[HN Gopher] 'Big Short' investor Michael Burry says 'prepare for...
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'Big Short' investor Michael Burry says 'prepare for inflation'
Author : undefined1
Score : 26 points
Date : 2021-02-20 19:39 UTC (3 hours ago)
(HTM) web link (markets.businessinsider.com)
(TXT) w3m dump (markets.businessinsider.com)
| chrisgd wrote:
| Can't be right every time
| AzzieElbab wrote:
| Would you bet against him?
| wtf_is_up wrote:
| Look into how his TLRD bet went recently.
| cko wrote:
| I wouldn't, but I wouldn't bet with him either. I think some
| people (like myself) have the personality where they won't
| make a bet if there's too much uncertainty.
| chrisgd wrote:
| On inflation, absolutely. Nothing has changed since 2008 when
| people first brought up inflation
| AzzieElbab wrote:
| I was reading his tweets and the point that it takes 3 debt
| dollars to create 1 dollar of value really did resonate
| with me. Wish I had access to analysis behind it though.
| And seriously, nothing has changed since 2008? We didn't
| print a load of new money for one reason or another?
| jopsen wrote:
| How do you bet on inflation?
|
| Hold stocks/stonks? Gold?
| rsj_hn wrote:
| Absolutely. If you don't understand the mechanisms that
| create inflation and are still clinging to long discredited
| worries about the "money supply", then I'll bet against any
| opinion of yours on inflation. I'll win that bet much more
| often than not.
| adwi wrote:
| He's predicting Tesla share price dropping 90% this year.
|
| Not going to argue its price is based on sound fundamentals,
| but yes, I'm currently betting against him.
| solaxun wrote:
| I think what he actually said was that _if_ the price
| dropped 90%, there would be no broader economic fallout,
| all else constant.
| wtf_is_up wrote:
| He's publicly short TSLA
| solaxun wrote:
| What's your point? He can be short without betting on a
| 90% drop, my reply was strictly pointing out that his
| claim wasn't necessarily that a drop of that magnitude
| would happen, but if it did that the economic fallout on
| the rest of the system would be nil.
| wtf_is_up wrote:
| The Fed wants inflation. They've been trying to create it for
| awhile. Just this year they announced broadening the window over
| which they calc the 2% target. They will let inflation run for
| some time, if it comes.
| imrankhan17 wrote:
| What if we stopped measuring inflation? Can't help but think
| inflation causes more inflation and it's just used as a lazy
| excuse to raise the price of goods.
|
| Why have train ticket prices gone up? Inflation. Why have the
| debt repayments gone up? Inflation.
| PragmaticPulp wrote:
| News articles about cryptic, now-deleted tweets are not a great
| way to discuss these issues. It seems the media wants inflation
| and stocks and Bitcoin to be the new attention-grabbing topic now
| that the election is over and COVID is trending downward due to
| vaccine availability.
|
| Inflation has entered the public zeitgeist in a weird way: Too
| many people are convinced that inflation is a binary on/off
| switch, rather than a range of values. Too many people have also
| been led to believe that Bitcoin is the only way to escape
| inflation, when really any asset will rise with inflation (by
| definition).
| Traster wrote:
| In some ways though inflation _is_ on /off. There have been a
| number of events in US history where inflation went from " off"
| (sub 5%) to "on" (>10%). No one is worried inflation will rise
| to 2% they're worried it'll rise to 20% (or as BTC holders
| think - 2,000,000%)
| solaxun wrote:
| People continually reference the lack of inflation (as
| traditionally measured by the CPI price basket) as a reason to
| not be concerned with the huge increase in the money supply we've
| experienced.
|
| I think we are experiencing extreme inflation, just not in CPI
| goods, but rather capital assets. Stocks, bonds, real-estate, all
| are completely disconnected from any reality right now...
| traditional valuation is irrelevant and we are now trading purely
| on sentiment, ala meme-stonks.
|
| Just look at the IPO landscape, and the ridiculous market caps of
| companies who not only have never had positive net income, but in
| fact have an _increasing_ loss every year! They can continue
| doing this because the capital markets basically throw free money
| at them, it 's easy to raise debt at low rates and issue
| additional shares if needed.
|
| As they say "don't fight the fed", and timing the market is
| impossible, but I can't even begin to fathom the blood-bath that
| will ensue if rates were increased to a reasonable level.
| bko wrote:
| Does anyone else feel like inflation is under-reported on a
| personal level?
