How Covid brought the future back
worksinprogress.co
worksinprogress.co
The first, raised in the context of development of the transistor and how it was stalled by WW2, is some notion of “future improvement motivation”. The author suggests that the transistor came about because the people involved wanted to improve the future.
I’d assert that the people involved wanted to improve switching speeds and reduce power requirements, and were driven by curiosity. That they changed the world was a side effect. A big one, but unintentional.
The second notion is bound into the idea of people being optimistic about the future and taking as its evidence that people are “investing” for future growth.
My take? A lot of people are afraid and uncertain and are looking desperately for a short term windfall, and some people fear they won’t have a job in X years so they might as well plow their money into whatever is rising.
The author’s position requires rational investors. We know the rational agent model is bunk.
The third questionable idea is that somehow the plague gave us usable time and that people are using this to their advantage. Sure, some may be, but most of us got anxiety, longer hours because work was more accessible (just down the hall) AND a refuge from plague fear and future fear and bad news, et al, etc.
What the author writes may be true for a small fraction of us. But not for most/all.
The term bubble may best describe where the author lives: in an optimistic, future-looking, rational place. Many of us may hope to live there, few of us do.
Anyway, without fossil fuels we may still be where we were before them - so dark ages, I think. Without fossil fuels I don’t know whether we’d ever have even the conception to seek out higher concentrations of energy. And it’s that energy concentration that still powers most of our civilization.
All of which is to say, we could be on the verge to reduce ourselves to only marginal increments on what is currently available at that sort of power concentration, or worse. Or we could realize things like nuclear power open up still more exponential power concentrations.
Maybe we'd have massive build out of hydroelectric dams, wind turbines, steam engines powered by wood harvested from artificial forests optimized for fast growth/hot burning trees. You could still have air travel by airships & trains will still be workable albeit slower than our trains.
Maybe Iceland would be contentious territory due to geothermal resources, like the middle eastern petrostates in the 20th/21st centuries.
The greek had invented steam powered machines, but considered them a curiosity,or a way to push open doors 'by the gods' without human labour.
The industrial revolution, in that vision, happened when mines still needed a way to push the ore up, but humans didn't do it anymore for a price that made it worthwile.
So there was a clear need for an alternative, and that made people look around. steam power was already known, but started to make economic sense. Hence, it got perfected.
Apart from this, yes ,it’s cleat that a crisis is a terrible thing to waste, and companies are forced to innovate as the current struggles provide them opportunities to shine.
Most places on the world dont have the infrastructure for electric cars yet.
But I'll be damned if you won't find a Toyota Hilux in the most backwater village behind a mountain range.
I know a vast majority of people of my friend group who aren't in tech have no idea about tesla and at best have heard the name something something electric car something something Elon Musk
Compared to VW or Toyota - who shift millions of units in every concievable market - Tesla is just a cute curiosity like the carmakers of the 20s.
If Tesla starts suffering mortal market-share wounds, they will still be a compelling acquisition target for one of the existing automakers who are late to the EV party-- you get a ready-made bag of patents, supply chain, and designs. You can immediately start building a Model 3 with an Acura or Chrysler badge, and you've got something to ship to dealers in countries with punitive tax regime or ban on gas cars, and a few more years runway to fully adapt the design into a full full own-brand EV.
Some, but the more common story is "traditional automaker pouring billions into EV production to make up for lost time."
> If Tesla starts suffering mortal market-share wounds, they will still be a compelling acquisition target
More importantly they'd need to suffer mortal market cap wounds. At anything like current prices they're not only dreadful value, they're simply unaffordable. At the moment Tesla buying a large traditional automaker is more likely than the reverse (though maybe not likely in an absolute sense.)
Uh oh.
"Stocks have reached a permanently high plateau" - Irving Fisher, economist, early October 1929.
People en masse have started using the S&P 500 and other index funds as a long term store of value. Large amounts of money buy these stocks every pay period with zero regard to performance or current market conditions.
As far as I'm aware, this has never happened before. We don't know how this experiment will change the market long term or whether it will eventually collapse.
Or a short term way to escape moneyprinting and inflation until the rates become sane.
The 2008 crisis taught the US Federal Reserve how to respond to an economic crisis effectively, and they've been pretty successful at managing the current one. Note that Fed's main concerns are macroeconomic, so their assistance necessarily goes mostly to larger corporations and financial institutions, which seem to be doing OK (smaller businesses are suffering, but Congress stepped in for them... somewhat). I don't anticipate a liquidity shortage-triggered panic + recession like 2008.
However, all asset prices seem to be inflated. Real estate, crypto, stocks... all going up and up. They can't do so forever, it will be interesting to see how it fails this time.
You have to account for the amount of money in the system and how that money seeks to beat inflation.
You can't just pick up 40-year old chart analysis books and say "aha the P/E ratio for this sector is higher than normal", it is all part of an ecosystem.
The macroeconomic policy is going to be a greater influence than any chart-based psychology proxy or seeing how many essential workers are talking about investing their spare change.
Right now, more money is going to be created or distributed in the trillions. If the Central Banks are instructed to be involved, or chose to be involved, their method of getting new money into the market will be by purchasing more bonds which pushes interest rates even lower.
The only thing this didn't predict were new ephemeral asset classes, crypto. That people are opting to buy.
Yes. We haven't yet had a bubble collapse in a time of zero or negative real interest rates. When it happens, cutting interest rates will not be an option. That option has been used up.
No worries. We can fix that.
I first heard the argument you made used to explain why the market would continue to go up indefinitely in the late 90’s.
But that’s only because I was old enough to pay attention then. I don’t doubt in the least that it was used in the 80’s as well.
Currently the S&P 500 has a P/E of 40, a number it historically hits before crashes. Of course the pandemic makes that figure less meaningful long term than it already is, but even before the pandemic it was well above a justified level.
