[HN Gopher] There's Nothing to Do Except Gamble
___________________________________________________________________
There's Nothing to Do Except Gamble
Author : known
Score : 210 points
Date : 2021-04-15 11:03 UTC (11 hours ago)
(HTM) web link (nymag.com)
(TXT) w3m dump (nymag.com)
| whatgoodisaroad wrote:
| Weird how finance suddenly becomes "gambling" when a bunch of
| regular people join the table.
| mLuby wrote:
| Yeah, it gets harder to believe there's "smart money" when your
| friend Alice made bank following some meme stock and Bob down
| the road became crypto-rich off Dogecoin.
| Tenoke wrote:
| I know people who won at the roulette or the slots but that
| doesn't make me think there's no smart money - in that case
| the Casino.
| LargeWu wrote:
| If you think about the difference between "investing" and
| "speculating" (ie. gambling), the latter involves no actual
| value creation, just transfer of assets based on outcomes the
| speculating party has no influence over. Crypto, meme stocks,
| penny stocks...just pure speculation. To be fair, hedge funds
| and HFT are also mostly speculation, just a more sophisticated
| version.
| wallacoloo wrote:
| Do I create value when I loan another person some asset? What
| about when I act as a currency exchange, and offer at any
| moment in time to take either side of any trade along with a
| 0.3% fee?
|
| These are two things I do on Ethereum right now which have
| analogs in the traditional finance system. Seems to me it
| matters little whether the activity is done in a traditional
| space or in cryptoland: they either both create value or
| neither creates value.
| LargeWu wrote:
| Loans would be one of the classic value creating
| activities, because they allow others to use otherwise idle
| capital to produce something new.
|
| Currency exchange is fuzzier. If the exchange is happening
| to facilitate commerce, then sure, I would consider that
| value creation. If it's happening simply in order to
| support speculation in a different currency, then no, it's
| not value creating. And it's pretty clear from the data
| that the vast majority of crypto transactions are just
| glamorized forex trading - ie buying in order to hopefully
| sell later at a higher price. Add in the detrimental
| environmental externalities from crypto mining and you
| could even make the argument that crypto currency exchange
| actually creates negative value.
| shusson wrote:
| > Loans would be one of the classic value creating
| activities, because they allow others to use otherwise
| idle capital to produce something new.
|
| Only if people use loans to produce something valuable.
| Most people I know take loans for houses, which afaik
| does not produce any direct value to society.
| imtringued wrote:
| You're right, the hope is that people build new houses,
| but that ship has sailed a long time ago.
| dehrmann wrote:
| HFT is usually arbitrage, almost the opposite of speculation.
| LargeWu wrote:
| Fair enough, although one can make a reasonable argument
| that arbitrage is not a value creating activity either, if
| the market is already reasonably efficient.
| Tenoke wrote:
| If the market is reasonably efficient there'd be no room
| for arbitrage in the first place.
| Animats wrote:
| The NFT thing is interesting. Some things to note:
|
| - It's inherent in NFTs that they are thinly traded. If each
| thing is unique, there is no overall market price. Price quotes
| are anecdotal. There are "indexes" which list prices for
| transactions, but that doesn't mean you can sell at that price.
|
| - Liquidity is very limited. This works like collectables. Try to
| unload a million dollars worth of Beanie Babies. It may pay off
| as a way to monetize fame. Taylor Swift, who has a very good
| understanding of how to monetize followers, may bring it off.
| Mark Cuban and his basketball team are doing fine with it. If you
| have fans, this works. If you're just a fan, well, you're the
| sucker.
|
| - The NFT industry is trying to become like the diamond industry.
| Diamonds are mostly hype. Diamond manufacturing is working so
| well that you can buy gemstones on Alibaba. The diamond industry
| works to get gemstones into "safe hands", that is, one person
| with some items of jewelry. A hedge fund with a vault full of
| stones ready to sell, constantly watching prices, destabilizes
| the market. NFTs are more like the hedge fund case.
|
| - There's a long history of bulk manufacture of collectables.
| Beanie Babies. Cabbage Patch dolls. Franklin Mint castings.
| Commemorative plates. Currier and Ives prints from the 19th
| century. All of which can be purchased on eBay for low, low
| prices. There are people in eBay still trying to unload Jar Jar
| Binks merchandise. The stuff produced in quantity does not
| appreciate in value.
|
| - The NFT bubble may already have popped.[1] Prices, such as they
| are, are down 70% since February 2021.
|
| - The real reason for NFTs is that, not being commodities, they
| are not regulated by the CFTC, and not being securities, they are
| not regulated by the SEC. So unlimited hype is legal.
|
| [1] https://www.cnn.com/2021/04/05/investing/nft-prices-
| falling/...
| Lammy wrote:
| Bold of them to put Groyper in the hero image
| diamondhandle wrote:
| Our job in life is to engage in value creation. When money is
| decoupled from value creation, your long-term bet is that it will
| lose its value, as value creation is what actually matters in the
| "real" world.
|
| This is also why "crypto" (the asset class, not technology) is so
| corrosive, because it makes people who have done approximately
| nothing to create value in society, but who've enjoyed a massive
| boost in monetary value, think they've "won" or accomplished
| something real. This doesn't work long term, and will eventually
| collapse on itself like all false religions.
|
| If you're planning to be alive in 20 years, you're better off
| making sure you have a work ethic and skills that generate value,
| than obsessing over any sort of wealth-hoarding instrument at
| all, because it is the only true protection against change.
| JMTQp8lwXL wrote:
| Did Visa create no value in society with plastic payment cards?
| If crypto is valueless, payment processors are valueless too.
| It's unfortunate that Visa gets a 2% tax on the economy, but
| the convenience of plastic or a public/private keypair unlocks
| more economic growth compared to a world with only paper cash.
| whateveracct wrote:
| Visa has a more compelling and proven value proposition than
| crypto
| sigstoat wrote:
| > on the economy
|
| a 2% "tax", on retail sales, at best.
|
| b2b, c2c, and large dollar b2c generally don't go through
| visa.
|
| calling it a "tax" is nauseating. you get something from
| visa, and you can choose not use them, if you'd like. it's
| the rare place that won't take at least a few other
| alternative payments, including cash.
|
| it's a rarer tax yet that you can choose not to pay.
| wallacoloo wrote:
| > it's the rare place that won't take at least a few other
| alternative payments, including cash.
|
| Yes, and when you pay with an alternative, that's when you
| get hit with the 2% credit card tax. Because you and the
| credit card user both pay the same price, but the merchant
| has to raise prices by 2% to cover fees caused by the
| latter. The credit card user is reimbursed for the fees
| they created via cash-back programs, while the cash user
| has to just swallow them.
| JMTQp8lwXL wrote:
| Semantically, would 'haircut' be a preferable term to
| describe what's occurring? Visa isn't some government-
| mandated thing, so I agree that 'tax' is overloaded, but it
| isn't meant literally. Given the nearly omniscient use of
| plastic payment methods, that's why "tax" is used:
| everybody pays taxes.
| thinkingkong wrote:
| Yes. If you read up on the history of the credit card
| industry they solved the incredibly huge problem of small
| businesses extending loans to individuals.
| Ekaros wrote:
| 2% is entirely up to local regulation. EU has capped it to
| 0.2% or 0.3%. Which I would guess that cash doesn't do too
| much better.
| mercutio2 wrote:
| Interchange fees are a small fraction of credit card costs
| to merchants. The EU only capped interchange fees.
| EVa5I7bHFq9mnYK wrote:
| People (at least in the developed world) already have created
| all the value that they need. They have enough food, safety and
| shelter. Majority of the effort now goes into creating virtual
| goods. If you're planning to be alive in 20 years, you're
| better off making sure you hire robots with good work ethics.
| Mattasher wrote:
| I agree with your last statement, but I think you are mixing
| cause and effect. Crypto is exploding _because_ our system is
| already corroded. Starting with the creation of the Fed, and
| tracing through endless money printing and complex financial
| instruments which let well-connected companies and politicians
| create paper wealth out of nothing, we 've decoupled money from
| value.
|
| Savings pay no interest, manual labor doesn't scale, but rent
| seeking and financial games get many people riches in no time.
|
| What are the incentives in this kind of a system, and where are
| the safe harbors for storing value? And if you can't in value
| creation, your safest bet may be to gamble.
| imtringued wrote:
| The real problem the US, Japan and EU are facing is that the
| system is way too stable and resilient, the COVID stimulus
| should have created enough inflation to bring the economy
| back to a normal state yet it completely failed to do so.
|
| The last 20 years were marked by the corporate savings rate
| increasing, meaning companies are not investing. This could
| be related to China and various other factors but it is clear
| that the Fed and the government has done enough to help
| corporations, they are doing so extremely well that they
| don't need any more help. The mistake from the start was that
| the government didn't help citizens enough. It didn't create
| enough jobs or it didn't return those excess corporate
| savings to the population forcibly. The reason why wealth
| redistribution is popular is that excess savings are zero
| sum, for the corporate savings rate to go up, either total
| investment has to go up (it hasn't) or the household savings
| rate has to go down. There is a similar dynamic with rich vs
| poor.
|
| The corrosion you speak of doesn't exist. The system is way
| too stable, far more stable than should be possible, that's
| the real problem. Your dollars, by that I mean the dollars
| corporations and therefore the wealthy own, aren't losing
| value fast enough.
| cmrdporcupine wrote:
| > we've decoupled money from value.
|
| Since when was it ever coupled?
| XorNot wrote:
| Crypto is exploding because people are looking to get rich
| via speculation, that's it.
|
| There's a wealth of uninformed investors and they're all
| hearing stories about crypto millionaires and how much it
| went up and FOMO narratives about it.
|
| People haven't been _transacting_ in crypto basically at all
| - it 's not even a blip in the popular discussion about it,
| except as a flimsy justification for why its value is not
| tulip-mania.
