Stock Markets Tumble Amid Worries Over Tech Firms and Trade Tensions
nytimes.com
nytimes.com
Until recently, data was considered "the new oil." Those who sit on vast amounts of it were considered rich.
Now, after the Equifax hack, the FaceBook/Cambridge Analytica scandal, and other revelations (such as Grindr freely sharing highly personal data), it seems that data is increasingly being viewed as "the new uranium."
Data, it seems, is becoming radioactive and must be carefully controlled and safeguarded to prevent leaks. Those who sit on vast amounts of it must now handle it with care to avoid societal, political, regulatory, and legal backlash.
The stock market seems to be reflecting data's transition from asset to liability.
That unless you enrich it to the point that you will be considered a rogue actor if you're not a member of The Club already.
[1] https://www.theguardian.com/technology/2016/jan/28/how-much-...
THAT should be something that an individual can sue Facebook over.
Current price of Brent crude is $67.57, per ~300Lbs comes to ~22.5 cents per pound, or about 4.5 Lbs/USD$.
So you'd have to give about 100+Lbs of crude for your pound of Uranium ore
https://www.schneier.com/essays/archives/2016/03/data_is_a_t...
I'm so saddened to see that so many organizations have collected and overstepped their boundaries without justification.
There continues to be so much good, totally legitimate work to be done with data.
Still, suffice to say, we've been slaughtering each other quite capably despite the level of technology we've been at.
This was obvious. The only people who didnt see this in tech were the tech optimists.
Anyone else who has had to deal with humanity at large has warned that whatever was created would be used to help the powerful retain power.
The time for revolution was back in the 1990s. But that got lost in the baggage and dreams of being a unicorn.
This is just reversion to the mean, if anyone missed this, they havent developed the right balance of cynicism and optimism which helps identify the koolaid from the water
That is to say, I agree, it was obvious for a long time and information asymmetry has always been a tool of survival, advantage, control, etc. and not just in humans.
However, having lived through and been a tiny part of the "data revolution", and having seen some of the bad parts personally, as well as what we could do with data if everything was done in the open with good, clear intent and permission... that part of it still makes me sad.
I mean, the way the human race is going in general makes me sad, so yeah, perhaps I should not be surprised to see reality affect this area.
But, I'm still optimistic that some of us really are doing good and honest work with data and that there is still much more to be done.
Like so much other information, it sits on both sides of the balance sheet: Both an asset (if used correctly) and a liability (if collected and kept carelessly).
Company: "Merging this and that will benefit the customer." USGov: "Ok, good enough for me!"
It may not be a profit motive but governments' motives are sporadically focused on the public welfare at best.
It comes down to money in politics, where said money is a necessity to maintain an agent position within the system. This motive alone is enough to turn protagonist agents within the system into antagonist agents against the system.
I'd rather we make the government more focused and responsibilities more specific. We need to remove the incentives for throwing money into politics rather than try to play corruption whack-a-mole.
Look, corporation etc. etc. are just tools for humanity to deal with complexity. To break it down into parts which we can manage.
IF we had larger brains we would have bigger corporations.
If we were a hive intelligence, we would have different configurations of corporations.
But we would always create a tool to expand into complexity for the efficiency gains or productivity gains we get.
In short - EVERY tool made that gives an advantage moves the system onto the next level of complexity till we fail.
If you have small corporations, then they will band together to become quasi corporations.
Cheating can take the form of: pollution, privacy violations, abuses of human behavior, exploitation of natural resources, corruption, etc. You'd be hard-pressed to think of a single F500 company that isn't benefiting from some form of cheating that is inadequately regulated at present.
Source: i'm currently paid to create ML and data analytic clusters for startups and to give some advices on regulation.
The size of the company doesn't matter. One person with an API and a database can do as much damage as a massive company.
That's the only reason why the media at large cares about FB's data leak right now. That's especially not something to trade over today since the leaky API was fixed in 2014 or something.
Considering all of the leaks/breaches that happen, FB is an outlier and not indicative unless something changes with regulations and the law.
It's like one of those 3d pictures. The "hidden" image was always there in plain sight. People just overlooked it until they stared at it hard enough.
Also, keep in the various oil disasters. Dealing in oil also comes with it's own risks. No need to switch from that analogy. In this light, likening data to radioactive materials seems to me like spreading fud...
Its half-life is very long, even decades after you can still find traces amount of it in the (under)ground.
Nothing will focus the mind of Facebook more than a declining stock price (and personal fortunes).
Until today you could leak users data and nothing would happen to the stock price.
One important takeaway here is that if you think the "worries over tech firms" and their data are bad now, just wait until there's a Three Mile Island or Chernobyl level incident with all their data, like millions of identifable browsing records or grindr logs being dumped on an onion site somewhere.
Let's not pretend that there's no way to misapply this data and that a lot of people won't be incentivized to do so.
Your example perfectly illustrates the power of data, and the potential for revenue, negative and positive.
If you can avoid it, don't collect it.
If you must collect it, destroy it as soon as possible.
If you must keep it, prepare to fork out for the best security and insurance against breaches.
And never, ever, share it.
I understand that the HN consensus desperately wants your statement to be true, but that doesn’t make it so.
Would you care to elaborate? I'm curious and not entirely sure what you mean by this, sorry.
> Equifax suffered no meaningful consequences for its breach.
I don't think OP is claiming they did, but rather that it was part of the evolution towards thinking of data as a liability rather than an asset.
Since there appears to be some confusion (it took me a few passes as well), I interpreted your statement as the following:
> Facebook is in trouble because it sold political influence at a discount from what previously only large nation-state actors could afford.
The implication, if I'm reading correctly, is that any mom-and-pop millionaire could practically launch the same sort of campaign on the platform. Or perhaps more succinctly and dramatically,
Facebook commoditized the weaponization of data.
Am I understanding correctly?
We saw a successful candidate from outside that space because the efficiency of Facebook's ad platform, plus a unique and possibly Russian-intelligence-supplied savvy in wielding it, obviated the need for (as much) donor consensus to achieve a winning level of influence. I don't know about "any mom and pop millionaire," but you need less of them in your court than you used to.
That scandal that has everyone up in arms is Facebook's complicity in Trump's election, which is a consequence of its enablement of extremists in general, which is a consequence of its ad platform's cost-efficiency, which is a consequence of its troves of user data. But it's not data that started a drumbeat of public intellectuals calling for heavy-handed intervention in the New York Times editorial section (a fingerprint we've seen before). It's influence. The establishment is (correctly) not trying to engage populism in a meme war. It's fighting back the way it knows how.
Through the application of advanced techniques and data, Facebook enabled the circumvention of that at a shockingly lower cost than in the past.
What effects though? The idea that CA’s strategies were effective has been disproven [1].
[1] http://www.businessinsider.com/cambridge-analytica-facebook-...
