlook is bad: An aging population will necessarily convert assets of all classes into money in order to finance their retirement. Simple as that. Short term, who the hell knows? Buy Citi on margin short term, if you feel like it.
    - ryanwaggoner 17y ago
      As the aging population uses the money to finance their retirement, where do you think it goes?
      - mynameishere 17y ago
        It chases goods and services.
        ryanwaggoner 17y ago
        And much of that money will get poured back into assets...young professionals who work at firms that cater to retired customers will buy homes, retirement communities will expand and build more buildings, older people will sell their assets and rent instead, which means that someone will buy homes and turn them into rentals. I agree that many older people will be liquidating assets, but it just seems they'll shift to other parts of the population.
        DLWormwood 17y ago
        > And much of that money will get poured back into assets... I disagree with using the word "much," that money is going through the filter of consumables and living expenses. The parent poster's point is that retirement destroys wealth faster than it is created. (Which is why that wealth was saved in the first place. To believe otherwise is to subscribe to the Broken Window fallacy.)
    - ojbyrne 17y ago
RobertL 17y ago
This stuff isn't that tough guys. You lower taxes and you cut back on government and the economy expands and there is prosperity for all. When your policies go in the opposite direction you get what we are experiencing now. Read Ayn Rand's "Atlas Shrugged". It's all in there.
mattculbreth 17y ago
They left out another big lier: themselves. The financial media are as much to blame as Citigroup, the government, and whoever else. Hell, perhaps even more so given the press's traditional role of watchdog and investigator.
- villageidiot 17y ago
  ->Hell, perhaps even more so given the press's traditional role of watchdog and investigator. I'm not sure if you were being sarcastic here. Alternatively, perhaps you're not from the United States.
  - berntb 17y ago
    The US media looks better than my local Swedish one. In a small country, the interests are more aligned, for good and bad. For instance, the US media have different opinions on lots of subjects! Here, you get at most two opinions. But mainly, the US media seems to find lots of real scandals in your president administrations. That doesn't happen much with the local government and media... Maybe there aren't any scandals here to find? (And if you believe that, I have a bridge to sell, if you want to make a good deal?) That said, there are lots of crappy media in the US. But obviously, some of the world's best ones, too.
    - roc 17y ago
      You have numerous political parties due to your proportionally representative parliamentary government, but you only get two opinions in the press? Even in the internet age, when the cost of publishing is approaching zero? That's odd.
      - nop 17y ago
        It's not like you've got six democratic or republican parties in government in a giant pit fighting each other it's more like you've got two blocks with an internal cease fire that yell at the other group and occasionally slip and complain about a block partys politics.
Tichy 17y ago
"Everybody is lying to you [...] Our stock experts, David and Tom Gardner, avoid fish tales. These are two straight shooters who take their big catches in stride and don't lament the ones that got away." Right...
ilitirit 17y ago
> one-half of 1% per year What's the intent here? Why not say "0.5% annually"? And why do people say "one-half"? Is this typical of economics journalism? [edit] The whole sentence seems redundant anyway. the average annual investment return from 1950-2000 was less than one-half of 1% per year "annual investment return" implies "per year" and vice versa.
- pchristensen 17y ago
  There are four numbers (1950, 2000, one-half, 1%) between annual and per year. Even though it's redundant, it makes it easier to read. A big part of Motley Fool's appeal is the accessibility of their writing and explanation.
  - ilitirit 17y ago
    I'm not sure if they would have put it like that themselves though. They extracted the quote from USA Today.
jbm 17y ago
In reference to housing prices; I don't understand how it is the "best time to buy" if prices are still falling. Wouldn't it be the "best time to buy" once it has hit rock bottom and just begun a slight upturn?
- swolchok 17y ago
  Sure, but if you can identify that situation on a financial asset, you can go ahead and quit your day job now.

33 points by landist 17y ago

Basically this article boils down to one central point: This isn't a downturn it's a correction so don't expect things to "bounce back". My opinion is they're probably half right. I don't think anything is going to bounce back to where it was but I also think panic caused things to drop further than they needed to. So we'll probably see a small bounce eventually but from there it'll probably be a decade before we reach pre-bust levels.