|
| The only thing in effect is the ultimate truth of investing:
| the market can stay irrational a lot longer then you can stay
| solvent. No one was "surprised" when the housing bubble
| collapsed in 2008, and no one will be "surprised" when crypto
| collapses, but as we saw in 2008 when the returns get high
| enough even the "sensible" investors can't justify to their
| stockholders/board why they're not jumping in on the apparent
| "easy" money.
| selimnairb wrote:
| "People haven't been transacting in crypto basically at
| all"
|
| Exactly. When I did a deep dive on crypto currency a few
| years ago I wondered, what can the transaction rate be for
| proof of work schemes. Turned out it was less than a dozen
| per second across an entire network. I don't think this has
| changed (https://bitcoinvisuals.com/chain-tx-day). How many
| transactions does Visa alone do?
| Ekaros wrote:
| I have for years heard about pressuring merchants to
| accept bitcoin or what ever currency and in the end the
| number of daily or even monthly users was most often
| laughably low. Not that there isn't some that move stuff,
| but that isn't really too many...
| dale_glass wrote:
| Crypto basically changed tracks in the last few years.
|
| Initially it was supposed to be money, and so there was a
| lot of effort to drive adoption. You could buy games on
| Steam for BTC.
|
| But then a thing happened: the value exploded, and new
| people started hearing about this amazing new asset
| growing in value. Crypto became not a coin, but a thing
| to hoard and sit on, waiting for the price to get higher
| still.
|
| In this situation, using it as a money is stupid. That
| pizza somebody bought for 10000 BTC was a terrible loss
| to the buyer -- they could sell the 100BTC for $634
| million today. They shouldn't have bought a pizza, they
| should have just kept their money in a wallet and done
| nothing at all with it for a decade.
|
| Given that usage pattern, ability to process transactions
| doesn't matter. The ideal is one buy at the bottom, and
| one sell at the peak, possibly years apart. Fees don't
| really matter, because the transaction is enormous.
| Paying $5 to move $10 is ridiculous. Paying $5 to move
| $634 million is a rounding error.
|
| And since Bitcoin was made to be deflationary this
| pattern of usage is more or less guaranteed. Using it as
| money is always silly because any newcomers to BTC
| increase demand and therefore the competition for the
| supply. And over time, some BTC gets lost, which adds to
| that as well.
| jasode wrote:
| _> Crypto is exploding because people are looking to get
| rich via speculation, that's it._
|
| No, that isn't just it. Like other assets, there can be
| _multiple narratives_ that explain cryptocurrencies rising
| prices.
|
| Yes, pure speculation is one of them. But another reason
| for some is _deliberately shifting wealth from an asset
| ($USD, euro, bolivar, etc) they believe is deteriorating_.
|
| E.g. a multi-billionaire like Ray Dalio is _already rich_.
| He 's the one saying _" cash is trash"_ because he like
| many others see the M2 money supply growing very rapidly
| which _erodes future purchasing power_. (The "cash is
| trash" also means not holding US Treasury government bonds
| because of inflation.)
|
| Yes, the Fed + US Govt can have all sorts of rationale to
| justify $2 trillion stimulus checks and printing billions
| to buy corporate bonds (Home Depot bonds), bail out banks,
| etc ... but economic actors can also counteract the money
| supply expansion by taking steps to retain future
| purchasing power. E.g. Shift wealth into real estate, tech
| stocks, gold, bitcoin, etc.
|
| That fact that nobody uses bitcoin to pay for Starbucks
| coffee is irrelevant to the wealth holders _looking for
| alternatives away from $USD liquid assets as long term
| holdings_.
| imtringued wrote:
| >E.g. a multi-billionaire like Ray Dalio is already rich.
| He's the one saying "cash is trash" because he like many
| others see the M2 money supply growing very rapidly which
| erodes future purchasing power.
|
| As I have said in previous comments, the Fed has been
| unable to erode future purchasing power, because the
| excess savings rate increases to compensate for the
| increase in the money supply.
|
| > (The "cash is trash" also means not holding US Treasury
| government bonds because of inflation.)
|
| But the entire problem is that the newly printed money
| ends up in exactly those places. Negative interest rates
| are impossible, because people can just get cash or
| rather, they get cash equivalents, namely treasury bonds.
| The Chinese government is using excess dollars from its
| trade surplus to purchase treasury bonds. The money put
| into treasury bonds can only be tapped into by issuing
| new debt, thus excess savings (uninvested savings) are
| being created. The government has to employ people on
| behalf of the Chinese investors otherwise the end result
| is unemployment because the household savings rate has to
| go down which means spending more than you earn.
|
| >Yes, the Fed + US Govt can have all sorts of rationale
| to justify $2 trillion stimulus checks and printing
| billions to buy corporate bonds (Home Depot bonds), bail
| out banks, etc ... but economic actors can also
| counteract the money supply expansion by taking steps to
| retain future purchasing power. E.g. Shift wealth into
| real estate, tech stocks, gold, bitcoin, etc.
|
| The problem with this strategy is that it is built on the
| existence of excess savings. If the inflation rate were
| to go up, which eats away at corporate savings, companies
| would be forced to find viable investments and thus
| generate jobs. The existence of these investments would
| allow the Fed to raise the interest rates again and
| excess savings would flood out of treasury bonds and
| other cash equivalents into regular bank accounts and
| corporate bonds again. That means stocks, real estate and
| cryptocurrencies would go down, precisely because
| inflation is going up i.e. because your future purchasing
| power is eroding.
| XorNot wrote:
| Ray Dalio at no point in his life ever believed he should
| be keeping his wealth in "cash". It has been basic
| economic knowledge that cash is a terrible place to keep
| large idle piles of wealth, and that it has to be
| invested to not depreciate.
|
| This is not _new_ information, this is literally by
| design as a product of the Fed 's 2% inflation target.
|
| US treasuries have always been a last resort investment,
| because the return sucks but they're as close to risk
| free as anything ever gets - what's happened recently is
| demand for them has been so incredibly high (because
| better investments are so rare) that the US has at
| various points been able to issue them with negative
| interest rates - taking a loss has been less of a loss
| then just holding currency and no better options existed.
|
| Crypto has a narrative being pushed to increase the value
| of crypto, but "the end if nigh" doomsayers definitely
| don't act like they think it's actually coming -
| otherwise they'd be diversified into Swedish gold
| depositories and basically planning to move country.
| Because come whatever "collapse" they think is going to
| happen...the power company is still going to want to be
| paid in USD.
| lottin wrote:
| > is literally by design as a product of the Fed's 2%
| inflation target
|
| Holding more cash than you need for transaction purposes
| is inefficient, _regardless of the inflation rate_. This
| is because what makes holding cash a bad idea is not the
| fact that it depreciates over time (in inflationary
| circumstances), but the fact that holding cash has an
| opportunity cost, and that opportunity cost is unaffected
| by inflation.
| jasode wrote:
| _> Ray Dalio at no point in his life ever believed he
| should be keeping his wealth in "cash"._
|
| I'm not saying that. His recent _" cash is trash"_ was
| talking about staying away from _investments_ like US
| government bonds because of negative yields and money
| printing:
| https://www.youtube.com/watch?v=tZyWVxGXPHo&t=24s
|
| (Because in the past, reasonable people did believe that
| buying and holding US Treasuries was a semi-decent way of
| _investing_. To be clear, we 're not talking about just
| leaving pure cash in a $250k FDIC-insure bank savings
| account.)
|
| _> the US has at various points been able to issue them
| with negative interest rates - taking a loss has been
| less of a loss then just holding currency and no better
| options existed._
|
| And this is the part I was responding to in your first
| comment. _It 's not just speculators._ Another narrative
| for crypto's rising price is that _some investors_
| believe a _better option now exists_ for preserving
| purchasing power. This is the _defensive financial
| perspective_ that can simultaneously exist with other
| market participants who are only in bitcoin for the
| casino gambling speculation.
|
| Yes, some people buy real estate and just leave the
| houses empty for "speculation". But some others also buy
| houses to live in them and many buyers bid up prices with
| competing offers because of desirable location closer to
| the office. If there can be _2 or more different
| narratives_ for rising real estate prices, why can 't
| there be multiple narratives to explain crypto?
| jariel wrote:
| XorNot is essentically correct.
|
| Crypto is a 'get rich quick' speculative behaviour,
| driven by multiple narratives as you say, but those are
| effectively just narratives used to validate the
| participation.
|
| Amway's 'narrative' was that you could 'help' your
| neighbours by selling them cleaning products.
|
| But really it was a pyramid scheme.
|
| There are some questions around the Fed and monetary
| dilution etc, but BTC is not the answer.
|
| And of course currency was never meant to be a 'long term
| holding'.
|
| Literally by design, we build at minimum a tiny bit of
| dilution into our currency, that's 'part of the plan' so
| don't hold it, hold something else.
| sjg007 wrote:
| I mean the crypto folks bought in at the right time? It's like
| finding oil under your land. For some reason you bought into it
| and that's takes some type of skill.
| beckingz wrote:
| Or just luck.
|
| Plenty of people have also lost money on crypto and oil
| speculation.
| acheron wrote:
| For some reason my friend bet on 26 last spin and won, that
| takes some skill.
| electrondood wrote:
| The bizarre part is that the speculation does create "value,"
| in terms of appreciation. But it's a Ponzi scheme, and whoever
| cashes out before everyone else has the same idea wins.
| WrtCdEvrydy wrote:
| > because it makes people who have done approximately nothing
| to create value in society, but who've enjoyed a massive boost
| in monetary value, think they've "won" or accomplished
| something real. This doesn't work long term, and will
| eventually collapse on itself like all false religions.
|
| Explain to me the value of Daddy's Money and Landlords. No,
| seriously, tell me about it.
| w0de0 wrote:
| > Our job in life is to engage in value creation.
|
| That's grim! It's not my job in life.
| fullshark wrote:
| That's how the gov't views you, as an economic unit = labor
| production.