I’m curious exactly what you mean by this. If you’re saying that their paid ads system works well, that isn’t specific to political influence. Further, the recent scandal was over data abuse by third parties, and the reported effects of that have been proven to be dramatically overblown [1], so I assume that isn’t what you’re referring to. Finally, the notion that enough votes to change the election results were suppressed/changed by some Russian fake news articles mostly written in broken English is laughable.
So what exactly are you referring to here?
[1] http://www.businessinsider.com/cambridge-analytica-facebook-...
The most recent wave of Facebook's ongoing scandal revealed that data abuse by third parties was one implementation detail of Facebook's complicity in Trump's election. Facebook's troubles (calls for breakup, regulation, etc) started over its crime of making political influence too readily available to extremist ideologies.
Also, not to get political, but would you be this upset over it if the other side had won and it turned out that they had employed a similar strategy (even if it had been proven ineffective, as CA’s strategy has)?
Fact: the "wrong" candidate was elected (according to >50% of voters and >80% of American billionnaires). (wrong between quotes because obviously in a democracy there is no wrong election outcome, and that's a very good thing indeed, even if it is not what I would have liked)
Fact: he did so while being dramatically outspent by the other candidate (and with pretty much all tv stations supporting one candidate with the one exception being Fox, which cannot reasonably be accused of uniform support for Trump)
Fact: The entire bay area is up in arms about this, and has shown itself prepared to destroy people's careers over this.
(and yes, it was the economic situation created by Bush, and (much more so) by Obama, I get it. However, most voters do not get this)
Now you're right. Even if the Russians supported Trump, it cannot have been a great factor. Fake news is another issue that I find hard to believe swayed the election. And, truth be told, there is both democrats and republicans rigging votes, it's not going to make a huge difference.
You're right, BUT, seeing this, as a democrat in California or Florida, requires realizing
1) that they've lost. They were in power and fucked up the economy bad enough that they lost the election. The thing about elections is simple: there is always a change of the guard if the economy does badly. Always.
2) (on the part of large tv stations, newspapers, etc) that they've lost their influence. That Jeff Bezos' money spent on the Washington Post was just wasted money. That the owners of NBC, CBS, ABC ... cannot influence people more than facebook can.
3) Have you seen any interviews with Hillary's election team ? I mean I voted for her (DESPITE the war comments, wtf Hillary ?), but damn, these people are NOT taking a "live and let live" attitude here. At one point I thought she was going to attack the interviewer (for asking "why she failed" after she explained that they didn't fail, they were robbed).
So if you haven't noticed yet, people, especially in the Bay Area, are attacking anything and everything that is even remotely perceived as being on the side of Trump. And of course, Facebook has/had Peter Thiel, and nobody is happy with him.
You are right, the fault is with the democrats and how they handled governing, and how they handled the election, not with Facebook, Russians, Peter Thiel or whoever else will get blamed next month. The fault is with them. They can either admit fault or attack these evil outsiders, and, well, clearly they don't agree the fault is with them.
Any conversation that even veers slightly in the direction of politics immediately gets prefaced with a warning that Trump got elected. And we all know, this is a warning that if you support him, for the love of God, keep your mouth shut (I'm convinced that this merely hides his support, and he therefore has a LOT more support than is generally thought. I mean between 1/3 and 1/4 voted for him in the heart of the Bay Area. Where are these people ?).
Personally I find blaming myself a very healthy attitude to failure. Step 1. It's my fault. Why ? Because what I do myself is the only thing I can change, and that's the only tool I have to create a different outcome next time. So that's where I need to focus my effort. And yes, I can attack who "made me fail", real or perceived, or with conspiracies, but it's not going to get me a different outcome, it'll simply cement in the failure.
https://www.schneier.com/blog/archives/2016/03/data_is_a_tox...
I always thought this to be the key difference between the treatment of data in the USA and Europe. In Europe the culture of personal data protection is much more developed. In the USA it looks like citizens don't care and corporations abuse it to an absurd extent.
You can witness this by using any service for the first time: an American start-up will immediately subscribe you to their mailing list without asking any questions - the relevant info is (probably) in their Terms and Conditions. In Europe, you are most likely presented with a separate box that even cant't be selected by default. In some countries you need to have separate boxes for different scenarios of personal data use. These regulations clearly favor the user and upset the marketing folks. People often criticize the EU for bureaucracy, but I'm not even sure the USA has an office responsible for cases like this one, someone who cares and can intervene on behalf of the citizens.
- Fed is raising rates to slow down the economy/inflation
- Tech, which did alot of the leading of the market, is finally having to account for alot of its negative externalities.
- The US is picking a fight with China and Europe over trade access, though I think the US has a point on this fight.
- Market is just over bought by several common factors
- Too much institutional money is chasing too few ideas so that these trades are all levered up, the risk here is that the first person to be forced to unwind could cause alot of additional unwinding as the selling off feedback loop plays out.
And sadly this could have been bitcoin's time to shine and show that its a gold replacement by performing well when the market goes to shit, but bitcoin is going through an ever larger correction at the moment.
Hand's up, who thought back in December that we'd see a 6 handle on bitcoin by April:(
Good time for HFT firms though, volatility is back.
Erm, S&P's implied volatility is 23.62% / 30-days. Bitcoin's volatility is over 100% / 30-days.
https://www.bitmex.com/app/index/.BVOL
Implied volatility and historical volatility are different, but they're at least "the same units". So please tolerate this apples-to-oranges comparison. Still, its clear that BTC is way more volatile than the S&P500, even today.
In times of crisis, people move their money from high-volatility to low-volatility sources. IE: Stocks to Bonds.
In times of growth, people move from low-volatility to riskier (but higher potential of gains), ie: Bonds to Stocks.
(Perhaps "short" was the wrong word. But it is where people go - with reason - when they're losing confidence in fiat currencies.)
There are no dollars in BTC, period. Dollars and BTC may both move, and in certain exchanges one may be traded for the other, but the dollars are never in BTC. (Your net worth, which you may choose to measure in dollars, may be tied up in BTC, but no actual dollars are.)
An individual can put cash into an asset. You can start with $1, then exchange it for BTC, and now you have $0. The amount of dollars in your accounts has gone down and the amount of BTC in your accounts has gone up.
But in aggregate, this is impossible. There is a (mostly[1]) fixed supply of dollars in the world. And there is a (mostly) fixed supply of BTC in the world. When you buy BTC for $1, the $1 just moves from your account to someone else's account. Their BTC moves from their account to your account. In aggregate the amount of dollars is the same before the transaction and after. The amount of BTC is the same before the transaction and after.
The reason for this is that for every buyer, there is always a seller. Every single time someone puts dollars "into" an asset, someone else is taking dollars "out of" the asset on the other side of the trade. No one has ever put dollars "into" BTC on net.
