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Comment by paulpauper | Hacker News Reader

Peter Schiff predicted this from the moment the fed bailouted the banks in 2008.

He predicted dollar collapse, hyperinflation for 11 years, and a bunch of other stuff the didn't come true. Major broken clock syndrome on his part. Inflation finally spiked, but after being wrong since 2008. Gold still has not done much in a decade. The inflation was from the post-covid recovery, which was so strong that supply chain could not keep up, not as a consequence of 2008.

It's very easy to predict something will eventually happen. Anyone can do that. Way harder to predict when,

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It's better to be wrong until you're right than right until you're wrong...because you will get the last laugh.

The fundamental problem is that price controls never work and the interest rate is the price of money. If you understand this, then it's easy to predict the endgame, whether it takes 10 or 20 yrs to fail, you will still be right once you position yourself for the windfall.

Not too knowledgeable about macro -- is that tantamount to saying that monetary policy doesn't work? And what's the windfall in this case, given that the dollar is the reserve currency; RMB-denominated assets?

>It's better to be wrong until you're right than right until you're wrong...because you will get the last laugh.

Peter Schiff gets to laugh despite being wrong for 9 out of the last 10 years because he's not the one deciding monetary policy. For all we know, if he had his way, the US would be in a perma-recession and made into a vassal state of China by now.

Also, the business cycle is something acknowledged by literally every economist. The fact that we have mild economic turmoil after a global pandemic shouldn't be a prediction that Peter Schiff is proud of.

Position yourself for the windfall how?

Let's say Alice will be wrong several times and then right once, and Bob will be right several times and wrong once. Both of them start with $10k.

To give Alice every advantage, let's say her bets pay out 10x or nothing, and Bob's bets pay out 4x or nothing. We'll also say Alice magically knows which time she'll be right, but Bob won't know which time he'll be wrong.

Alice will obviously bet all her money on the time she's right, and come out with $100k.

Bob can invest 2/3 of his money each time, repeating every time he's right. Let's say he happens to be right 8 times, then is wrong. After those 8 right bets, he'll have $6.6M. After he makes his wrong bet, his fortune will drop to $2.2M. Then he'll retire.

Looks like Bob has a much better windfall to me.

Your math is correct, of course, but these aren't the two strategies to choose between and there is a set of behaviors for which your parent is correct.

The issue (using your analogy) is that Bob is exposed to profound, unseen risks that are deeply discounted in the marketplace - he is "picking up nickels in front of a steamroller" as Taleb puts it.

At the same time, you have the Alice strategy wrong: Alice makes regular, extremely leveraged hedge purchases - perhaps even 500:1 or more - and just ignores the steady outflow of her premia.

Eventually, Bob gets hit by a black swan event and loses 80 or 90 percent of his principal and Alice has a 500:1 return on her hedge.

These are the two strategies that are interesting to compare.

It may interest you to know that Taleb performed this in real life with his own money at risk[1]:

"A tail-risk hedge fund advised by Nassim Taleb, author of “The Black Swan,” returned 3,612% in March, paying off massively for clients who invested in it as protection against a plunge in stock prices."

[1] https://www.bloomberg.com/news/articles/2020-04-08/taleb-adv...

> Alice makes regular, extremely leveraged hedge purchases - perhaps even 100:1 or more - and just ignores the steady outflow of her premia.

If Alice wins after 10 bets, with 200:1 return, and she bets the same percent each time, the absolute best she can get is an 8x return on her initial bankroll.

> The issue (using your analogy) is that Bob is exposed to profound, unseen risks that are deeply discounted in the marketplace - he is "picking up nickels in front of a steamroller" as Taleb puts it.

For Bob to be "picking up nickels" that means Bob is getting ripped off on the things he's right about. If "right until you're wrong" involves tiny little rights and an enormous wrong, then sure it's not very appealing. But that needs to be stated explicitly. Without a qualifier, I expect "being right" to be at least coin flip odds. Because who cares if you can predict something that's 95% likely to happen?

How is Bob getting a 400% return on every bet he makes? Especially when his strategy is to make the same bet that everyone else is making? Last I checked, Bob’s investments so closely tracked inflation, its indistinguishable. And it’s about 50-100 times less than you claim.

Oh and Bob did not save 1/3 of his gains. To be fair, he spent it, living high on the irrational market all these years.

Meanwhile, Alice scrimped and saved and warned and was mocked.

She turned out to be right all along, and now she’s the queen of Barter town. Which isn’t a great place to be.

But the little guy who controls the resources and his muscle don’t need Alice, and want her wealth.

> Especially when his strategy is to make the same bet that everyone else is making?

Who said that? I was just responding to "It's better to be wrong until you're right than right until you're wrong...because you will get the last laugh."

I assumed that "right" in the first half is at least somewhat similar to "right" in the second half. And that "wrong" in the first half is at least somewhat similar to "wrong" in the second half.

If they're supposed to have inverse odds, then that wording is very misleading.

> Last I checked, Bob’s investments so closely tracked inflation, its indistinguishable.

???

Please elaborate on who you think Bob is, because whatever you think it was not my intent.

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