| [deleted]
| polypodiopsi wrote:
| The cycnicism in me insists that the the ones saying this
| also make money in finance; and feel that the purpose of life
| for everybody should be to create value - of course with an
| implicit exclusion of themselves; because their purpose in
| life is obviously to ENJOY. (The latter of course is a silent
| narcisitic thought that can only dwell in the privacy of the
| ego, and is not allowed to enter public discourse)
| anonporridge wrote:
| Finance people tell all kinds of stories to themselves
| about how they're actually adding value to the system with
| their activities.
| onlyrealcuzzo wrote:
| 2% of the world's wealth is tied up in crypto (and it's growing
| quickly). If it does implode, that'll make The Great Financial
| Crisis look like blip.
|
| At this point, I can't imagine financial regulators doing
| anything to stop it.
| mytherin wrote:
| What will actually happen if the crypto coins collapse in
| price? What tangible effects will there be? Very few people's
| salaries are paid in crypto, crypto isn't backing people's
| mortgages, and outside of the rare (and newsworthy) cases,
| people are not investing extreme amounts of money into crypto
| that they cannot possibly afford to lose.
|
| I have a hard time imagining what actual tangible disasters
| will happen if crypto currencies lose their value overnight
| besides some speculators losing money and some mining centers
| closing.
| waynesonfire wrote:
| there is this concept termed "too big to fail" -- we're
| seeing crypto start to find it's way into ETFs.. and then
| 401Ks.. and then ops.
|
| https://www.barrons.com/articles/a-new-crypto-etf-is-here-
| yo...
| AnimalMuppet wrote:
| No real damage (except to those holding it) unless enough
| people have bought crypto with borrowed money. _That 's_
| where it can cause damage to the overall economy.
| lazerpants wrote:
| The Wealth Effect is a real consideration here. During
| 2007 people cut their spending considerable because their
| houses went down in value, even if they were not, at that
| time, trying to sell their home. You would see the wealth
| effect work similarly if cypto assets were devalued.
|
| As an example, I have 5-20k in crypto assets on any given
| day. My wife and I are also shopping for a new couch. If
| my crypto assets evaporated we would not be shopping for
| a new couch, nor would we be going out for dinner
| tonight, despite the fact that I am not spending down
| crypto assets to fund either of those purchases. The
| psychology behind it is that people adjust to a certain
| amount of "savings" and will adjust purchasing to get
| back to that level if their savings changes quickly and
| substantially.
|
| https://en.wikipedia.org/wiki/Wealth_effect
| pbourke wrote:
| 60% of Americans (roughly) own real estate. It's by far
| their largest asset. What proportion of Americans own
| crypto and how much of their net worth does it comprise?
| That would show you how significant the wealth effect
| would be.
| onlyrealcuzzo wrote:
| What will happen is 2% of the world's "wealth" would
| disappear - which would almost certainly spill over causing
| a much larger decline.
|
| From 2007 to 2008, for example, global wealth declined
| about ~10% [1].
|
| There's not much room left for central banks before we
| officially enter banana town. If cyrpto implodes, it could
| easily be worse than the financial crisis - which means,
| regulators have an interest in it NOT imploding.
|
| [1] https://www.credit-suisse.com/about-us/en/reports-
| research/g...
| pbourke wrote:
| In no way, shape or form would a crypto implosion be
| anywhere near the financial crisis in impact. It's just
| not systemically important. It's essentially "phantom
| wealth" not underpinned by any economic reality - even
| more unglued from reality than esoteric derivatives.
| pfisch wrote:
| Now do gold.
| Ekaros wrote:
| Is there even any significant amount of debt backed by
| crypto? As otherwise it is just money that some have spend
| and others have gained... Ofc, there are some energy
| producers that will be hit and some manufacturers. But I
| wouldn't be too worried about later, they should be able to
| pivot to other chips in current market.
| i_haz_rabies wrote:
| What skills can you guarantee (or at least say with high
| confidence) will be valuable in 20 years? I can't really think
| of any except maybe "soft skills" and whatever skills allow you
| to build a large network.
| goodcanadian wrote:
| Plumbing, electrical, basic construction skills, most trades,
| really.
| throwaway0a5e wrote:
| There is no skill that doesn't require upkeep over 20yr.
|
| Everything that was valuable in 2001 is still of about the
| same value now. But the mechanics who didn't want to diagnose
| electronics and the accountants who refused to learn
| computers and the programmers who only wanna write php have
| seen their skills reduced in value because they did not
| maintain currency.
|
| Being responsible for the work output of other people and
| doing your job somewhere unpleasant or dangerous pretty much
| always increases your pay.
| rubicon33 wrote:
| This is so hard to do in an industry that also heavily
| rewards specialists.
|
| I've been regularly asked by my employer to change role to
| help some other part of the business. Whether it was
| switching from mobile to server, server to front end web,
| or switching frameworks / tools within those domains, I
| always made the switch.
|
| The problem is that now I'm a jack of all trades, and a
| master of none.
| throwaway98797 wrote:
| Redine yourself as a problem solver vs. just a tool box.
|
| "I'm a master generlized problem solving machine, how can
| I be of service?"
| rubicon33 wrote:
| Yes, well, I can't help but look around at people who
| have chosen to specialize and see how much quicker they
| climb into leadership roles, and getting to work on
| mission critical features.
|
| If you're the jack of all trades guy, you'll always be
| asked to cleanup, or take care of small feature requests.
| When the company needs the big guns for a mission
| critical feature, you will never be called.
|
| This is an important point for people to realize. There's
| risks at specializing for sure, but there's also a lot of
| risk to being a jack of all trade.
| throwaway98797 wrote:
| Despite the semi trolly comment history on this profile,
| i was able to climb the ladder by knowing ONE thing
| extremely well and then being a generlist in everything
| else.
|
| Granted i climbed the ladder in mid size non-hot
| companies so may not be applicable.
|
| Im currently a consultant in my trade and I appear to
| sell this ONE thing but in every case i end up solving
| problems as a generilist.
|
| Is there a chance that you can claim that you are already
| an expert in one the things you do? sometimes other
| people's bar for expertise is lower than yours.
| prewett wrote:
| How diverse are the experiences you are generalizing
| from? Companies are different, so you'll need to sample
| from lots of different ones. You can also try talking to
| your manager about what your career goals are and what
| needs to change to get there. It sounds like you might
| just need to be in a team / company where your skills and
| matches the mission critical features, so you could look
| for transfer opportunities. Or if you don't care about
| the "leadership" route, you can opt out and try
| contracting / consulting. Every client wants a different
| set of experiences, so jack-of-all-trades is more likely
| to hit on multiple skills.
| c22 wrote:
| Welding?
| Ekaros wrote:
| Welding is probably bit multi-modal. Traditional stuff
| isn't likely going away, but already there is already
| advanced robots for the job. Though it's unlikely they will
| be entirely AI controlled.
| c22 wrote:
| No doubt a lot of "assembly line" welding operations have
| already become highly automated. This is, however,
| already the area requiring lesser skilled and more easily
| replaced workpeople. I was thinking more about on-site
| and craft-associated welding which I imagine will
| continue to be highly valued until extremely portable and
| versatile high-DOF robotic manipulators become
| commonplace.
| polypodiopsi wrote:
| Its also getting payed for grinding through your body
| (like a lot of trades but welding especially.)
| vsareto wrote:
| Skills around software and IT - not just developers. There
| might be a lot of churn within that industry, but if you can
| solve problems in those industries industry with any tools,
| you're going to be valuable. It might take longer to find a
| job depending on the current times and your own retraining
| speed, but it will be there in some form. Nothing is likely
| going to make all software and IT workers obsolete like
| automation does to factory workers.
|
| My evidence is that we still have a lot of legacy and
| technical debt around, and it's likely to still be there in
| 20 years, so even if you don't work on the cutting edge
| (which may now have stratospheric requirements for entry like
| a PhD and Github projects and 8 rounds of interviews), you
| can still take legacy work.
|
| Security and defense (physical and IT/software) will also
| likely be around forever.
| DC1350 wrote:
| I'd love to believe this, but dev and IT people are not
| paid exceptionally well in most of the world. That says to
| me that the high salaries are a consequence of social
| structures and the current economy, not that the skills are
| super valuable. It's proximity to money that actually
| matters.
| anonporridge wrote:
| Also, you'd better believe that a tsunami of smart,
| motivated young people are coming through the education
| pipeline to pump up the labor supply for the IT/dev
| sector.
|
| Maybe the demand will increase fast enough to keep
| salaries from dropping in real terms.
| sgerenser wrote:
| Developers are paid pretty well in most of the world,
| usually well above median income for the country. Just
| because they're not paid at 90-95th percentile incomes as
| in the U.S. doesn't mean they don't have valuable skills.
| benjohnson wrote:
| Your great advices pays dividends much further down the road
| too - focusing on work and creating value is also good for your
| children. Sadly, there's been many children that took decades
| to get out of their entitled mindset caused by easy money from
| their parents or the government.
| the_gipsy wrote:
| Culture is the best inheritance you can give your children.
| nscalf wrote:
| That's really nice in theory, but in the real world money IS a
| proxy for time and value creation. Having money is the same
| thing has being able to create value, and gives you freedom to
| create value at your own pace however you want.
|
| Crypto as an asset class is only working the way it is because
| there is a separation between perceived value and net present
| value. The same way fundamentalists value companies by expected
| earnings and angel investors look at the TAM, crypto is blowing
| up in large part because people are starting to believe in the
| story that crypto is pinned to.
|
| At the end of the day, you probably should have some skills to
| fall back on and not depend on an asset increasing in value,
| but if you have enough assets, that is your skill.
| beiller wrote:
| The problem is that economy and technology shifts. Not so great
| when you are a cold fusion developer today as an example. So it
| is required to hedge against that isn't it. You need to ensure
| you have a future by saving for retirement. I've been saying
| "it will eventually collapse" for what seems like forever now.
