Comment by nevinera | Hacker News Reader

Comment by nevinera | Hacker News Reader

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It is, and eventually, we will probably run into a real game-changer.. but I'm mostly concerned for all the people that are saving money in index funds. Every recession, the news and the discourse are about how this one is special, and how the causes of this recession run so deep.

People are not good at remembering that we had those same conversations last time and the time before - they get a gut feeling that 'this is the big one', and they pull their money out of the market during the recession and put it back in after everything's ok, essentially tossing a major fraction of their life savings overboard.

What people seem to never consider is that when we actually move out of an expansionist economy, the effects will be much broader than "our stock returns are not so good anymore"; their inability to retire at 65 would be the least of their concerns.

but the casino aspect of the economy has grown stronger and more pervasive over time. Look at a chart of the 10 year US bond. The interest rates have plummeted over the last 30 years. These low rates have intensified the casino aspect of the stock market.

The rates were lowered after the crashes of 2001-2002 and 2008-2009. But the rates cannot be lowered any more. Why? They are at zero, effectively.

That is different.

The point is that there are always differences - each recession is a snowflake, with distinct causes and circumstances. That doesn't impact the fact that they all behave pretty much the same way at the large scale, and it shouldn't affect your decisions about the market (unless you are an expert, and inordinately good at avoiding various cognitive biases).

Gloom and Doom sells papers, and it always has.

There is nothing about growth that is guaranteed. Perhaps thinking that the entire world can adopt western style institutions and would become good consumers was too optimistic.

> But the rates cannot be lowered any more. Why? They are at zero, effectively.

They could always go negative:

    http://www.global-rates.com/interest-rates/libor/swiss-franc/swiss-franc.aspx

Another example - Sweden's National Bank: http://www.riksbank.se/en/ (See the Repo rate).

>These low rates have intensified the casino aspect of the stock market.

So, are you making the claim that the stock market is less stable today than it was 100 years ago?

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