|
Post by shardelay on Aug 9, 2011 18:45:32 GMT
Turns out, today was not sunshine after all. The sky is falling AGAIN...
|
|
|
Post by shardelay on Aug 9, 2011 19:17:29 GMT
And now it's great again. The theme is crazy.
|
|
|
Post by FunkySwerve on Aug 9, 2011 20:46:49 GMT
My parents got out yesterday. I moved my IRA into other countries about two weeks ago, during the debt ceiling shenanigans.
Funky
|
|
|
Post by tomaan on Aug 9, 2011 23:08:57 GMT
I'm young and long. Looking at this as a buying opportunity myself.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Aug 10, 2011 3:50:56 GMT
That is what I am saying. He presents himself as one ideal and his political foes attack him for being that ideal; in doing so they present themselves as the opposite ideal. But neither side is either ideal- as you have pointed out. The only thing I am saying in addition to what you have said in this post, is that politicians are almost universally money-hungry liars who will present the image required to get elected and then turn around and simply act on behalf of the connections they have established to build their wealth and get elected in the first place. First of all, that just isn't what you said. Second of all, it also isn't true. I think you're confusing idealism with ideology. Idealists looks at how they want the world to be ideally, and then try to figure out how to get it there (often, ironically, in practical fashion). Ideologues believe that the world is a certain way and disregard information that clashes with that viewpoint. Loosely speaking, Obama is an idealist, and the Tea Party (and unfortunately much of the Republican party) are small government ideologues. The blindly advocate for smaller government and lower taxes, regardless of the current situation. Ideology is the closest I can come to a one-word summary of this country's woes. Republicanism is in many ways as bad as Communism. The whole 'all politicians are totally corrupt' bit is yet another caricature. Yes, some are corrupt. Yes, money and power corrupt. Yes, we need stronger campaign finance laws. But to paint Obama like that is nonsensical - he hasn't shown much sign of it, and has at times been clearly shown to put the country's interests ahead of his political future, as when he made the call to go after Osama - a political risk Bush was unwilling to take. Why? There was the risk it'd turn into another Eagle Claw. Even the payoff - helping to end the notion that Democrats are soft on defense - redounds more to his party than to him, as it's unlikely to help him much in the next election beyond cutting off a single line of attack. On the other hand, had they captured him and held him in secrecy until a week before the election... You seem intent on describing things in only vague, sweeping terms ('presents himself as one ideal'??) - this is indicative of someone who is unfamiliar with and can't be troubled to learn the more nuanced facts that lie beneath generalizations. Sure, it keeps things simple and saves time and energy, and makes it easier to avoid being pinned down as just plain wrong, but if you aren't interested enough in politics to learn about them, why bother posting on the subject in the first place? Funky I am definitely interested enough to find out about politics, but not enough to engage in prolonged nuanced debates about politics online. Not anymore, anyways. Politics is as much opinion as it is facts and when you get into deconstructing nuanced opinions the whole thing just becomes a mess. It boils eventually down to who can make the most persuasive, concise argument, because that argument is going to sway more people (and thus more elections) than its over-opinionated, over-nuanced counterpart. HG is good at making games I enjoy playing. I should just look at it, an the HG forums as that. We are in trouble as a civilization though- and it is difficult to not throw ones two-cents in when the subject is brought up.
|
|
|
Post by FunkySwerve on Aug 10, 2011 4:22:14 GMT
Facts matter. They're out there for the finding, if you look.
Funky
|
|
|
Post by bazukar on Aug 10, 2011 5:23:16 GMT
Facts matter. They're out there for the finding, if you look. Funky Swear to god I'm not trolling or trying to derail or start another conversation, but lately with all the things that have been going on and that I have seen, I've come to wonder if this is true
|
|
|
Post by FunkySwerve on Aug 10, 2011 5:36:52 GMT
You're in no danger of that - I find nihilism eye-rollingly uninteresting - and not half as amusing as truthiness. Funky
|
|
|
Post by shardelay on Aug 10, 2011 15:05:05 GMT
The kicker here, is that the facts that matter in the markets of this week are on a different time horizon than your investments.
The facts that matter TODAY are the facts of liquidity, margin calls, and forced derisking. The fundamentals don't matter today. This is why we are moving like we are.
I have no idea which way the market is going. I've been doing this professionally for 10 years, and the business that I am in (electronic market making of equity derivites markets) is premissed upon the idea of NOT knowing which way anything is going. We make money by making markets; I allow other people to have opinions, charge them a few pennies to facilitate those opinions (I do this millions of times a day), and then use my technology and my quant models to bias all my thousands of live and simultaneous prices on everythign that trades such that I slowly or quickly work out of the other sides of everyones opinions and end up with no position - hopefully having kept a small % of each penny.