| The market can stay irrational longer than you can stay solvent
| - to borrow a cliche.
| svachalek wrote:
| The whole economy feels like nonsense now. There's a massive
| overabundance of both capital and labor required to meet actual
| needs, so we keep creating ever more useless games to play with
| capital so that we can create more capital that the world
| doesn't need or actually use. In the meantime, massive portions
| of the population are struggling to make ends meet. I don't
| know where this ends but it can't be good.
| ClumsyPilot wrote:
| Exactly, even a blind should be able to see that we spmehow
| have broken the system
| pbourke wrote:
| You are seeing one response in the various relief and reform
| proposals put forward by the Biden administration. Biden is
| following FDR's blueprint of first relief then reform in
| response to a crisis. The refundable child tax credit alone
| has the potential to sharply curtail extreme poverty.
|
| Whether it works or not is to be seen. You can look at both
| Biden and Trump as the end of the arc of neoliberalism that
| began with Reagan. The same broad moves seem to be happening
| in other peer nations.
| Mizza wrote:
| > as value creation is what actually matters in the "real"
| world.
|
| I guess this is the thing that people are having a hard time
| coming to terms with - we no longer live in the real world.
|
| All of these surveillance-advertising tech giants, all of these
| financial instruments, all of these media-induced bad feelings
| and ideological trends, everything that defines our
| contemporary era - none if it is real.
|
| If it all simply stopped, wiped out from a solar flare - for
| most of us here, nothing "real" would change. We'd all sit for
| a moment looking at dead black rectangles, then we'd have to go
| and find something else to do. My bet is that we'd all be
| happier for it.
| entropicdrifter wrote:
| > My bet is that we'd all be happier for it.
|
| Yeah, except for those who'd suddenly be without electronic
| medical assistance. There are definite downsides to the
| digital era, but to act as if there's been no benefit is
| laughable at best and dangerously ignorant of the past at
| worst.
| WJW wrote:
| Everyone whose food supply depends on electronic supply
| chain management (ie everyone who is not actively farming
| their own food _right now_) is also going to be in for a
| pretty rough time though. Or everyone who needs gasoline
| for transport because they live a non-walkable distance
| from the nearest food and water.
| Hoasi wrote:
| > I guess this is the thing that people are having a hard
| time coming to terms with - we no longer live in the real
| world.
|
| This, and the parent comment:
|
| > If you're planning to be alive in 20 years, you're better
| off making sure you have a work ethic and skills that
| generate value, than obsessing over any sort of wealth-
| hoarding instrument at all, because it is the only true
| protection against change.
|
| You see, the problem is that they both read like correct
| statements, which is rather worrying.
| seph-reed wrote:
| An interesting theory from "Sapiens" is that human happiness
| doesn't change too much throughout macro history.
|
| People adapt to whatever the new norm is, and sort of fall
| back to whatever their bio-chemical baseline is. When things
| are in the process of getting worse or better, it'll push
| them one way or another. But once it settles again, so too do
| they.
|
| The point being that happiness generally has more to do with
| internal bio-chemistry than whatever the new norm is.
| jpdus wrote:
| What you call "corrosive" (appreciation of non-value-creating
| assets) is 1:1 applicable to Real Estate.
|
| Compared to the appreciation of worldwide real estate, the
| market value of crypto is only a drop in the ocean. And
| countless people got unbelievable rich due to rising prices and
| "crowding-out" in cities without creating any value for society
| at all (in the opposite, making life harder for everybody
| struggling to keep up with their rent).
|
| And nobody so far managed to explain convincingly, in which
| ways investments in (existing, residential, not for self-use)
| real estate creates any value. People don't by these assets b/c
| they provide better service or can run their properties more
| efficiently than someone else. They buy these assets b/c its
| risk-free return on the backs of tenants who need a place to
| live. In this aspect, Real Estate investors are arguably way
| worse than Crypte gamblers. But I agree that the rent-seeking
| behavior we see in more and more parts of our economy and our
| society is indeed corrosive in the longterm....
| imtringued wrote:
| California has statewide politics that prevent the housing
| problem from being solved, so people move to the next state,
| which they don't like because California has nice weather.
| betaby wrote:
| California is not much different in that regard from
| Ontario or Quebec, or most of the western world really.
| CyberDildonics wrote:
| > And nobody so far managed to explain convincingly, in which
| ways investments in (existing, residential, not for self-use)
| real estate creates any value.
|
| Shelter is literally third on the list of human needs after
| water and food. Make something desirable and people will
| leave their previous (possibly decent) place behind to move
| in. I'm not sure how anyone can say real estate doesn't
| create value just because they are frustrated that some
| people make money off of real estate.
| DylanDmitri wrote:
| People who build housing create value. People who manage
| properties create value. People who speculate on properties
| do not create value.
| ryan93 wrote:
| Why are people selling real estate assets to speculators
| for less than they are worth?
| imtringued wrote:
| Because the real estate market is very illiquid. Each
| property is unique. It's not easy to figure out the right
| price. Trading isn't even bad, it's contributing to price
| discovery in the market and makes sure that the average
| sale price is close to the actual market price.
|
| The problem isn't that speculators are evil people but
| rather that the "arbitrage" they are doing is fueled by
| regressive housing policies. Increasing the efficiency in
| the housing market exposes the fundamental housing
| problem. After all, it can't just be that speculators are
| snapping up properties, there must be buyers that are
| willing to buy properties from the speculators, otherwise
| the speculators lose money. Those buyers don't even need
| to think that the house is overpriced, the house could
| genuinely be a good deal for them.
| unholiness wrote:
| In densely populated areas, the value of real estate has
| very little to do with what's built on the property, and
| everything to do with the land it is build on.
|
| GPs point is that owning land is not creating value. It is,
| however, very profitable.
| imtringued wrote:
| You either have a sufficiently large land value tax or
| let the government rent out land instead of selling it.
|
| In both cases the land would become a liability that you
| constantly have to take care of instead of being an
| "investment".
|
| Productive work like building on top of land should be
| rewarded, waiting for a train station to be built in your
| neighborhood is not productive work that should be
| rewarded.
|
| Pretty much every economist thinks that the work <->
| reward relationship should be as tight as possible.
| However, most of them don't think of anything other than
| cutting taxes and strangely enough they insist on being
| able to take advantage of negative externalities (CO2 or
| illegal waste disposal in general).
| alert0 wrote:
| Comparing cryptocurrency to real estate is laughable. With
| real estate you have either a place to live, reducing a real
| world expense (rent), or an income producing property. No
| matter how much you dress up cryptocurrencies as stocks, by
| using terms like market cap, you are not buying a share of an
| income producing asset. You're speculating on a digital
| collectible. You can speculate on real estate and stocks, but
| you can also invest in them.
| solosoyokaze wrote:
| They compared it to the appreciation of real estate, which
| _is_ wildly divorced from real value. Real-estate prices in
| say, the Bay Area are driven by legislation and
| speculation. Not actual value. The move to remote works
| accelerates the discrepancy.
| qznc wrote:
| Value creation is only one part. The next question is how much
| of the value you create, you can capture for yourself.
|
| Nurses create a lot of value, especially during a pandemic, but
| they receive only a tiny part of it. Competition can force you
| to give most of the value you create to your customers.
| polypodiopsi wrote:
| I'd argue that this is also an systemic issue, that can not
| exhaustively be thought about on the level of just an
| economic model (of supply and demand), but has to be
| scrutinized on a broader scope. (Epistemic, historical,
| sociological, psychologically etc.) Reproductive labor
| (actual birthgiving as well as carework, sustaining the
| potential to work in the bodies), has for the most time been
| thought to be just given by the "nature" of women. Even early
| Marxsim excluded reproductive work, as the precondition of
| all productive labor from its aspirations.
| mam2 wrote:
| There is no justice in the world. You seem to be strugglinh
| with this idea :(
| Dracophoenix wrote:
| The same could be said of the US Dollar (or anything really).
| All value is speculative until proven and changes in those
| speculations can't be stopped. What's worse in the Dollar's
| case vis a vis crypto is that the divorce between "real" value
| and "created" value is determined by a tiny group of
| institutional bankers and their government liaisons. Reality,
| much less work ethic, won't change their minds. If you think
| that crypto is akin to a religious sect, then the Fed is a
| financial Vatican slowly collapsing in its importance while
| denying it all the same. Rid yourself of the fallacy that
| holding on to value is hoarding lest you believe that what one
| does with one's wealth should be determined by others.
| yks wrote:
| Wealth is a human's worth under capitalism and arguing against
| riches of any kind while the number goes up is a philosophical
| attack on what we believe in as a society. At best you're
| looked at as an idiot, at worst you're the enemy that threatens
| the system. Fortunately, this too shall pass.
| GoodJokes wrote:
| I am mostly just super happy that I finally learned my job in
| life. It is utterly clear tech bros could have used a lot more
| liberal arts education.
| naveen99 wrote:
| Appropriate Capital allocation is value creation.
| cblconfederate wrote:
| Tbf, the same holds for stocks. It's a game where everyone
| wins, currently. This obviously never ends well.
| eli_gottlieb wrote:
| >Our job in life is to engage in value creation.
|
| I don't think there's any non-tautological way in which this
| can be simultaneously true and not an oppressive imposition by
| capitalism.
| isoskeles wrote:
| Even without capitalism, you have a duty to create value for
| the people around you, and you might expect the same of them.
| There are exceptions for the young, old, and infirm.
| m3ta4a wrote:
| In no world where there is a "duty" to provide value am I
| going to be found happily providing value. In this world,
| in my experience, your statement is simply false. If I
| happen to provide some form of value it is from my choosing
| to, not to satisfy the demands of some formless "duty".
| isoskeles wrote:
| The "duty" is to satisfy the demands of existing within a
| community of people, where able-bodied freeloaders are
| never welcome. But I can understand nitpicking over
| semantics. Replace the word "duty" with whatever you
| want.