Generally, prices do not go up because dollars go "into" the asset. It is fallacious to say that the stock market has gone up because dollars have gone "into" the stock market. Dollars flow through markets, they don't flow into markets. Prices reflect opinions of people making transactions, they don't reflect a history of dollars that have gone "into" an asset.
To be fair, this issue is kind of pedantic and besides the main point of this thread, but I do think it's a fallacy worth being aware of. Ever since I learned of it, my financial thinking has felt clearer.
[1] let's say fixed with respect to you any buy/sell transactions you may or may not execute (this would have be an asterisk, but it turned all of my text into italics)
We'll see if dollar has a short term rise, though as a flight to safety, though I think unlike in past downturns, the dollar and US economy is in a much worse position.
> ... though I think unlike in past downturns, the dollar and US economy is in a much worse position.
I'm a bit undecided, but I fear that you are right on this one.
Here I think he covers it mostly in full [1]. Definitely worth a listen..
Also, here is a great 5 part podcast from December where he (and other Dollar bears) talk about the dollar decline[2].
Because of US dollar reserve status, government spending has been financed by foreign buying of treasuries, especially China. In recent years, they have rightly seen the fiscal situation of US, with massive liabilities, as being fixed only by devaluation of the dollar and therefore in real terms holding treasuries, or especially continuing to stockpile them not prudent. And he points out many examples of how they have recently been declining their purchases of treasuries and stockpiling gold (them and Russia).
He argues their recent opening of a Oil futures market as their avenue to moving away from dollar, eventually (long long term) pushing Renminbi to gain reserve status but in medium term using gold / oil as their leverage away from dollar.
On the stock market/taxes connection, he points out usually a yr over yr decline in tax receipts occurs in recessions. But last month, in the midst of an "everything bubble" (stocks, real estate, bonds, etc.) we saw a year over year decline of tax receipts. [3]
Also that stock market is increasing % of GDP & most taxes paid by wealthy whose income increasingly based on stocks market returns implies a dependence at the margin of government spending on high equities valuations. [4]
If the market continues to decline, and future months tax receipts decline, the "fed put" will get called into action, as China has stopped funding deficit (enough to match it's increase) so it has to be funded by rising rates in the private market. Libor shows this, as does the decline of the dollar.
Here's a link his slide deck covering all of this [5]. See slide 26 for a chart showing that when tax receipts fall "enough", US quickly takes action to weaken the dollar. Slide 25 shows that declines in tax receipts usually correspond to recessions, but except recently..
[0] https://twitter.com/LukeGromen/status/978994115047231488
[1] https://www.theinvestorspodcast.com/episodes/luke-gromen/
[2] https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-en...
[3] https://twitter.com/LukeGromen/status/979079824567427073
[4] https://twitter.com/LukeGromen/status/979087795447894017
[5] https://www.dropbox.com/s/j86wfg79iyds85j/Luke%20Gromen%20Sl...
It's not within the fed's mandate to worry about the price of the dollar or equity prices (until employment is impacted), is it?
"Price stability": sounds like no inflation or deflation to me, but in fact they pursue some non-zero amount of inflation, usually 2-3%.
"Full employment": sounds like 0% unemployment to me, but in fact they target some non-zero value, around 5% I think.
Targeting equity prices or other asset prices is not officially within their mandates, but given their behavior at times (e.g. suddenly dropping dovish comments when the market drops), one might start to think this is a de facto or shadow mandate. :)
I think worrying about the price of the dollar is closely related to the level of inflation or uh "price stability" they are aiming for.
EG:
https://www.frbsf.org/our-district/press/presidents-speeches...
"Let me start with the Fed’s mission. It’s often said that Congress assigned the Federal Reserve a dual mandate: maximum employment and stable prices. But, that’s not quite accurate. In fact, the Fed has a triple mandate..."
Also: https://www.richmondfed.org/-/media/richmondfedorg/publicati...
3-5% sounds plausible. Even with full employment, people will be unemployed for short periods of time while they're between jobs. And these phases are going to get more significant in a gig economy, where you don't stay at the same company for 40 years anymore.
Similarly, as a large-scale landlord, you can always expect some 3% of your apartments to be vacant even in markets with high demand because some time passes between the old tenant moving out of an apartment and the new tenant moving in. (Source: My father is working in that business.)
I, for one, don't want my personal data subject to search by American agencies; as a non-citizen there's little to protect my data from such abuse.
That's definitely true .......
[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
I think it should be pretty clear that Bitcoin is not a gold replacement.
Neither have any intrinsic value (unlike property), except that gold has been in use for thousands of years. If the market goes to shit, then so does Bitcoin, because it's a bubble.
Gold has a million industrial, scientific, and cosmetic uses that give it intrinsic value.
Bitcoins aren't even physical so they are not even useful as paperweights.
gold's price is some part speculative some part non-speculative. Non-speculative value gives it some kind of price floor, but the price can be way above the floor. For instance, if the price of gold jumps 2x it's not necessarily because gold jewelry became twice as popular in the same time period.
I can invest in gold because I want something that will retain value, even if it doesn't grow. I'm gambling, if you like, but I'm gambling that people will still want gold for more than industrial and cosmetic uses. In a big world, where in a variety of places people fear that their government will try to take their assets (either through confiscation or inflation), that seems like a reasonable gamble. I have a hard time classifying it with "speculation". It's still a gamble, but it's a pretty conservative one.
Most fundamentally, I'm gambling that the chemical composition of the earth's crust isn't going to change much. That part of the gamble I feel pretty confident about.
However, new technology can lower the ceiling on how expensive gold needs to be to make those feasible.
Calling an emerging tech a bubble is like calling the first wave of autos a fluke.
Speculative bubbles can happen around anything, whether it has value or not. Beanie babies and AI are examples of things that were/are the subject of speculative bubbles.
It's really hard to imagine the Bitcoin tech will just poof go away when the market tanks. No way.
But while Bitcoin almost certainly won’t go poof, it could dry up. ETH and Monero each take a slice of the market away (smart contracts and anonymous, respectively). More will come that take away more niches.
Lots of things can transfer quantity trustlessly now. The question is: in a world with thousands of established way to send quantity, how much is the “plain old ledger” worth?
With Bitcoin having no real-world value aside from being an great token for a fully-anonymous game of greater fool, the prognosis is not great.
With other asset classes, there's some real-world value backing the minimum price (real estate has rent, stocks bring dividends, bonds guarantee interest payments, etc). With bitcoin, there's no real bottom for the value.
In this, it's actually similar to a lot of unicorn stocks. What's the real-world value of a business that's bleeding money like no tomorrow? The P/E ratio is negative!
90% of gold's price is investment/speculation, only 10% has real-world usage backing.
I'm not sure why you discount intangibles. A lot of Apple/Adidas value is based just on their perceived brand.