10 years of not having an opinion and trading with everyone who does (and making money consistently as a busines not as a series fo bets), and I -FIRMLY- believe that noone knows what is going on and noone is deterministically right about their market bets (with the exception of insiders, who are cheating). Sure, some people have track records, and some folks are smart, but it is just one huge game of monkey's and typewriters.
I never give directional market advice, because i think it's close to impossible to do, and it's suicidal to do with a sample sizeof 1 (i.e. you make one trade with your entire net worth and I was 51% sure - no thanks). Rather than giving directional advice, I will stress that its important to understand these moves for what they are - liquidity dislocations. Times like right now (we are down another 3+% today after having a 9% range yesterday) are exactly the market timing that can spank people. This is because you may not be gettign in and out of some large grand macro picture, but you may be getting in and out of some wierd temporary hiccup up or down. (today's price could be either, i havent a clue) - and with hiccups of 9% in one day, you can loose YEARS of a good solid 3-6% yearly return with 1 or two mistimings.
If you are bearish on the market, i don't know if that means down from here, or down from 10% higher than here, or down from 10% lower, because the market has not determined where HERE is yet. Attempting to move money in or out based on recent or near-term moves will add a huge volatility to your returns, but at the cost of VERY little chagne in expected return.
There are few real truth to personal investing that I can say while keeping my integrity in tact.
1) Investing has risk, but pays you for that. You might loose your money, but for that risk you are given a return (That's why capital gains are taxed at a lower level than income tax). That's the game, be aware of it - some "investments" like money under a mattress, land, ammunition, gold, or treasury bills have different risk, but risk is always there.
2) Diversification reduces risk more than it reduces return. Don't put all your eggs in one basket.
3) You are in it for the long term unless you are stinking rich. Individuals aren't banks (lets exclude the Gates and Buffets of the world). This means we are exposed to a sort of gambler's ruin. We can't afford to withstand hugely volatile bets because our pockets aren't deep enough. Don't try to time it. If we go bankrupt on a 75% bet, we can't try it again and realize any statistical arbitrage. Bankrupt is bankrupt.
4) It's all monkey's and typewriters, don't believe what anyone tells you. Even me.
|
|
|
Post by FunkySwerve on Aug 10, 2011 16:40:31 GMT
The kicker here, is that the facts that matter in the markets of this week are on a different time horizon than your investments. I wasn't referring to the market, but responding to overdriver's remark. Economic facts, however, are out there as well - they're just more complex, and thus harder to discern. That's why only a few individuals made bank by predicting the mortgage crisis, junk bonds, and market crash. Indeed, our system has few incentives in place to encourage dissemination of that type of information - it would reduce those people's ability to capitalize on their understanding. They write the books after the dust settles (literally, at least in one case). I was NOT claiming to have foreseen the current market instability, however - I just don't have the knowledge base. I was, for the most part, pessimistic about the debt deal, and for good reason, as it turns out. The more I read, though, the less it looks like that had much to do with the current turmoil. I'm happy to have gotten out when I did, but I'm not altogether sanguine about where I am now (Canada and Mexico, largely). I definitely saved a pretty penny so far, though. Funky
|
|
|
Post by bazukar on Aug 10, 2011 17:56:28 GMT
You're in no danger of that - I find nihilism eye-rollingly uninteresting - and not half as amusing as truthiness. Funky Truthiness owns.
|
|
|
Post by shardelay on Aug 10, 2011 18:37:52 GMT
I didnt mean to imply you were referring to the market, but it just seemed a good jumping off place. Economic facts ARE out there, but economic reality at any given momeny is defined by far more than fundamental facts. As you imply, it is vastly complex. Strap onto that a good dose of randomness and the effect of investor psychology and you get a system that is, excepting very individual cases, unpredictable. The best you can do is gently lean in a direction over time. We can make reasoned. broad, long-term statements with a fair degree of predictive power, but even those are frequently wrong. What we cannot do, however is make consistantly good predictiosn in the short term. The real markets become effectively non-deterministic. Too many monkeys and too many typewriters.
As to the current turmoil - it is definitely not about the debt ceiling or the S&P downgrade. That acted as a bit of a focus and made folks look closer, but there is absolutey no doubt at all that that big story is europe's sovereign debt and the implications fo that. For proof, look at what us treasuries did even after a downgrade, adn then look at howmuch the DAX, CAC and Eurostoxx are down YoY vs the SPX/NDX/DJX - then to spice it up a bit look at the CDS's of the US vs the Eurozone countries.