| m3ta4a wrote:
| Nonsense, a different word doesn't suddenly make it
| universally true. It could be a guiding philosophy,
| something like "to live a good life provide value to your
| community". But it is in no practical way a rule.
| groone wrote:
| It is a universal rule as if you don't do that, you are
| part of the problem and are creating a drag on the
| society, reducing the value for everyone to use and
| enjoy. Your argument sounds like You want to see the
| society to fail and collapse.
| solosoyokaze wrote:
| It's not universal. I'd rather see someone "freeload" in
| a system of wild wealth inequality than further enrich
| those who already have runaway gains via the power law.
| In fact, I'd say it's quite an ethical position to take.
|
| Put another way, I'll worry about a million people not
| "adding value" when there ceases to exist individuals who
| have captured enough wealth to support a million people.
| The latter is the real problem.
| groone wrote:
| If you are not creating value that means you are
| consuming value created by others. The total value
| created for everyone to enjoy shrinks. Society just
| cannot sustain itself without people who create more
| value than they consume.
|
| Who is going to create all the value consumed by rent
| seekers, financial engineers, thieves, scammers, corrupt
| or bloated government? People who create and provide more
| value than they consume.
| eli_gottlieb wrote:
| That's the tautological branch of the dilemma, yes.
| [deleted]
| the_local_host wrote:
| > Even without capitalism, you have a duty to create value
| for the people around you
|
| I don't think this is true. This is one of these work ethic
| corollaries that helped build wealthy societies when
| productivity was proportional to people's effort. But it
| seems to grow more obsolete by the day.
| isoskeles wrote:
| Do you think that early hunter-gatherers shared their
| food with people who did not participate in acquiring
| food?
|
| Without capitalism, we could regress to the most
| primitive version of civilization and still require
| contribution to the tribe. The alternative is to go off
| on your own (and at that point, there are no "people
| around you" to help). Less primitive alternatives, as
| different political-economic systems, usually still
| require you to contribute through taxation.
| CyberRabbit wrote:
| > Do you think that early hunter-gatherers shared their
| food with people who did not participate in acquiring
| food?
|
| Almost certainly, yes. Is altruism missing from your
| vocabulary?
| [deleted]
| RGamma wrote:
| Welcome to the age of meaninglessness.
|
| Why should tech tycoons and .1 percenters be the only ones living
| with their head in the clouds?
| realce wrote:
| Giving you today another version of what you had yesterday.
|
| https://www.youtube.com/watch?v=MHFrhIAj0ME
| real-dino wrote:
| GME is actually quite a solid gamble, and could lead to what
| people are referring to as the MOASS.
|
| https://iamnotafinancialadvisor.com/DD/GME/og/GMEv14.pdf
|
| It hasn't alreadys been like this, but everything has been turned
| into overdrive. Where people were talking about 10% returns on
| investments, people are getting 1000% returns on investment.
|
| There is some bubble going on at the moment with the repo-market,
| hyper inflatation and what is being coined 'the everything
| short', but it's all too crazy to talk about seriously. Money has
| always been valuable, but will becoming a millionaire in a years
| time be the same as it is now? It's literally a field in a
| database, and a sheet of paper from the future could get you
| there! The stock market and crypto is so similar to gambling too
| it really pushes those triggers in the brain.
|
| Buy and HOLD does run counter to this though, but still, we are
| all still dreaming of benefiting from the chaos.
|
| I've been full on GME for a while now, and back in January, the
| shorts did not cover. Not even by a long shot.
|
| Ask me anything about GME and I will try to answer, but it does
| feel like some kind of echo chamber at the moment, even though I
| am participating, but then again everything is so crazy at the
| moment regardless, it might just be true.
| alecst wrote:
| I'll take you up on that.
|
| What's your thoughts on how many GME investors are retail vs.
| institutional? Any idea on what the breakdown is like?
| real-dino wrote:
| Honestly, no-one knows, except maybe Citadel and brokers who
| run via 'payment for order flow'
|
| There have been estimates using subscriber counts on
| subreddits and an average value which feels like complete BS,
| and there are some brokers who broadcast how many they own.
|
| However, institutional ownership for the top 10 is 192%
|
| http://finra-
| markets.morningstar.com/MarketData/EquityOption...
|
| Even Finra don't seem to know properly, the sums don't add
| up.
| kart23 wrote:
| Why doesn't gamestop just sell back a ton of stock? They
| repurchased >100 Million in shares in 2019 for dirt cheap. I
| saw the news about the share selloff, but a paltry 3.5M shares
| isn't what I was expecting, and thats part of the reason I was
| extremely skeptical about GME, why wouldn't the company simply
| sell directly to the shorts so that they could cover?
|
| https://ycharts.com/companies/GME/stock_buyback
| tcbawo wrote:
| Money is stored wealth, the ability to buy goods and services in
| the future. The problem seems to be that we live in a time of
| societal upheaval. The future of stored wealth becomes cloudier
| and more uncertain the further you go out in time. So, what is
| the best place to store wealth? Will my wealth be eroded by
| inflation? Will the companies I invest in become obsolete by
| technology or market-manipulating nation states? Will regulation
| changes suddenly damage the value of my investment? Will changes
| in tax regime eat my earnings? Will corruption and crime take my
| wealth? Clearly, some people are getting out of hand with
| speculation and credit (a suitcase full of lottery tickets is not
| diversification). As Warren Buffett says, when the tide goes out
| you learn who's been swimming naked. The economy has its ups and
| downs and speculative fervor ebbs and flows. There are no
| certainties, but IMHO all you can do is stay diversified and
| maximize the probability of your success.
| aqme28 wrote:
| > Money is stored wealth
|
| This is sort of a tautology. I like the explanation better that
| money is a "call option on goods and services."
| psychlops wrote:
| Money is a representation of stored wealth. An important
| distinction. Live in a country that has an unstable currency
| for a while and money is a liability and may show what it's
| truly worth. Nothing.
| gumby wrote:
| > Money is stored wealth...
|
| That is merely one function of money, and as the marginal cost
| of production plummets that role becomes less useful.
|
| In a modern economy it's also, for example, a signaling
| mechanism (arms-length communications tool), with pricing
| guiding production and effort.
| AnimalMuppet wrote:
| I heard of a wealthy family that had managed to maintain their
| wealth in Europe across multiple generations, through lots of
| war, upheaval, regime change, and so on. Their formula was "one
| third gold, one third art, one third land". You could lose any
| piece of it in any upheaval, but you wouldn't be likely to lose
| all of it.
| solosoyokaze wrote:
| Their formula was being wealthy enough to float above war,
| upheaval, regime change and so on. If they were wealthy
| enough, they probably triggered some of that and capitalized
| on war profiteering.
| xyzzy123 wrote:
| I don't like this comment, but I can't put my finger on why
| exactly.
|
| I think it's the drive-by, reflexive assignment of guilt,
| while knowing nothing of the circumstances.
|
| This strikes me as the opposite of thinking. What you said
| might be true, it might not, what have you added to the
| world?
| LudwigNagasena wrote:
| Assets are less ephemeral stored wealth. Money facilitates
| transactions, but it is not a factor of production, it is not a
| consumption good, and it is not backed up by any of these
| things, so it is a very nebulous type of wealth.
| rufus_foreman wrote:
| >> The problem seems to be that we live in a time of societal
| upheaval
|
| What time wasn't a time of societal upheaval? The Great
| Depression? World War 2? The Cold War? The Sixties?
| Stagflation? The Reagan era? The Clinton era? Post-9/11? Trump?
|
| Markets climb a wall of worry.
| mrfusion wrote:
| We didn't start the fire ...
| imtringued wrote:
| Money is a debt that grants you to the right to someone else's
| labor, the reason you work for money is that someone else
| promises to work for you in exchange. It doesn't store wealth.
| If you do not utilize your money, then someone else doesn't
| work and that person's time is irreversibly lost, despite no
| work being performed. That is why money is losing value over
| time, I mean, money should be losing value over time. The
| "should" is just a political decision because we consider it
| fairer, than the inverse, letting someone become unemployed and
| then you ask for even more work from them because your money
| has appreciated.
|
| This is why you must put your money into a bank account,
| because someone else out there will use that unemployed
| person's time to create value on behalf of you.
| paulpauper wrote:
| My answer to these questions and other unknowns about the fed,
| fiscal policy, America and its role in the world, the economy
| etc. is that the future will be a lot like the present, but
| more so. So extent the current trends into the future. Sure,
| things sometimes change, even dramatically such as the fall of
| the USSR or 911, but we are living in a steady-state world in
| which the underling trends do not change. Inflation will remain
| low in spite of printing, America remain on top economically
| and militaristically. Stock market keep going up. US dollar
| remain strong.
| imtringued wrote:
| The current president is attempting to bring things back to
| normal and the USA will stay strong because of that. The EU
| and Japan are not doing what they really should be doing.
| jonfw wrote:
| I bet the romans said the same thing
| XorNot wrote:
| Sure and like America eventually, they'll be taken out by
| ecological collapse (Rome was dealing with exhausted
| agricultural soils for much of it's collapse).
|
| But in the wake of that, the idea that you're going to be
| holding onto much of anything that'll matter globally is
| laughable.
| nonameiguess wrote:
| Most of them were right. Rome lasted for 950 years. All
| things must pass, but it isn't likely to happen in your
| lifetime.
| solosoyokaze wrote:
| The current trend is record breaking wealth inequality. We
| already have rampant inflation in the form of housing,
| education and health care costs. It's an unsustainable
| situation near its breaking point.
| XorNot wrote:
| Money isn't really stored wealth, it's a transferable debt
| obligation from the government. It's guaranteed to be
| redeemable to settle up taxes and court rulings, and entitles
| you to some estimate of the productivity of it's jurisdiction -
| enforced by the government.
