Hacker News Reader

Comment by pg | Hacker News Reader

This came up recently. The answer is that you shouldn't worry about it, because you can't time the market. If you were really sure the economy was going to tank at a given time, you could just short a bunch of big stocks and make money that way. But no one really knows when or whether there will be a recession or how big it will be. So the best plan is just to ignore the economy.

http://news.ycombinator.com/item?id=88410

View on HN

Actually you can time the market, because:

* it is a dynamical system, not a random one, and theoretically can become predictable in the short term

* economic policy is very politicized and Central Banks do unreasonable things on purpose (like keeping artificially low interest rates).

So, combine the economic imbalances waiting to be resolved (like negative savings rate etc.) and a market crash that you see taking place right now - and you can predict start of a recession quite well.

the economy is a complex system and is affected by things like positive feedback, phase shifts, emergence etc so its not that predictable

> you can predict start of a recession quite well.

If true, you should be a trillionaire.

That's not exactly true. I was talking with a trader friend of mine last fall about the real estate collapse that was just getting underway (finally -- that's an event my coworkers and I had seen coming for at least a couple of years), and we both agreed without equivocation that there was going to be a recession this year. Knowing that in advance doesn't automatically give you knowledge of a profitable series of trades to make. For instance, if we'd both shorted the S&P 500 on that day, we'd have been crying uncle the very next day when it shot up 3%, or a couple of weeks later when it peaked even higher.

Also, there's a difference between knowing something and being willing to risk losing a ton of money if you're wrong.

To support pg's point, unless your product takes a couple of lazy weekends to slap together, there's really no way of knowing where the economy will be once you're ready to go live.

And for that matter, weren't a number of successful dot-coms founded in the middle of the 2001-2002 recession? It seems to me that if you've spotted a good opportunity, the gyrations of industrial giants shouldn't really matter much to you. Even if your customers are businesses, your product should offer better value for less money than something they're already using, recession or no. A recession will, if anything, make them more receptive to such a product.

My point is that "predict" means very little if you can't pinpoint with greater precision than a year.

I agree with all those saying recession isn't a big concern.

predictions overlap hope mixed with feelings which is surpressed by logic vs risk, therefore acting on a predictions is a tottaly different task.

Reply on news.ycombinator.com