Bitcoin has the same thing, an intangible brand value which keeps on rising based on more people getting confortable with it.
that being said, if golds utility value is only 10% of what people pay for it today then maybe that particular investment needs re-evaluation :p
*edit: changed “tangible” value to “utility” value, as that’s more descriptive
That's the key difference. Bitcoin is as valuable as Beanie Babies. Those too had a perceived brand value, which was supposed to keep on rising forever.
I wouldn't pay 5 million dollars for Michal Jackson's glove, but some people did. That in itself makes it more valuable that let's say it's cost of manufacture. And it's valuation is rational, but in a more complicated kind of rationality than the simple ones presented in economics 101 books.
I think you are a person which believes that this is a correct approach: https://en.wikipedia.org/wiki/Homo_economicus
I don't
For Apple stock, the number might be high, but it is not infite. For Bitcoin, there’s _no_ annual income from holding it.
Intangibles can still have substantial real value. For example, the Jackson record copyrights - while completely immaterial - still bring a very nice chunk of revenue every year.
It is also a fantastic means for storing wealth and moving it without qeustion, but I'll admit that the volatility makes this use case substantially less useful than the payment network which is the true value, regardless of price (so long as it is non-zero).
Traders provide the liquidity.
Grandma provides the cash to pay off both.
I'm not sure I would even give it 10%, but yes, Bitcoin is a lot like gold in that regard. It's not an overly useful metal and it's primary usefulness is to look pretty.
Apple/Adidas's stock price is based on their income statement plus speculation. I would guess the speculation could -/+ the dollar value by 20% or so, but the rest is solidly based on the business.
I don't personally discount intangibles, but they are tricky because they are harder to predict and can be fleeting. Since Bitcoin is mostly speculative (100%?), there's a lot of things that push it down and it's bottom would be effectively $0.
Until a major government backs it or something, it's value can go away in a poof.
Bitcoin is the best way to send money in a lot of scenarios. Visa is the best in a lot of scenarios, Venmo is the best in a lot of scenarios, sometimes a check is best, but there are a lot of scenarios where that won’t work.
Bitcoins use value comes from the number of those scenarios.
I'm not against those as features of a platform, I'm just realistic about Bitcoin /NOT/ being anonymous.
What I am against is the perversion of proof of work from something that is optimal on a /generic/ computing platform to something that is dominated by ASICs and 'entry level' on GPUs. Speculation related to bitcoin has caused so much wasted power and driven up the cost of hardware that could otherwise be far more economical for it's intended uses. At least if the work had been based around CPUs we'd be seeing /that/ market scale up which I believe both has more capacity to scale up and would also be more beneficial to the long term results. (It would be much nicer if the 'work' were mixture of proofing the ledger AND something actually scientifically useful, examples including the old protein folding, SETI, and prime number searching projects.)
Something about monopoly players in the industry of usefulness being positioned to 50% attack because they get “extra” value out....
Not really, to be honest. The SPX is still above the February high. We are merely back to were we were in October 2017 before the acceleration into the end of the year and the January rally. We're still up around 9% for the last 12 months. Q4 earnings have been extremely strong, and early indications suggest the same for Q1.
The looming risk of a trade war seems to have spooked the market somewhat, which has resulted in a re-pricing. But, as it stands, pullbacks are still buying opportunities here as long as we don't see a large scale escalation.
The recent market volatility has more to do with the debt markets than near term quarterly earnings. No one really knows how the messy combination of tax cut fueled growth, trade wars, inflation (or lack of), fed rate schedule, record US deficits, and unwinding QE will impact markets, but the general consensus is that interest rates are going to rise. The question of the day is 'how fast?'. Too fast, and it will hit the brakes on the economy. Too slow, and we may overheat (if we haven't already).
Looking from a yearly perspective, we've gone from a period of slow, stable growth to a period of uncertainty and loss, with a doubling of volatility.
I think it's just as reasonable to call this the beginning of something ugly, as it is to say it's a buying opportunity.
Peter Schiff sounds like a gold salesman at times (he is afaik), but he makes the argument that rather than fixing the issues that caused the bubble that led to the Great Recession, the Fed and stimulus managed to only make it bigger. Now the market is burning itself up with expectations of economic growth under Republicans, but all they are doing is growing the deficit and putting the US deeper into a hole that it can never dig itself out of. Soon the US will be unable to acquire more debt and we'll do another round of quantitative easing, which could spiral into hyperinflation as we're forced to repay our debt by printing money. This will be terrible for the US because we've become a nation of debtors and consumers. He believes the coming recession will be worse than 2008 and that we are in the largest bubble the US has ever experienced, possibly never having even escaped the 2008 recession in the first place.
He believes all this will come due before the end of Trump's term, probably within a year or two. I've heard other famous investors say a recession is likely to begin next year.
These might not be in order of when he spoke:
https://www.youtube.com/watch?v=1Fd58n4HhAM
https://www.youtube.com/watch?v=WD2zcyfwdJ4
How does one evaluate value the way he does?
He's basically applying systems theories to companies, and knows that the more complex a system is, the more possible failure states it has.
He’ll be staying in his “Circle or Competence”, great company, evaluating companies for their “margin of safety”?
He’s only looking at a handful of numbers to determine a good buy.
We really should try to learn from this market movement. Warren Buffett and Charlie Munger offer decades of knowledge and wisdom.
Whatever's a good deal when the prices drop low enough.
> How does one evaluate value the way he does?
It's not difficult, he and Munger consistently refer to a handful of books and themes and repeat them over and over.
They do have advantages that you and I don't, however.
First: they have a captive source of cheap cash in their insurance businesses. They are run strictly for underwriting profit, meaning there is always cheap float on hand to invest.
Second: they don't participate in the open market a lot of the time. A lot of the B-H stable is composed of successful private businesses who sold directly, rather than being purchased via the share market. Buffet & Menger can more or less let the deals-of-a-century come to them.
Third: if there's nothing good to buy, they don't. They accumulate cash and near-cash assets. This means that when the market tanks, they are one of the few groups with cash on hand to snap up bargains. This happened in a big way during 2007 and 2008.
Me, because fiat currencies derive their value from the requirement to pay domestic tax in said currency. Bitcoin does not have this.
Despite the fact the executive branch grew the fastest and exercised some of the greatest amount of power under the previous party, much like the previous guy before him who also set a record of executive power expansion, etc, helping set the stage for current volatility.
I seem to be one of the few people concerned by the fact such market volatility is even possible based on one man's decision making.
Although I should note there is a uniquely large disconnect from the things said by the current administration as opposed to the actual actions - and the subsequent media (and lesser extent market) reactions. I'm happy people are concerned about abuse of power but it's disheartening that it's been so weakly correlated to real world power use/expansion.