| ArtWomb wrote:
| Skip this NYMag pablum. Read Dean Kissick's Downward Spiral:
| Popular Things (on NFTs and the pervasiveness of mundane art)
| instead. "We live in an algorithmically generated culture, and we
| are the algorithms" ;)
|
| https://www.spikeartmagazine.com/articles/downward-spiral-po...
| rideontime wrote:
| I hope your dismissive tone doesn't cause people to skip the
| column you linked. I appreciate seeing a criticism of NFTs (and
| meme "art" in general) that isn't solely about environmental
| impact. "Post-death culture" is a term that's going to stick
| with me.
| pyrrhotech wrote:
| There's only one entity to blame for this mess of a bubble, the
| US federal reserve. It started with Greenspan, and it's gotten
| worse with every subsequent chairperson
| paulpauper wrote:
| How many people are actually getting rich with NFTs besides
| people who who are already celebrities/famous? Not many. The
| market is flooded now with NTFs. The overwhelming majority of
| listings do not sell or sell for little.
|
| A better way to make money is with 3x ETFs using options
| strategies, which I am working on. The performance of some of the
| major 3x funds such as TECL, FNGU, and TQQQ surpass even Bitcoin
| tekromancr wrote:
| Ah, 3x ETFs. For the sophisticated degenerate.
| imtringued wrote:
| They work just fine, until they don't.
| second--shift wrote:
| The contango drag on 3x ETFs is hilarious - good luck on your
| endeavors sir, I've got futures contracts for sale for your
| fund manager to buy.
| paulpauper wrote:
| no it's not. it is actually positive due to the dividends . a
| 3x funds pays 3x the dividends . the borrow cost is only 1%,
| versus 2% dividend
| second--shift wrote:
| > a 3x funds pays 3x the dividends
|
| what? which funds pay 3x dividends? All of the leveraged
| ETFs i'm familiar with replicate the 3x exposure with
| futures contracts, which do not pay dividends. the drag
| exists when these futures contracts are in contango, where
| the back-month is more expensive than the front-month. The
| leveraged ETF pays that drag every time the fund rolls to
| the next futures. Nothing to do with borrowing costs.
|
| This is also the reason why USO trends down long term,
| regardless of the spot price of oil.
| paulpauper wrote:
| it would only be in contago if there is borrow and
| storage cost. This applies to commodities. But stocks pay
| dividends, so this can cease backwardation if interest
| rates are low relative to dividends.
| kgwgk wrote:
| But where are the 3x funds that pay 3x the dividends?
| paulpauper wrote:
| futures and swaps do not pay dividends, so the dividends
| on 3x funds are imputed in the nav, adjusted
| incrementally everyday . I compared a 3x of the DIA
| (UDOW) to the 1x version and found that the 3x outperform
| in such a way that the only reason for the discrepancy is
| 3x dividends.
| kgwgk wrote:
| Ok.
|
| Leveraged ETFs are very dangerous animals, though.
|
| UDOW lost 17% in 2020 while DIA went up 8%.
| cjf4 wrote:
| >for many of us, money is only experienced through our phones, as
| a number on a screen. You pay your rent with one app, you buy put
| options with another. The number goes up, it goes down, it lives
| in the little portal we hold in our hands.
|
| And decades ago it was a number written down on a little piece of
| paper, and before that it was little pieces of "precious" metal
| locked away somewhere.
|
| At least nowadays amateurs have a better chance to be literate.
| newsclues wrote:
| I still have gold and prefer cash for purchasing daily items.
|
| The money seems real, swiping cards or phone financial
| transfers lack a physical reality and my brain has less
| friction with digital transfers, thus I avoid them out of
| financial prudence.
| jp555 wrote:
| Have you noticed how your cash is buying fewer items than it
| did a ~year ago? My daily item costs are WAY up, which is
| really just saying the value of the cash is WAY down.
| jfengel wrote:
| Honestly, no, I haven't. My groceries are the same. My
| electric bill is stable. The watch I'm replacing today is
| the same price today as ten years ago when I got its
| predecessor.
|
| I don't know if it's because I buy different things from
| you, or if I live in a different place from you, or what.
| But my andecdote is that no, I'm not paying more for stuff
| than a year ago.
| newsclues wrote:
| Odd that some people don't notice things like this...
| https://en.m.wikipedia.org/wiki/Shrinkflation
|
| Do you actually track spending or just don't notice?
| jfengel wrote:
| A gallon of milk is still a gallon of milk. A pound of
| carrots is still a pound of carrots.
|
| It sounds as if your basket of goods is different from
| mine. Most of the examples on that Wikipedia page are
| sugary foods, which I just don't buy a lot of.
| newsclues wrote:
| I used to buy 3lbs of carrots, but now the bags are 2lbs
| but cost the same.
| jfengel wrote:
| Here, two pounds of carrots are $1.79, just as they have
| been for as long as I can remember. I don't have a
| spreadsheet, but I know what carrots cost. They certainly
| haven't shot up by 50%.
| wcfields wrote:
| I just saw this in real-time this past month with cat
| food.
|
| A 24pk of Rx Renal cat food went from 5.8oz to 5.1oz[1].
| I buy two packs at a time and what used to cost $113.76
| is now $114.72 Effectively they're charging me an extra
| buck to keep 33.6oz (5.7 old-cans / 6.5 new-cans) of cat
| food from me.
|
| [1] https://www.chewy.com/royal-canin-veterinary-diet-
| renal/dp/2...
| gruez wrote:
| >Do you actually track spending or just don't notice?
|
| Do you? The BLS does, and their inflation numbers for
| food is 3.5% YOY.
|
| [1] https://www.bls.gov/cpi/
| newsclues wrote:
| I do actually. Because I am poor, I'm extremely conscious
| of my spending, and have spreadsheets and save receipts
| to track price changes in normal purchases.
| newsclues wrote:
| Yes, inflation is real, and since I'm on a fixed income I
| noticed that despite cutting out luxuries and limiting meat
| purchases, my groovy bill went up and I still lost weight.
| toss1 wrote:
| Insufficient data - supports several modeks.
|
| If you are trying to lose weight, shifting away from
| sugary & processed foods & meat to high-quality fresh
| fruits, vegetables, nuts, etc. can definitely increase
| your grocery bill while reducing your weight in a very
| healthy way. Food bill may go down by going directly to
| farmers, but travel & fetching costs increase.
|
| Or, it could be an unhealthy shift towards more processed
| foods, costing more in factory work & transport, and you
| are seeing real inflation.
|
| So, insufficient data to indicate inflation or not.
| newsclues wrote:
| Wasn't trying to lose weight and my diet remained
| essentially the same other than modification due to cost
| (mainly less meat).
|
| I had a fixed grocery budget, and over months, I lost
| weight due to a caloric deficit. Literally I bought less
| food with the same money and the result was just over a
| pound a month lost .
| toss1 wrote:
| I'm sorry to hear that you are having such difficulties;
| I hope things improve for you soon.
|
| That is the data we need to confirm that you're seeing
| inflation. Curious where you are located that you are
| seeing these numbers?
| newsclues wrote:
| It's ok, I might be poor but I'm pretty happy despite the
| disability.
|
| I live in a city an hour away from Toronto, Canada.
| legulere wrote:
| It's the other way around. First there was personal debt, then
| impersonal money.
|
| In the beginning you would just lend stuff from other people
| and give it back, or with consumables give something back of
| similar worth.
|
| Precious metal was pretty rarely used, as its main benefit is
| that you need almost no common trust relationship.
| jasonwatkinspdx wrote:
| I see you've read Graeber. Great book and changed my views on
| a lot of things, particularly how much of our "common sense"
| understanding/education on topics relies on "just so"
| assumptions made by some aristocratic scholar a couple
| centuries ago.
|
| Anyhow, to explain for the forum: Graeber's book goes through
| the evidence we know of from the places were money first
| appeared. In essence, debt came first, and money was a later
| innovation. Very interestingly temple records using tally
| mark schemes may have been what lead to the development of
| cuneiform writing in the levant. A similar debt first pattern
| appears in other places, at other times too.
|
| Coinage, particularly metal coins, came about much later as a
| clever hack by rulers to simplify raising and maintaining a
| large army. Pass a law demanding all citizens pay you X coins
| each year. Pay your soldiers in coins. Suddenly your society
| is figuring out how to feed and house soldiers, without you
| haven't to build a command hierarchy to run it all directly.
|
| I can't recommend this book enough. It's dense in parts
| because he goes into a lot of detail that fully justifies
| what he's saying. Still, completely fascinating to learn much
| of the way we think of economic history is mythology. It's
| also a great lens for understanding what's happening now with
| cryptocurrencies.
| imtringued wrote:
| Yeah this is true, people didn't necessarily "barter" back in
| the day. Traders and merchants probably did because they
| wanted immediate payment, but within a trustworthy community
| you simply record or memorize what you did and demand the
| other side to pay you back in the future.
|
| An oversimplified hunter and gatherer society would just let
| the hunters give meat to the gatherers, assuming that they
| will one day be paid back with gathered vegetables or fruit.
| drewcoo wrote:
| The difference between finance and gambling is largely class. The
| things we call finance and gambling today both trace back to
| gambling/insurance in Venice a few centuries ago. They've
| diverged over time to reflect society and now Vegas is low brow
| and Wall Street is peopled with suits. If finance has been
| reduced to gambling, it just means that class boundaries are
| being broken down. In the cases listed, broken down by
| technology.
| JackPoach wrote:
| And this never ends well.
| jp555 wrote:
| Zero mention of the recent unprecedented fiat currency printing
| we've seen, nor the fact that _every time_ since the Tang Dynasty
| when we have done this, it has led to _very_ troubling times
| 12-18 months later.
|
| Everyone is gambling even if they dont know Crypto exists.
| richardwhiuk wrote:
| TFA:
|
| > Asked if the money the Fed was injecting into banks in the
| wake of the global financial crisis was "taxpayer money,"
| Bernanke shook his head and grinned sheepishly. "To lend to a
| bank," he said, "we simply use the computer to mark up the size
| of the account that they have with the Fed."