|
| After barber shops opened I was surprised my barber increased
| his prices from $25 -> $40. I poked my head in a few other
| barber shops and they've had similar price increases. I think
| restaurants also increased their prices. I remember restaurants
| where the prices were $14-17 for most dishes now charge ~$18-22
|
| Of course this is purely anecdotal.
| pfranz wrote:
| Personally, I haven't noticed in the price of goods. I
| wouldn't be surprised if services increased their price since
| we're still in the middle of a pandemic. I imagine the flow
| of customers are down (I love restaurants but don't have any
| immediate interest in going to that or a barber shop) and the
| people going are more motivated than the average customer
| hence willing to pay more. I also think a price increase
| might be done because of sympathies knowing those kinds of
| businesses are struggling.
| enjeyw wrote:
| Not sure if it was a typo, but I think you're looking for the
| word "anecdotal" not "antidotal" (coming from someone who
| messes these kinda things up all the time)
| bko wrote:
| Yup, corrected. Thanks!
| dragonwriter wrote:
| Barber shops and restaurants are a fairly small part of what
| people spend money on (especially with COVID) and have seen a
| big drop in unit sales across which to spread fixed costs.
| So, inflation there is higher than general inflation.
|
| Inflation across different sectors varies _a lot_ ; the
| overall level is a aggregate but not one around which the
| sector-specific numbers cluster tightly.
|
| https://www.bls.gov/news.release/archives/cpi_02102021.htm
| jopsen wrote:
| > blood-bath that will ensue if rates were increased to a
| reasonable level.
|
| Any reason to think that'll happen?
|
| Won't assets inflation just stay and maybe level off.. my point
| is: nobody is going to pull money out of stocks to buy bread
| and milk.
|
| Isn't stonks the best thing to hold, if we have inflation.
| solaxun wrote:
| It's a complicated relationship, but yes stocks generally
| perform well in inflationary environments, certainly better
| than bonds which unequivocally get crushed. However, often
| what happens along with rate increases is tighter lending
| standards, increased borrowing costs, less ability to
| refinance at attractive rates, etc. It's also more difficult
| to raise equity when investors have reasonable alternatives
| in other asset classes. Suddenly investors start caring about
| tired and old things like "valuation" again, and "price to
| eyeballs" or "tweets per minute" matter less.
|
| For companies that have been riding the wave of free money in
| perpetuity, that's a bitter pill to swallow - when it's time
| to refinance they aren't prepared to pay the new bill. More
| dangerously, they simply may not be able to refinance at all
| if credit markets dry up (2008), and that is when it gets
| really ugly.
|
| Stock prices are as high as they are right now because there
| are no reasonable alternatives. It's the "least bad" option.
| stevofolife wrote:
| I thought interest rates and rate of inflation have an
| inverse relationship.
| solaxun wrote:
| nominal interest = real interest + inflation
| jopsen wrote:
| So as long as the fed can increase money supply, the dance
| continues -- and holding stonks is fine.
|
| Once the dance stops, which might be a while... Then you'll
| want to be holding assets of actual value.
|
| What happens to inflation when money supply dries out?
| confidantlake wrote:
| Also housing, healthcare, and college tuition.
| boublepop wrote:
| True. Feels like the concept of looking for inflation by
| watching the price of milk and bread makes no sense when the
| supply/demand curve is hiding the fact that we have an extreme
| overproduction of both ready to go, but kept from the market in
| order to avoid harming the market. On the other hand everyone
| is putting every last excess dollar they have into the stock
| market because banks can't offer interest, so prices are
| exploding without any grip on reality.
| dragonwriter wrote:
| > I think we are experiencing extreme inflation, just not in
| CPI goods, but rather capital assets
|
| Assets don't provide direct utility, asset price inflation
| isn't inflation as that term is understood without
| modification, the same reason that producer price inflation and
| other inflation outside of consumer goods and services is. It's
| definitely a thing that occurs, but it doesn't have the same
| effects and trying to conflate them is just equivocation.
|
| > Just look at the IPO landscape,
|
| The cycles in the IPO landscape and stock market trends for
| fairly early-stage but post-IPO firms probably relates more to
| waves of enthusiasm about promising new immature sectors (and
| the erosion of those enthusiasms) than monetary policy; the
| dotcom boom had all the same things you say about the current
| time, despite much tighter monetary policy with Fed funds rates
| in the 5% range rather than hovering around 0%.
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(page generated 2021-02-20 23:02 UTC)