Bear in mind that what's considered 'employment' is far from what people called employment in the fifties. This does not translate into people attaining self-sufficiency.
The reported unemployment rate peaked at 13% in 2005 (which, whether coincidentally or not, is also the year when Merkel was first elected), then fell steadily [1] and is currently at 5-6%. Critics attribute a fair amount of that positive trend to tampering with the statistics. For example, unemployed people are excluded from the statistic while they are going through government-mandated job training. I've heard stories of people who had to sit through the same Excel course over and over again because the stat was lower while they did so.
[1] https://commons.wikimedia.org/wiki/File:GermanyUnemploymentR... - Notably, it's very hard to see the Great Recession in this chart. There is only a small negative dent in the overall positive trend.
This is a personal favorite metric of mine, because it makes readily apparent some of the distortions the parent brought up. I imagine they're likely being downvoted for some combination of more vociferous language, less citations, different perspectives on the merit of the math/historical comparison the poster is referring to, as well as good old "you're wrong" downvotes, but I certainly found myself agreeing with the thrust of the point. (that unemployment and in related fashion CPI are regularly distorted for one agenda or another; for a recent example of this look at the application of C-CPI in the latest tax code to help address budget shortfalls in a way one might fairly call "slight of hand."[1])
[0]https://data.bls.gov/timeseries/LNS11300000 [1]https://www.bloomberg.com/view/articles/2017-12-20/the-big-p...
In terms of "self-sufficiency" the laggard of the past few decades has been wages which is largely attributable to fiscal policy placing a premium on investment instead of production, not economic output.
I’d also bet more equity is concentrated in states that likely don’t vote republican.
The Dow could drop to 20,000 and people would still be positive in his term.
8,000/18,000 = 44%
But the economy itself is quite healthy. Earnings have been rising and driving up valuations. Unemployment is low. Wages are (modestly) growing. Things are in general very good.
Why has the market risen for so long? Because the correction in 08 was so fast and deep, and took so long to recover from. That doesn't mean we're due for a correction anymore than sunny weather makes you due for rain.
Barring a shock to the system (a war, an unforeseen debt crisis perhaps coming from China, terrorism, etc.) I think we've got some more gains to realize.
https://www.newyorker.com/news/news-desk/john-bomb-iran-bolt...
Trump is a skilled brand marketer; beyond that there is a dearth of evidence.
> and is a president of the US of A after taking up politics as a hobby 1.5 years before the election
Trump's first Presidential effort, which was quickly abandoned (notionally because he didn't want to be associated with certain other candidates in that race), was in 2000, when he sought the Reform Party nomination. He was involved in politics before that, and had fairly open Presidential aspirations since. So you're off by at least an order of magnitude with that 1.5 years. (Then again, while governing is something else, electoral politics is about 100% brand marketing.)
His negotiation skills are more like con-artist skills selling snake oil. Why should anyone on HN regard him as a great entrepreneur who built a great disruptive enterprise that caused many boats to rise on a ride? Shall we compare him with Bezos, Gate, Jobs, or Musk? There’s kind of a bizarre Trump worship that happens among SeekingApha financial types who seem to value pseudo-Alpha male bullying behavior and win at all costs salesmanship even if it screws other people over.
He is not an exemplar of a great businessman or negotiator and if anything his personal skills seem subpar and based purely on a dishonest sales tactics and bullying.
Ross Perot who also ran for the Reform Party Like Trump is a business man deserving of far greater respect based purely on what he had to do.
Moreover do you really think it is hard for a billionaire or pseudo billionaire to marry a former young model?
Honestly, if you can’t tell that Trump lacks serious character traits to be an effective executive I don’t know what to tell you because it seems patently obvious, from the temper tantrums and childish outbursts on Twitter, the excessive personel churn and desire for loyalty over competence, to the inability to focus, stay on message, and apparent severe attention deficit disorder.
Maybe people were hoodwinked in 2016 and really disliked Hillary, but at this point, all the cards and warts are on the table, and if you’re still carrying water from Trump there’s not really any other conclusion to make.
Quote: “The president's personal financial-disclosure report was extensive before he handed the torch to his sons, and listed Trump as a trustee, president, chairman, or member for more than 530 entities. Almost half of these companies listed have Trump's name as part of the company name.”
“President-elect Donald Trump owns a helicopter in Scotland.
To be more precise, he has a revocable trust that owns 99% of a Delaware limited liability company that owns 99% of another Delaware LLC that owns a Scottish limited company that owns another Scottish company that owns the 26-year-old Sikorsky S-76B...”
The Reform Party was created in an attempt (unsuccessful, but that's another story) to institutionalize the relative success of H. Ross Perot’s 1992 independent run, and qualified for federal matching funds in 2000 based on the (lesser) showing of Perot in the 1996 election under the party banner.
Trump, David Duke, and others sought to take advantage of those matching funds by running for the Reform Party nomination in 2000, but Trump’s run wasn't much like Perot’s.
His business acumen is questionable, as he has gone through four bankruptcies. One of those was a friggin casino. Do you know how hard is it to bankrupt a casino?
His negotiating himself out of personal debt amounted to threatening banks that he would declare bankruptcy unless they reduced or forgave his debt. As the saying goes, if you owe the bank $100,000 you have a problem, but if you owe them $100,000,000 they have a problem.
You must have forgotten about his first presidential bid 10 years ago. His MAGA slogan was trademarked in 2012. So his interest in politics isn’t new.
Lastly, I’m not sure how his marrying a “hot former model” has anything to do with... well, anything.
And turning $1 billion into $10 billion is even easier!
Random scares people away (or into violent opposition), not into line; for punishment to be effective in getting people in line, you want people to be maximally clear on what action will and will not provoke it.
I think this meme died 6 months ago. If /s, carry on.
But the multiple is rising, meaning prices have grown _faster_ than the price.
This pushed AMZN down for a third session now, snowballing with it a lot of others.
He basically brought down the economy he is responsible for.
If Mr. Trump wants the USPS to screw Amazon over, he has the power to do so. Its clear that Mr. Trump doesn't care about the long-term survivability of the USPS anyway, so he certainly has the power to "weaponize" the USPS and change its terms to become anti-Amazon.
On the contrary to your post: it is the JOB of investors to pay attention to the US President, as well as the powers he has... to keep your investments safe. Its your 401k retirement at risk here. Therefore, it behooves you to move your money to safer pastures if the President is making threats.
No, he can't. There are laws in place to prevent the USPS from changing the price based on who is shipping. The USPS is Net Neutrality at its best.
Uh huh.
Let me get more specific then.
https://www.scribd.com/document/254642175/Amazon-USPS-Sunday...
What is preventing Mr. Trump from tearing up this contract for Amazon Sunday Deliveries?