| tim333 wrote:
| Ha. I was skeptical about the unprecedented bit but googling
| seems to indicate you are correct, at least for the US
| https://mobile.twitter.com/fgmr/status/1355105955982282752
| quickthrowman wrote:
| You need to look at velocity of money in conjunction with the
| money supply to get the true picture:
| https://fred.stlouisfed.org/series/M2V
|
| The tweet you linked leaves out half the story, which is that
| money velocity is down greatly, thus the increase in money
| supply hasn't caused rapid inflation.
|
| https://www.stlouisfed.org/on-the-
| economy/2014/september/wha...
| tim333 wrote:
| Yeah though what happens when people go out again?
| imtringued wrote:
| Hopefully people spend their money and corporations
| invest their money to meet the demand.
| ac29 wrote:
| The US printed and spent tons of money during World War 2, and
| the postwar period was one of, if not the largest economic
| expansions in its modern history.
| hpoe wrote:
| I see this argument come up a lot, I'd like to point out 2
| points.
|
| 1) Wealth wasn't created during WW2, almost all of the
| increased production went to things like bombs and tanks and
| bullets, these things don't provide a real increase in
| quality of life this is one of the main points in 1984,
| people need to be kept busy, but Quality of Life can't
| increase.
|
| 2) The postwar boom was largely a result of everyone except
| America being unable to really produce because their economy
| and workforce was shattered. When you suddenly have 66%
| percent of the world only able to purchase from you, that's a
| lot of demand that you can then serve.
| lazerpants wrote:
| Plus it was an unprecedented investment in labor. An entire
| generation of young men were either killed or maimed, or
| they received job training and the offer of a free college
| degree. Suddenly you have an exceedingly employable
| workforce. And, on top of that, employing women became
| acceptable too, all creating a situation in which supply
| expanded massively.
| nickthemagicman wrote:
| This is a great point. Not to mention the world owed the US
| a bunch of money due to the Lend Lease Act.
|
| https://www.loc.gov/item/today-in-
| history/october-23/#:~:tex....
| paulpauper wrote:
| then how come the US economy boomed after 2009 in spite of
| unprecedented stimulus and other programs. Not saying that the
| programs caused the expansion, but it did not seem to hurt it
| either. Everyone who said that the printing would cause
| inflation, a repeat crisis, recession, or other problems, were
| wrong.
| makomk wrote:
| I'm not sure to what extent the 2008 crisis and the stimulus
| programs even did result in net printing of money. Remember,
| every time a bank issues a new loan they're printing money
| and every time they reduce lending they're destroying it, and
| increases in the flow of money are also act much like an
| increase in the money supply. So when the banks stopped
| lending and the money flows locked up back in 2008, this was
| effectively a massive destruction of money that offset some
| of the money printing.
|
| The Covid pandemic is different. Western economies are
| heavily service-based and the pandemic effectively stopped
| many of those services being consumed. All of the restaurant
| meals and vacations and so on are gone, never happened, the
| opportunity to create them forfeited, even some factory
| production time was lost - and the money that would've paid
| for those things remained in the customers' pockets. Yet in
| most countries, the employees who would've worked to supply
| them also earned most of what they would've got for doing so.
| There's an imbalance there between stuff available to consume
| and money paid that's fundamentally very different from 2008,
| which was mostly a crisis in the financial and housing
| sectors.
| swiley wrote:
| It boomed according to certain metrics but fewer people could
| afford housing and transportation so I'm not sure I agree.
| realce wrote:
| It's hard NOT to have the metrics of a "boom" when the Fed
| just buys up any bad asset on the market and puts it in a
| black bag.
| swiley wrote:
| Not being able to get to work or live inside because of a
| national financial issue is not a boom.
| AlexandrB wrote:
| Doesn't something feel _wrong_ about the post 2008 "boom"?
| Theoretically the economy is doing great but you have
| constant social upheaval, a generation where many are still
| living with their parents, and the need for constant central
| bank stimulus in the form of cheap credit.
|
| I sometimes wonder if we've managed to mask the real state of
| the economy by pumping the metrics to make it look like it's
| fine.
| h2odragon wrote:
| Empty houses everywhere since 2008. Someone has those
| booked at "full value" as assets, but they're gonna take
| money to remove before any use of the site can be made;
| they have negative value.
| mbil wrote:
| Lyn Alden explored this idea in her January newsletter,
| titled "The Hindsight Depression"[0].
|
| > the US and much of the rest of the world have already
| been in a mild depression for the past 12 years, ever since
| the 2008 global financial crisis. It's just not as obvious
| as the 1930s depression, because higher levels of
| technology and anti-deflationary monetary policy disguised
| it in a nominal sense.
|
| [0] https://www.lynalden.com/january-2021-newsletter/
| calvano915 wrote:
| > I sometimes wonder if we've managed to mask the real
| state of the economy by pumping the metrics to make it look
| like it's fine.
|
| This concept extrapolates widely in our personal and
| professional lives. The internet and cell phones were
| probably the biggest real pieces of innovation in my
| lifetime (mid thirties). Everything else is just fluffed up
| rehashes of relics or in very early stages of something
| radically new. I just read an article proposing genomics as
| the next big thing to really change the course of medicine
| and humanity, and I'm inclined to agree but do not see what
| the timeline of the tipping point will be. Everywhere else
| I look I just see more stagnation, short term
| thinking/goals, and continuation of status quo...with
| touches of regression throughout.
| sauwan wrote:
| Many economists argue that the 2008 stimulus didn't do
| enough, and that where it did provide stimulus it was
| applied at the wrong places (towards the top rather than
| the bottom). That's why we're seeing this response to the
| current situation.
| api wrote:
| If you are going to do stimulus, the way we are doing it
| now is better. Even better still would be to drop money
| from helicopters.
|
| There's an argument to be made that we have done _too
| much_ over the past ~10 years and are risking significant
| inflation, but that 's a separate argument and it's hard
| to say what else we could have done that would have been
| better. Inflationary blowoff is usually less painful than
| deflationary depression, but neither is good. Policy is
| often an exercise in choosing the least awful option.
| imtringued wrote:
| I agree, ineffective policies just cause unintended
| consequences. If the Fed or us government had done its
| job we wouldn't have to print so much money in the first
| place.
| tim333 wrote:
| Things are kind of distorted from what would be fair. The
| near zero interest rates have lead to high property prices
| which has made owners rich and renters poor in a rather
| arbitrary manner.
|
| It's like the governments are trying to control a lot of
| variables with only a couple of levers.
| imtringued wrote:
| A lot of the Fed problems are related to the fact that it
| doesn't have direct control over the economy and the help
| (fiscal stimulus) that is most needed can only be done by
| the US government.
| roenxi wrote:
| Add to that the collapse in wage growth and the conspicuous
| difference in the rate of improvement in Asia vs in
| America.
|
| The World Bank says [0] the US GDP per capita has more than
| doubled since 1996. In real terms. Computers have been a
| big boost, but it seems a tough sell that the US population
| has actually seen a real doubling in that time. That is
| saying a dude with a house in 1996 is a dude with 2 houses
| now. Is that arguably true? Where is the stuff?
|
| [0] https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?loc
| ation...
| RugnirViking wrote:
| > Is that arguably true? Where is the stuff?
|
| In the hands of increasingly few people, namely tech
| billionaires. Amazon for example is worth more than all
| but 18 of the entire world's sovereign nations'
| respective GDP.
|
| The economy has grown tremendously, in measurable terms,
| but that growth has almost exclusively gone to the 0.1%
| toss1 wrote:
| True
|
| And also much of the 'stuff' is here, or converted to
| services. 25 yrs ago, approx no one had 55"+ tvs,
| internet connection was a minority, and media eas
| collections of CDs/Videotapes. Now 'net connections are
| near-universal, and it is all streaming. Cell phones were
| just beginning & expensive, now everyone has a powerful
| computer in their pocket. We don't have two houses, but
| the ones we have are worth twice as much. Cars are much
| better developed than 2 decades ago, snd we'll soon have
| ubiquitous electric cars...
|
| All of it needs to be more evenly spread. Just look at
| the charts of portions of funds going to labor vs
| capital.
| RugnirViking wrote:
| Those things became cheaper to produce because of
| technological advancement, largely developed by people
| who did not benefit from this rise in production. They do
| not represent wealth in any meaningful sense. Wealth is
| economic power, and 55" TVs dont help you start a
| buisness or pay a downpayment for a mortgage. Internet
| connection may once have served as some measure of
| economic power, but its no coincidence that those with
| the power currently are doing everything they can to
| restrict the rights of normal people to create using it.
|
| Imo, its really about things that give you more agency
| over your own life and the world. Cars are good, they
| represent a great increase in our ability to travel and
| make decisions for ourselves.
|
| > We don't have two houses, but the ones we have are
| worth twice as much.
|
| This is largely a wealth transfer to the elderly. Among
| under 40s, home ownership has fallen consistently since
| the 1990s, with only a brief increase in 2001-2005.
| owenversteeg wrote:
| It's worth mentioning that houses are not only worth far
| more, they are also physically much larger while
| household sizes have gotten smaller. In 1850 households
| had on average nearly 6 people; in 1890 five, in the
| 1930s four, in the seventies three - and today, the
| average household in America has two and a half people.
| Meanwhile house sizes have almost tripled since the 50s:
| new single-family homes were an average of 983 square
| feet in 1950 (about 280 sqft per person); today they are
| around 2,600 square feet (around 1050 sqft per person.)
|
| That is to say - not only are the houses almost three
| times larger, but the average American has nearly -four-
| times more personal space today vs in the 1950s.
|
| The improvements in cars have been crazy - I wrote a
| comment about that recently:
| https://news.ycombinator.com/item?id=26389885
|
| Only 3.4% of jobs in America require very heavy strength
| according to the Bureau of Labor Statistics. With the US
| employment rate at 56.8%, that's 1.9% of the population
| that has to do a very strenuous job.