I have no better advice for people. I have theories on why it's overpriced, but I am also invested in broad indexes for lack of a better idea. But it may just be that the long-standing advice has become dated.
Or much more loss-making, depending how lucky you are.
There always is. And then, abruptly, there isn’t anymore.
Do you know which are the 4 most expensive words in English? "This time it's different."
... Or, a striking rise in investing in whatever the mob thinks will make money, even when it is not, from tesla to bitcoin. If they were investing in the future they 'd be investing in ModeRNA / Biontech
BioNTech/Moderna are poised to income streams of billions of $ through guaranteed sales, with the very real possibility of more to come if either revaccination is necessary or there are more applications for the mRNA technology.
With that in mind, they are quite conservatively valued by the market right now.
Since the results of the regulatory tests and safety and efficacy validations can mostly be transferred for slight vaccine modifications (at least that's my state of knowledge), a variation should not have to go through the entire chain of test phases again before it can be cleared for use.
If anything, the prospect of mutations can only be seen as a significant moat for mRNA vaccine manufacturers, because their technology is the fastest when it comes to such adaptions.
Is that kinda like saying the 737-MAX wasn't really a new type of plane?
Self-driving is a pipe-dream and a marketing vehicle, not gonna happen anytime soon.
These days? It's always been thus.
The Roman Poet Juvenal who said:
"It is all too easy to fall from power – like Sejanus. The mob follows Fortuna and cares for nothing but bread and circuses." (Circuses can also be games, or in modern times TV, Games, Netflix, Reddit, etc...).
You ever see Gladiator?
Lucilla: "The gods have spared you. Today I saw a slave become more powerful than the Emperor of Rome."
Maximus: "The gods have spared me? I am at their mercy, with the power only to amuse a mob!"
Lucilla: "That is power. The mob is Rome. And while Commodus controls them he controls everything."
We have a literal cult controlling at least 40% of the minds of the USA (QAnon). A literal mob almost led a successful insurrection. (If they were more organized, they would've had a higher body count).
A literal mob, possibly manipulated by finance majors orchestrated a pump-and-dump under the guise of "stick it to the man", just disrupted wallstreet in a pretty spectacular way. Sure, they did stick it to the man, for a bit - but I'm sure a lot of people also lost their ass on this.
In a mob there's a bunch of people who basically just are following a fluid current in history, most are unaware as to why and the best answer is probably: "I wasn't doing anything else, so why not?", or "So and so told me, and I trust them" and often that trust is mis-placed, like believing a highschool dropout's opinion on climate change instead of the consensus by 90%+ of the leading scientists across the globe.
But for now, it's 40% that's a mix of cultists and people who act like cultists for the time being.
Can we also argue that this surge of investment is correlated to people staying at home and thus having more money to spend that would have been used on food, entertainment, etc... ?
İm not sure whether or not this is correct considering the negative economic effects of covid for many people, but it might have caused a surge in investing for a certain deomographic.
Unemployment spiked from 4% to 14% yes, but on the flipside, what about the 80% or so that didn't lose their jobs? We still got stimulus checks, while paying less for entertainment and transportation (if we could work from home). What else to do with that extra money? Put it in GameStop, perhaps?
For example, autonomous vehicles, whether automobiles or drones, take on much greater importance when much of the population is restricted to their homes and needs goods delivered, preferrably without interacting with a human.
Machine learning goes from a technology that can make our lives more comfortable and improve the bottom line, to one that can end a global catastophe.
Ending regulatory morass goes from a theoretical interest in the pursuit of abstract GDP growth statistics, to an imperative to prevent any future repetitions of the six week delay in COVID testing caused by the FDA at the outset of the pandemic in the US [1], or the regulatory delays in making available low-cost/makeshift ventilators, rapid at-home COVID tests, etc.
[1] https://www.nytimes.com/2020/03/10/us/coronavirus-testing-de...
I don't know where you live but here we're being delivered food by people on good old bicycles or cars.
> Machine learning goes from a technology that can make our lives more comfortable and improve the bottom line, to one that can end a global catastophe.
How so ?
COVID made people realise that unchecked globalisation brings Asian viruses to your doorstep in less than 24 hours. That deforestation increase risk of infectious diseases jumping from animals to humans. That most western countries have no manufacturing power when crisis hit (masks, ICU beds, alcohol gels &c.). That countries relying almost entirely on tourism are one step away from complete collapse. That a very large part of western countries are absolutely clueless at handling emergencies.
I personally dont want to live in a world in which I work from home, talk to people through zoom and I'm so scared of human contact that I rely on drones for deliveries. Some people here describe that as heaven, it's hell for me, this isn't a future I'm looking forward to
https://www.npr.org/2020/09/17/913093387/why-cant-america-ma...
https://blog.prif.org/2020/04/20/sars-cov-2-pandemic-is-an-a...
https://theconversation.com/how-deforestation-helps-deadly-v...
https://link.springer.com/article/10.1007/s10640-020-00444-x
https://www.gavi.org/vaccineswork/why-human-impact-environme...
it posits two things:
1. Companies have an “intrinsic value” that can be determined based on their earnings, balance sheet, dividends, and analysis.
2. Buy companies that are below this intrinsic value.
The problem with departing from the underlying value of an asset is you’re essentially doing the GME game (greater fool). You’re just relying on someone paying more than you did for something, which can go down as fast as it went up since there’s nothing tangible backing it up. Eventually there are no more greater fools
or you’re just gambling that something will happen in the future to justify the current value, which is exactly a gamble
I think he should say mostly. Fed balance sheet growth has been unprecendented and those folks who have not lost their jobs and are no longer spending on tourism are dumping their USG direct payments into Robinhood.