Hint: absolutely nothing. Mr. Trump can destroy the USPS's revenue AND hurt Amazon at the same time if he so wished. I guess destroying the contract will take 30 days, but in any case, Mr. Trump can make "Sunday USPS deliveries" of Amazon goods incredibly more expensive in just one month.
Mr. Trump may need to fire a few Post Office directors, but Mr. Trump doesn't really seem to care too much about the turnover of this organization he's running.
> "There are laws in place" is literally dismissing anything he can do; because its clear he's gone over the law before (the travel ban), he'll do it again, and again, and again, until the law has no foundation left to stand on.
And he lost on the travel ban, twice. In fact, when you look at what he has done that are against the law, he gets smacked down. He does not win on such things.
> Hint: absolutely nothing. Mr. Trump can destroy the USPS's revenue AND hurt Amazon at the same time if he so wished. I guess destroying the contract will take 30 days, but in any case, Mr. Trump can make "Sunday USPS deliveries" of Amazon goods incredibly more expensive in just one month.
There would be complete shitstorm if he did that since USPS makes money on the Amazon contract. Trump does not rule in a vacuum and even his shills in Congress would come down on him if Amazon packages stopped being delivered. Plus, Jeff Bezos can put messages at the start of every Amazon Prime Moive/Show asking for Amazon customers to call their Congress person to complain. Little message on Amazon.com on why there is no Sunday delivery would be a shitstorm to Congress. Trump might be the President but Jeff Bezos has millions of US voters using his website every day. I also guarantee that more people like Amazon.com than Trump.
Erm, Trump doesn't seem to care about the number of shitstorms he causes.
If anything, Trump (and his base) are HAPPY when they get shitstorms. "Drain the Swamp", "Snub the coastal elites", etc. etc. If Trump wanted to prevent shitstorms, maybe his Cabinet-level officials wouldn't leave every 3 or 4 months.
Trump doesn't care about Congress or laws. He just does whatever he can do. Sure, the courts smack him down sometimes, but the power of the Executive Order means he truly can hurt Amazon (to the detriment of greater America) if he really wanted to.
----------
There are PLENTY of powers Mr. Trump can do. The Justice Department can investigate Amazon for antitrust. So can the FCC. Heck, the FCC just got rid of net neutrality (due to Mr. Trump's most recent appointee). Demonstrating the power over the Internet that Mr. Trump wields.
USPS is just the most obvious way (IMO) that Mr. Trump can hurt amazon. And it seems to be the one that Mr. Trump's tweets are focusing on.
It's also worth pointing out that judicial remedies to Trump's wrongdoing are retroactive; they occur only after Trump has acted. In the meantime, before the courts get to act, real damage is done to actual people. It's a case of act now, ask questions later.
You mean, eventually, after God knows how many people got kicked out.
https://www.vox.com/2017/6/29/15892378/muslim-ban-work-visa-...
"There are laws in place" is literally dismissing anything he can do; because its clear he's gone over the law before (the travel ban), he'll do it again, and again, and again, until the law has no foundation left to stand on.
Please correct me if I’ve been reading too much fake news :).
Edit:: a cursory Google search seems to indicate that the President can indeed limit immigration [0].
[0] http://www.latimes.com/politics/la-na-pol-travel-ban-legal-a...
Put the goat behind the wheel of a tank with a brick on the gas pedal, and I think you may start to see why there's a degree of real fear behind what otherwise would be off-kilter ranting from a surprisingly loquacious ungulate.
Mr. Trump is directly attacking Amazon, and is saying that he wishes to change USPS rules to extract more money from the Amazon deal.
Its not "emotional" to sell Amazon stock after this tweet. Its common sense. Mr. Trump clearly has the power to hurt Amazon, and he's threatening them.
So as an investor, why SHOULDN'T I sell Amazon in light of this news?
But as soon as one person doesn't ignore him and start "panick selling", everyone else loses.
The President is the leader of the USA. You cannot ignore him.
When Trump / Jeff Sessions announced that they were going after marijuana, marijuana stocks fell. Trump announces tariffs on Aluminum, users of aluminum fell (ie: Ford). Making Aluminum and Steel 25% more expensive in the US has long-term effects you cannot ignore.
You CANNOT avoid Mr. Trump or his tariffs. You can't dig your head into the ground and "ignore him". When Mr. Trump decides to do something, it has cascading effects on the rest of America.
Mr. Trump controls the FBI, the DEA, the FTC, the FCC, the USPS. Directly. Mr. Trump can add and remove policies from these great agencies without even asking for anything from Congress. Pure, unilateral power of the executive order.
You CANNOT ignore this power. Its how America works.
Mr. Obama encouraged taxes to benefit solar-manufacturers and electric car companies. This caused those stocks to go up, and investments into green-energy to flourish. Sure, there were some failures (see Solyndra), but I think it was overall a net-benefit to the USA.
We're now manufacturing advanced Solar Panels that are better than a lot of other countries (although China is still manufacturing them cheaper...). And Tesla greatly benefited from the tax-break on electric cars.
That's the sort of thing a President is SUPPOSED to do: use his powers to lead the nation. Trump is using his powers to turn us against each other.
We all know how the big tech companies pay basically zero tax by elaborate international tax reduction schemes.
https://twitter.com/realDonaldTrump/status/98080078331370291...
21, as much as you might like, YOU do not determine the course of this discussion. Mr. Trump's tweet has more relevance. The focus of the discussion is therefore on the relationship between the USPS and Amazon, and how it would affect the USA.
If Mr. Trump decides to start tweeting about fixing the double irish with a dutch sandwich loophole (see: https://www.investopedia.com/terms/d/double-irish-with-a-dut...), then I'll support it. Alas, that is not what Mr. Trump is talking about today. Neither you nor I determine the course of the national discourse. Only Mr. Trump has the power of the bully pulpit.
I'm not sure what's you point here. This is what the US president does (unlike other countries) - has a lot of power to directly intervene in many places. This is what voters expect from him, and this is the issue on his mind.
Amazon is not the only one abusing the USPS. Chinese companies like AliExpress do the same thing all over the world, taking advantage of national post services to ship a 50 penny screw free from China to UK for example.
https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...
My point is that Mr. Trump is not talking about the double irish with a dutch sandwich loophole. He never has, and probably never will. Mr. Trump had an opportunity to fix it in last year's tax overhaul. But he turned a blind eye to the well known tax issue.
Therefore, your earlier statement:
> We all know how the big tech companies pay basically zero tax by elaborate international tax reduction schemes.
is... well... I agree with it. Companies shouldn't be abusing the double irish with a dutch sandwich loophole. But our President is ignoring the issue. And therefore, neither you nor I can do anything about it.
Actually we could do something about it. People don't want to buy from companies which use child labour or which destroy the environment.
Thus you have all tech companies painting themselves as green as possible.
We are already seeing a trend in people demanding that companies support the "local economy". I think it's just a matter of time until they will demand for them to also pay "local taxes".