villageidiot 17y ago
-> it'll probably be a decade before we reach pre-bust levels. How do you know? The same people who didn't see it coming are all of a sudden experts on when it's going to end.
- TomOfTTB 17y ago
  OK, pardon the sarcasm here, but what exactly do you think the word "probably" means? Because to me it means "the author is stating an opinion and is in no way saying that opinion is authoritative" In other words I don't "know", I never claimed to "know" so you shouldn't accuse me of it. If you're going to go so far as to quote the line at least read it first and try to look at what the author's actual meaning was. For the record I based my opinion on the simple fact that things around me shouldn't cost as much as they do. The house two doors down from me is 2 bedroom, needs a new roof and was still valued at $750,000. In my opinion a two bedroom house simply isn't worth that so I don't expect it to bounce back to that value.
  - joechung 17y ago
    The irony is that that 2-bedroom house will be worth $750,000 someday but only because $750,000 will be worth a lot less by then.
  - ryanwaggoner 17y ago
    A house (or anything else) is only worth what someone will pay for it. If houses are selling for $750k, by definition they are worth $750k. You can hate it and refuse to think that anyone should ever pay more than $100k for such a house, but as long as people are willing to pay the price, that's the value.
    - TomOfTTB 17y ago
      But that's the point, no one was paying that much for it. It was inflated by a speculator's market. That's what a correction is. It's the market re-evaluating assets and reassessing their price based on what people are actually willing to pay and not what some real estate speculator or junk bond salesman said it was worth.
    - HSO 17y ago
      This is a very naive (or doctrinaire) view. Please read one of the canonical value investing books, or Cunningham's book of excerpts from Berkshire Hathaway's annual letters by the chairman. For a more scientifically minded angle to this topic, please see Didier Sornette's "Why stock markets crash" (PUP 2003). Price and value are two different things, at least in my representation of the world...
      - jbm 17y ago
        I can't comprehend why this was modded down. The book is fascinating and provides us with an insight into valuation. It really is a topic that is difficult to sum up in any reasonable time. I wish I could find a free source for it, but I found the google preview. http://books.google.ca/books?id=F3WpzcinFc4C&dq=Didier+Sornette%27s+%22Why+stock+markets+crash%22&printsec=frontcover&source=bl&ots=Wd5SQyDkFV&sig=_XcapjYoUyG2T5abV0GD9lW_KM8&hl=en&ei=bK4SSoq_NqCY8wS2iLmABA&sa=X&oi=book_result&ct=result&resnum=1#PPR10,M1 http://books.google.ca/books?id=F3WpzcinFc4C&dq=Didier+S... Please go easier on the thumbs down stuff.
        HSO 17y ago
        Thanks. You guys might want to check this here: http://arxiv.org/abs/cond-mat/0301543 http://arxiv.org/abs/cond-mat/0301543
- mynameishere 17y ago
  Quick point: Having money, a depreciating asset, forces everyone into being a speculator. You have to make prophecies, because the alternative is an assured -2.0 percent return (roughly). Here's why the long term outlook is bad: An aging population will necessarily convert assets of all classes into money in order to finance their retirement. Simple as that. Short term, who the hell knows? Buy Citi on margin short term, if you feel like it.
  - ryanwaggoner 17y ago
    As the aging population uses the money to finance their retirement, where do you think it goes?
    - mynameishere 17y ago
      It chases goods and services.
      - ryanwaggoner 17y ago
        And much of that money will get poured back into assets...young professionals who work at firms that cater to retired customers will buy homes, retirement communities will expand and build more buildings, older people will sell their assets and rent instead, which means that someone will buy homes and turn them into rentals. I agree that many older people will be liquidating assets, but it just seems they'll shift to other parts of the population.
        DLWormwood 17y ago
        > And much of that money will get poured back into assets... I disagree with using the word "much," that money is going through the filter of consumables and living expenses. The parent poster's point is that retirement destroys wealth faster than it is created. (Which is why that wealth was saved in the first place. To believe otherwise is to subscribe to the Broken Window fallacy.)
  - ojbyrne 17y ago

RobertL 17y ago

This stuff isn't that tough guys. You lower taxes and you cut back on government and the economy expands and there is prosperity for all. When your policies go in the opposite direction you get what we are experiencing now. Read Ayn Rand's "Atlas Shrugged". It's all in there.

mattculbreth 17y ago

They left out another big lier: themselves. The financial media are as much to blame as Citigroup, the government, and whoever else. Hell, perhaps even more so given the press's traditional role of watchdog and investigator.

villageidiot 17y ago
->Hell, perhaps even more so given the press's traditional role of watchdog and investigator. I'm not sure if you were being sarcastic here. Alternatively, perhaps you're not from the United States.
- berntb 17y ago
  The US media looks better than my local Swedish one. In a small country, the interests are more aligned, for good and bad. For instance, the US media have different opinions on lots of subjects! Here, you get at most two opinions. But mainly, the US media seems to find lots of real scandals in your president administrations. That doesn't happen much with the local government and media... Maybe there aren't any scandals here to find? (And if you believe that, I have a bridge to sell, if you want to make a good deal?) That said, there are lots of crappy media in the US. But obviously, some of the world's best ones, too.
  - roc 17y ago
    You have numerous political parties due to your proportionally representative parliamentary government, but you only get two opinions in the press? Even in the internet age, when the cost of publishing is approaching zero? That's odd.
    - nop 17y ago
      It's not like you've got six democratic or republican parties in government in a giant pit fighting each other it's more like you've got two blocks with an internal cease fire that yell at the other group and occasionally slip and complain about a block partys politics.

Tichy 17y ago

"Everybody is lying to you [...] Our stock experts, David and Tom Gardner, avoid fish tales. These are two straight shooters who take their big catches in stride and don't lament the ones that got away." Right...

ilitirit 17y ago

> one-half of 1% per year What's the intent here? Why not say "0.5% annually"? And why do people say "one-half"? Is this typical of economics journalism? [edit] The whole sentence seems redundant anyway. the average annual investment return from 1950-2000 was less than one-half of 1% per year "annual investment return" implies "per year" and vice versa.

pchristensen 17y ago
There are four numbers (1950, 2000, one-half, 1%) between annual and per year. Even though it's redundant, it makes it easier to read. A big part of Motley Fool's appeal is the accessibility of their writing and explanation.
- ilitirit 17y ago
  I'm not sure if they would have put it like that themselves though. They extracted the quote from USA Today.

jbm 17y ago

In reference to housing prices; I don't understand how it is the "best time to buy" if prices are still falling. Wouldn't it be the "best time to buy" once it has hit rock bottom and just begun a slight upturn?

swolchok 17y ago
Sure, but if you can identify that situation on a financial asset, you can go ahead and quit your day job now.