YTD (before today): SPX - 6.8% NDX -2.6% DJX -2.9% CAC -16.7% DAX -13.5% SXX - 19.8% NKY - 11.6%
CDS's US .52% Germany .86% France 1.6% Spain 3.95% Italy 3.95% Hungary 4.22% Ireland 7.8% Portugal 8.9% Greece 16.78%
and otehr CDS's for comparison ISrael 1.57% Lebanon 3.71% Kazakhstan 2.1% Chile .91% Japan 1% Mexico 1.54% Venezuela 11.3% Argentina 7.46%
|
|
|
Post by nataani on Aug 11, 2011 19:11:00 GMT
I thought this was interesting for econ noobs like myself: www.youtube.com/watch?v=_7Xtj04QiQgHow accurate is he? Particularly this statement near the end: "The fact that the dollar remains the default currency of the world and that people still trust the United States to pay its debts is worth trillions of dollars to us anually... ...every time we show an inability to get things done politically or economically, we chip away at the worlds faith in us."
|
|
|
Post by grazztrat on Aug 11, 2011 22:26:28 GMT
Unfortunately the current problem is, indeed, all about the U.S. Forget comparing ourselves to Europe. China is the new boss, and they are economically stronger than most people want to acknowledge.
To put it in a nut shell, the U.S. has used it's longstanding status as world economic superpower to borrow an unprecedented/untenable amount. Greenspan stated that had he been in charge at the time, the great depression would have been avoided. Greenspan's "magic" was simple: create investment and spending by borrowing/spending at whatever level is required to keep the economy growing. As long as the economy keeps growing, then the debt to gdp ratio remains sound, and you can keep borrowing. This model was adopted by U.S. businesses, and of course, the U.S. real estate market. As long as prices climbed, people could borrow more and more, causing prices to continue to climb. Greenspan's "magic" was a de facto ponzi scheme.
So what now? We can all take the "rats jumping ship" approach that Funkyswerve is bragging about. Panic-selling what we have left, while stampeding to the border like a herd of Depends filling grandmothers. The risk there is that, like today's 420 point dow gain, the "long and strong" side of the market finds a way to win, and Funkyswerve et al get their collective arses handed to them by those investors (many foreign) who had the balls to step up. In any case, fleeing in terror to countries as closely economically tied to the U.S. as Canada and Mexico is largely nonsense.
This problem took a long time to create, and I'm not sure that there is an easy solution at this late stage in the game. If there is one, then it will certainly involve Americans doing the opposite of Funkswerve's "buy anything but American" sell-out. It would involve Americans standing united, and investing in themselves. Investing in education, technology and infrastructure, to earn back our eroding competitiveness. The solution would also likely involve deep cuts in spending on war. Way too much money has been spent in Afghanistan, Iraq and many other foreign conflicts. The economic spin-offs and returns are just not there, and international investors look very harshly upon nations at war. In 2003 the president of a Swiss investment bank that I was meeting explained that, by policy, most Swiss pension funds were no longer allowed to invest in U.S. equities because the country was at war. The Swiss know the dangers of prolonged war, and so did Sun Tzu:
[shadow=red,left,300] "When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength.
Again, if the campaign is protracted, the resources of the State will not be equal to the strain.
Now, when your weapons are dulled, your ardor damped, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue."[/shadow]
The Art of War Sun Tzu
|
|
|
Post by tomaan on Aug 11, 2011 22:30:44 GMT
I thought this was interesting for econ noobs like myself: www.youtube.com/watch?v=_7Xtj04QiQgHow accurate is he? Particularly this statement near the end: "The fact that the dollar remains the default currency of the world and that people still trust the United States to pay its debts is worth trillions of dollars to us anually... ...every time we show an inability to get things done politically or economically, we chip away at the worlds faith in us." It's a bit simplified but yes, he's pretty much correct. Three things he didn't touch on: 1) the US is too big to fail, in large part because of all those dollars in circulation; a lot of people will lose a lot of money if the US goes down, so they're more willing to try and ride out the crisis. 2) Real Estate and gold have been traditional "safe" harbors, but people are still reeling from the housing crisis and the price of gold has gone through the roof. It would cost a lot of money to divest those dollars right now, and I'm sure most large volume holders are hoping and praying that the US rights itself so that they don't have to make that decision. They have to be very sqeeemish about the Euro right now too. 3) The US still controls the flow of the world's capital and, as such, enjoys an "embedded" market that is not easily duplicated (if at all).
|
|