And then you'll see this page appear on the Internet: https://www.apple.com/taxes/, just like this one which exists today: https://www.apple.com/environment/
If Mr. Trump were complaining about Alibaba or even doing something about it, maybe then I'll chime in on that discussion. Otherwise, it seems kind of irrelevant to the greater discussion that our President is putting forth.
Unless you think that Mr. Trump, the FCC or the other powers that be are actually doing something about the Alibaba thingy? Or that Mr. Trump even cares about this issue at all: http://a.abcnews.com/images/Business/abc_donald_trump_made_i...
The only reason Mr. Trump is talking about Amazon is because Jeff Bezos owns Washington Post, and Mr. Trump doesn't like the articles that WashPo are running. When Mr. Trump stops using Chinese labor, and his own company stops abusing these same rules... then maybe I'll trust that he's taking the issue seriously.
If your point is that you support tariffs on China for unfair practices, then I agree with you. The part where I stop agreeing with Mr. Trump is where these tariffs start to affect US Allies (ie: Canada, Australia, UK), or close US Trading Partners (Europe, Mexico, etc. etc.).
Because I'm interested in human psychology, kind of as a hobby. I find it fun to observe how people become incredibly righteously indignant on what they think is a principled basis "But he turned a blind eye to the well known tax issue" and then do the very same thing. Donald Trump cherry picking = bad, you = ok.
I also find it interesting to interact with people who think they can read minds: "The only reason Mr. Trump is talking about Amazon is because Jeff Bezos owns Washington Post, and Mr. Trump doesn't like the articles that WashPo are running."
> If your point is that you support tariffs on China for unfair practices, then I agree with you. The part where I stop agreeing with Mr. Trump is where these tariffs start to affect US Allies (ie: Canada, Australia, UK), or close US Trading Partners (Europe, Mexico, etc. etc.).
I support fairness + pragmatism. China was given extremely favorable tariff treatment as they were developing, but they are now far, far beyond the development phase and it is well past the time that tariffs are normalized, as well as other unfair advantages fixed (free worldwide shipping subsidized by mostly Western postal services, like USPS).
But to listen to the typical fresh out of school HN expert armchair economists, current tariffs are "just right", as if they never change, and never need to change to accommodate changing conditions. In other words, they are incredibly ignorant of history (such as Obama's similar actions....where were the dire Smoot-Hawley warnings then?), but even worse, their emotions related to the topic seems to have disabled their plain old common common sense.
> I also find it interesting to interact with people who think they can read minds
Normally, I'd continue discussing this with you. But I've been literally banned when I "return the favor" here on YCombinator. The mods really don't like aggressive discussions in this area. Therefore, this is where the discussion ends.
I've made a personal promise to the mods to not escalate towards personal attacks anymore on this site to keep my account active, and therefore I'm unable to reciprocate your subtle personal attacks against me.
Personally, I strongly disagree with this policy, or at the very least believe they are going to need to revisit it soon due to the bizarre nature of discourse on recent topics - so many people refuse to engage in intellectually honest, non-deceptive discussion.
Unsurprisingly (based on the somewhat snarky tone of my comment, but absolutely and objectively justified imho), I am of the opinion that you were yet another of these people. Disagreeing on politics is one thing, refusing to engage on points of contention but instead moving the topic back to a preferred talking point, as politicians are famous for, to me is a depressing change in the level of discourse on HN.
Perhaps I've done this myself to a degree? Maybe, but it wouldn't be out of malicious intent, it is out of frustration.
Thanks for "a" reply at all, my spirits are lifted. But, I would be curious to know the perspective from your side of the political aisle, not about the topic we're disagreeing on, but whether HN has changed in the ways I'm describing. It may be less easy to notice if you don't hold opinions contrary to the norm, but no harm in asking.
EDIT: Ah yes, nice to see I got my obligatory downvote.
The theory is that:
Companies with international operations didn't repatriate funds because the U.S. because the U.S. was not competitive. Now it is.
It's worth noting this is not limited to Tech companies, XOM paid nearly 0% for decades, and, based on the returns that we have seen, we believe that Trump's family business may have paid 0% taxes for > a decade as well (because it had a deductible loss).
https://www.usatoday.com/story/news/politics/2018/03/07/trum...
Mr. Trump has the power to do this. And he did, just a few weeks ago. Mr. Trump is realizing the extent of his powers and is beginning to use the office of the Presidency with efficacy.
[1] http://abcnews.go.com/Business/key-facts-us-steel-aluminum-i...
My neighbors are all up in arms over this. They blame Amazon entirely for this woman’s troubles. On our FB group they’re talking about boycotting Amazon entirely.
Personally, I think both the USPS and the carrier negotiated their contracts poorly.
I'm not saying that the Justice Department would take the case to court (still less that they would win). But the stock market may care about such possibilities, because if they happened, Amazon's share price would take a hit - a bigger hit than it takes just from Trump whining about them.
Basically, if Trump threatens to take some action against Amazon that may hurt its value as a company by 10%, and investors believe there is a 50% chance of Trump following through with this threat, the investors will (theoretically) collectively lower the price of the stock by 5%.
A price on a stock market is determined wholly by future outlook, which a president's negative tweets can affect, hence why some companies with high earnings expectations in the distant future cough Tesla cough have ridiculously high price/earnings ratios on their shares.
P/E ratios don't tell the whole story, e.g. AMZN has a high P/E ratio because they aim for low profitability by reinvesting in growth, similar to Netflix who's still taking on debt to build out its inventory.
When a companies growth and revenue has stagnated their P/E ratio then becomes a strong indicator for market value / share price.
There could possibly be a more optimistic pricing in the markets if we factored in, just as a random example, that people are more timid to short rather than buy, as a short can easily result in a loss higher than the entire value of the position. An interesting read if you'd like to go down the rabbit-hole of that ideology would be anything on the concept of 'Adaptive Markets' by Andrew Lo. Rather than the common physics/maths-based approach to market behavior, it focuses on a more biological one, and thus includes these 'emotional inefficiencies' that may be present in market pricing.
He barked a lot about tariffs too, and eventually actually followed through.
More seriously, there's a lot of uncertainty affecting the US political and economic prime movers that's not priced into the market, for reasons I don't understand. You could have knocked me over with a feather when a con man with his own private parking spot at bankruptcy court won the Presidential election and markets went up.
So it's not just Amazon but any potential future target that may take a hit.
Also, with a possible trade war scenario happening, AMZN will no doubt be impacted. Ecommerce will also suffer as a whole, especially with a lot of products sold that are being manufactured in China.
My money is in IRAs weighted against a diverse mixture of stable and medium-risk companies. It's one thing if Amazon is getting criticized, but if the P&Gs of the world are sinking too...
No, but paper wealth has a huge effect on discretionary spending.
I'm surprised no-one has called you out on this yet. Amazon's price to earnings multiple is currently 223.09 (after the 5% drop). Normal for companies is ~20, maybe 25. Bad companies usually run at 10 or so (usually meaning lots of debt, but no doubts about survival), Great companies run at double that, up to ~50. Amazon's price to earnings is ridiculous.
Nope, Amazon's stock price is purely running on the reputation of the firm itself and of it's manager, Jeff Bezos. It is a huge exception in that regard.
Oh c’mon.
If all your stocks zero out, liquid capital will be worthless anyway. Raise chickens.
[1] https://www.ft.com/content/a3c43c14-2876-11e8-b27e-cc62a39d5...
But, the economy is still pretty good IMO, I still have 40k in cash to allocate, planning to buy in if things go a bit lower. Trade war stuff should subside once people get used to the new reality, and the issues with tech stocks are mostly negative press, but fundamentals are still strong and that's what matters. Wait till earnings. I do not hold any positions in TSLA.
let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less.
It's really a shame the tariffs and the corporate tax rate weren't packaged together to be closer to revenue neutral.
I couldn't really tell what point you're trying to make.
Also don't really why you're connecting those two. I'm sure in your mind it makes a lot of sense, but you gotta share it with the rest of us...
The point is that Tariffs are not happening in an economic vacuum; but are happening in the same space as a 14% corporate tax break.
The extension of this is that tariffs collect revenue (much like taxes did) while enforcing a political agenda (encouraging changing of sources).
If a "trade war" tariff exchange is isolated to raw materials (steel, aluminium, pork, etc) then tariffs are preferable to a higher finished good tax rate because there is margin on the finished good.
There always has to be some precipitating event, e.g. if you think Tesla is wildly overvalued, it gets adjusted as the result of some event like a (car) crash, and all of a sudden, it's a giant panic.
It's certainly interesting to watch.
Something like Tesla that can be impacted dramatically (over longish timeframes) by a single event is amplified because it’s a speculative investment.
Intuitively it feels like you're right but it's not what I've seen.
I've seen this happen in action when the S&P 500 might start the day with a big drop and the headlines are all "Markets drop on inflation fears" at 11 AM, and then they turn positive in the afternoon, and suddenly the headline changes to "Markets rebound on positive economic data". In actuality, neither the inflation fears nor the economic data was the cause of the market moves, but "Markets move randomly throughout the day", though true, is a terrible headline that won't get any clicks, and so no news outlet will ever run with it.
In my view, there's a price that correctly prices in all information that's knowable. Note that each individual may have his own version of this price, which is why buying and selling takes place. "Market efficiency" just means if I think it's worth 5 and you think it's worth 10, and we're participating equally in the market, the price will be 7.5. It does not mean one of us is necessarily not right and the other not wrong. If the market price is 7, but I have better information that makes be believe it's worth 10, I'm right, the market is wrong. Efficiency just means everything is aggregated properly and all opinions are priced in.
In the long term, we all know stocks are driven by both macro and company fundamentals, stuff like GDP growth, earnings, margins, revenue, free cash, etc. But there's also a short-term view that drives prices day-to-day. I think Peter Lynch was right, that short-term movements are more like a "voting machine" driven by news, hype, perception, and a lot of other things. While short-term pricing is unpredictable, I don't think it can properly be called "random" in the sense of a coin toss, or dice roll. It may be hard to predict, but it does feel that there's a definite cause and effect to things. In the case of Tesla, you may not know that they were going to release news of a crash, but it's a pretty safe bet that once that news is released, it's going to depress prices. It's not hard to see why, market participants are human, they do things for reasons, though those reasons may not be well-informed, predictable, or otherwise rational.
What's interesting is how these two views--the short and long-term ones--equilibriate/converge over time. Empirically, I've observed it's usually some sort of "event", whether an earnings release, or a news item, or a job report, that causes this equilibriation process to kick off. All of a sudden, some good or bad news item breaks, and the market "overreacts" (positively or negatively). I find this really interesting.
Signed, 15 years futures experience
Just chart voodoo. Nothing much to see; it's an artform and every TA "expert" is an artist.
> could easily be wrong
You've summarized what it means to be a successful trader very succinctly. No trade idea is guaranteed.
That doesn't sound like a prediction to me.
That was the prediction part, but his "sign: 15 years futures experience" kind of sounds like it's sarcasm.
Any "prediction" is worth zero unless you're an insider on a rigged market. Hence, any "prediction" can be wrong. So anyone saying that "The market will definitely do X" is wrong.
Accordingly, I did phrase the original comment incorrectly by not putting the usual disclaimers in. But these follow-up comments should clarify. No sarcasm was intended. Yes, I've traded futures for about that long and studied trends extensively.
The "let's see how many" part follows from my throw-away handle name, which is indicative of my general strategy (a contrarian strategy seeks reversal opportunities at sentiment extremes) relative to the sentiment of the comments in this thread along with the title of the post, coupled with what was a long signal for my system.
I did fail to put in the disclaimers and did not intend to imply that my idea of going long came with any guarantee. This long does not come with any guarantee of working, nor do any of my trade ideas. But I do have significant experience with trading futures and with studying trends.
Just posted hastily, sorry about that.
I predict that the market will go up from here. The idea looks okay. But it could be proven wrong. So we use stop losses, without exception. This is the mantra of someone who runs a successful trading strategy.
No sarcasm; I forgot to put in the disclaimer in the original comment, and didn't want to edit it after the fact. These follow-ups hopefully offer sufficient clarification.
There are a bunch of moves that the current president has taken that undo the actions the previous president took to help the United States and the global economy recover from the worst financial recession in history. The undoing of all of those efforts and the efforts of previous generations is seriously a risk the global marks and capitalism.
Potential NAFTA withdraw, TPP withdraw, Paris Climate Accord withdraw, starting trade wars, creating America isolationism, is a serious headwind for the global economy for for American prosperity.
The markets are beginning to price that in and will continue to do so until we get back on the course we were on before this administration took office.
Indeed the media blitz against US tech companies has been well coordinated. Somebody is running a very effective campaign.
It also hasn't gone in to effect yet, so I'm not sure how much stifling it has done so far.
"Privacy means people know what they're signing up for - in plain English, and repeatedly," said Jobs in that interview, which you can see below, aiming at the young techie and advertising-based businesses like Facebook."
Source:
https://www.recode.net/2018/4/2/17189192/mark-zuckerberg-fac...
Trade war with China will hurt both sides, with China on the loser side. But China will be resilient, after all the anti-west narrative never goes away and Trump only proves its correctness , when the propaganda machine rolls it will make China even more united, a divided US on the other hand, is not. Any negative impact will be written down by opposition as bullets for next election. Violent delights will have violent ends. Grab my popcorns, the show has just begins.