|
| Compared to even very recent generations, we live in
| palaces, we drive in luxury, we work cushy jobs, and we
| have endless entertainment.
|
| >All of it needs to be more evenly spread.
|
| Absolutely. Among the world, of course, but even within
| America the inequality is still huge. The fact that we
| live with this inequality while having the resources to
| fix it is a stain on our collective conscience.
| rchaud wrote:
| > Is that arguably true? Where is the stuff?
|
| First off, the chart shows GDP per capita at current
| prices, meaning it's not adjusted for inflation.
|
| GDP per capita is a very rough proxy for economic well-
| being. Adam Neumann of WeWork 'earned' $185 million for
| getting fired. So in essence, he raised GDP per capita by
| about $0.50.
| paulpauper wrote:
| someone needs to do a blog post or write up explaining
| how in sane world this is rational or justified, but in a
| serious manner . That is unheard of anywhere else in the
| world where people get paid so much after they fuckk up.
| lazerpants wrote:
| That is incorrect. GDP is typically calculated using an
| expenditure approach. Just transferring 185MM would not
| impact GDP.
| rchaud wrote:
| GDP can also be calculated using the income approach,
| since conceptually they both add up to the same amount.
|
| In either case, it is still a highly misleading proxy
| measure for economic development and well-being.
| onlyrealcuzzo wrote:
| Doing great if you're on the part of the K that's going up -
| not down.
| 99_00 wrote:
| This article is the a sign of a speculative mania peaking.
|
| There is a lot of liquidity. But liquidity has a bad habit of
| disappearing when margin calls are made.
|
| Don't get me wrong, I'm gambling too. The choice is to join the
| speculation party or sit out because there is no value to buy.
| And I'm joining in, but my eye is on the exit.
| paulpauper wrote:
| >If crisis had opened the door to a new way of thinking about
| money, the checks closed the door on the old: Gone was an
| understanding of money as a scarce, quasi-natural resource to be
| managed disinterestedly by apolitical experts. The question was:
| What was replacing it? Would MMT's chartalist view of money as a
| tool of state power prevail? (The undeniable success of the
| pandemic cash drop seemed to be a point in its favor.) Or could
| the crypto-millenarians' anarchic vision of money backed by
| cybermetal take the upper hand? (Cryptocurrency had a boom year,
| perhaps driven by the existential fear that accompanies a global
| pandemic.) Maybe the Marxists would finally figure out how to
| abolish the value form? (Don't hold your breath.)
|
| This is bollocks. Money will always be scarce, by design. Look at
| all the ppl struggling to get by even in spite of these stimulus
| checks, who lost their jobs or businesses due to Covid and still
| have not be rehired. The money that the fed is creating is not
| the type of money that individuals exchange with, which also
| explains the low inflation.
|
| Rather, what everyone got wrong is, the experts, pundits, etc. in
| 2008, and now in 2020-2021 thought that all of this printing
| would cause inflation to surge, but CPI just refuses to budge
| much. This is due to many factors, such as America's growing
| economic dominance, which has widened since 2008 and even more so
| since Covid.
| makomk wrote:
| Remember, CPI is just the average of a particular basket of
| goods weighted in a particular way - it doesn't necessarily
| represent the real levels of inflation people will see. I know
| for example that here in the UK, the low figures were the
| result of price increases in things people were actually buying
| like food, computers, cars, holiday stays when we weren't
| locked down, etc being counterbalanced by lower increases or
| even decreases in things they weren't buying as much anymore
| like clothes. (Our better news sources went out their way to
| explain this.) So the average person would have seen rather
| higher inflation than the CPI and RPI would suggest.
| gruez wrote:
| >I know for example that here in the UK, the low figures were
| the result of price increases in things people were actually
| buying like food, computers, cars, holiday stays when we
| weren't locked down, etc being counterbalanced by lower
| increases or even decreases in things they weren't buying as
| much anymore like clothes.
|
| Source? Maybe uk is different but that claim isn't consistent
| with the CPI figures coming from the BLS. In your list of
| things food makes up the biggest part, and it's only up 3.5%
| YOY. Computers is actually down 3.2%. New cars/trucks is only
| up 1.5%. Used cars/trucks is up 9.4%, but that only makes up
| 2.71% of the basket.
|
| https://www.bls.gov/cpi/tables/supplemental-
| files/cpi-u-2021...
| nickthemagicman wrote:
| Value is already decoupled from money in the entire economy.
|
| When inflation is 3% YOY, but wages don't increase.
|
| If money was an indicator of value wages would track with
| inflation.
|
| There's no objective measure of value anymore and most jobs are
| more or less bullshit jobs.
|
| https://en.wikipedia.org/wiki/Bullshit_Jobs
| onlyrealcuzzo wrote:
| Median household income is up to $69k now. In 1980, it was
| $17k. Wages are up 3.7x since 1980. REAL median household
| income is up 32% [1]. And this is with labor force
| participation absolutely plummeting [2].
|
| Less people are working, and yet households are bringing in 32%
| more.
|
| [1] https://fred.stlouisfed.org/series/MEHOINUSA672N
|
| [2] https://fred.stlouisfed.org/series/CIVPART
| 52-6F-62 wrote:
| That isn't really meaningful on its own, is it?
|
| I'm sure the parent comment actually meant in the context of
| how it income has increased in relation to cost of living
| (though they didn't indicate that explicitly)
|
| eg, https://www.investopedia.com/ask/answers/101314/what-
| does-cu...
| simonebrunozzi wrote:
| > Maybe the question we should have been texting our financially
| literate friends wasn't "What is an NFT?" but "What is money
| now?"
|
| Potentially interesting piece on the subject, but not
| particularly deep or insightful.
| [deleted]
| Al-Khwarizmi wrote:
| Financial elites have been gambling for decades. They seem to be
| really upset that the plebs now can also do it.
|
| When brokers did it it was OK, when algorithms did it in
| milliseconds (when common people can only operate with delays of
| hours and days, and with deterrent fees) it was OK, but now that
| there are platforms that allow more or less anyone to speculate,
| we start publishing moralistic pieces in the media and calling it
| "gambling"?
|
| Yeah, I'm sure people are going to listen... next time they want
| to promote values based on work and effort, maybe they should try
| not to create a system where workers are punished and gamblers
| are rewarded.
|
| PS: I don't even speculate myself, at most I buy and hold, but
| I'm disgusted by the level of hypocrisy of those who suddenly
| started saying that speculating was bad when common people
| started doing it. It almost makes me want to speculate just to do
| the opposite of what they say.
| ycombinete wrote:
| I don't quite believe that there was no moralistic sentiment
| directed against it when high frequency started, or even before
| that when whatever changed changed. The fact that people
| weren't currently writing about the status quo, but then write
| about a change to it isn't surprising.
| Tenoke wrote:
| The NYT had a pretty well received article on it back in
| 2009. Michael Lewis published a book criticizing HFT back in
| early 2014 which is a pretty good sign there was indeeed
| moralistic sentiment against it.
| paulpauper wrote:
| >Financial elites have been gambling for decades. They seem to
| be really upset that the plebs now can also do it.
|
| Hardly. They make money from the commissions
| disabled wrote:
| It should be noted that gambling needs to be viewed as nothing
| more than a form of entertainment. Back in the day, formal
| engineering schools offered elective courses on the mathematics
| of gambling. Just know that if you partake in the activity in
| short stints long-term, they have it so rigged that it is
| mathematically impossible to yield net gains long-term.
|
| Personally, I think gambling is an atrocious activity. I am not
| religious in any way, either. I just think it is a horrible
| activity from a moral standpoint. Also, people who have
| gambling addiction do actually have one of the worst and self-
| destructive addictions out there.
|
| There are other ways to gamble in life without actually
| gambling.
| InvertedRhodium wrote:
| What makes gambling inherently immoral in your opinion? I
| agree that it's addictive, but I don't see the how it's any
| less or more immoral than smoking, drinking alcohol, etc.
| tim333 wrote:
| No one is that bothered when the elites lose their money
| gambling. It's more of an issue when people who are hard up do.
| a1369209993 wrote:
| > but now that there are platforms that allow more or less
| anyone to speculate, we start publishing moralistic pieces in
| the media and calling it "gambling"?
|
| FWIW, I've been calling it gambling since I found out what the
| stock market is, because that _is_ what it is. Can 't speak for
| anyone else, though.
| nunez wrote:
| SPACs are the perfect example of this.
|
| Before SPACs, retail couldn't get into IPOs at anything lower
| than $40/share...and even that was _after_ missing the initial
| pop that happens once the ticker starts trading.
|
| Now that retail can get into (support) exciting companies at a
| MUCH lower floor ($10 for commons, $2.50 for warrants), "SPAC
| bad" hit pieces are a dime a dozen and some brokers (Merrill
| Lynch, for example) won't allow retail to trade them unless
| they have $n million in net worth.
|
| Are SPACs riskier? Of course they are. Are they any riskier
| than IPOs (which can and do trade lower than first-day
| valuation)? I don't think so. Retail finally has a shot at the
| same pathways for wealth than IBs and others have had since
| forever...and we can't have that.
| namdnay wrote:
| > Are they any riskier than IPOs (which can and do trade
| lower than first-day valuation)? I don't think so
|
| There are significant regulatory and disclosure differences
| that make it easier to be shady with a SPAC. If WeWork had
| gone with a SPAC there's probably a lot of stuff they
| wouldn't have needed to share
|
| If the aim is to open trading directly to retail, a direct
| listing (like Coinbase) is all you need.
| paulpauper wrote:
| except that the # of companies acquired this way is very
| limited
| AnimalMuppet wrote:
| This could be hypocrisy, but it doesn't have to be. It may be
| "kids, don't try this at home". The pros should have a lot
| better knowledge of the risks involved, and the resources to
| take the consequences when they're wrong. (Yeah, I know, they
| don't always either have the knowledge or the ability to take
| their lumps. They still are far ahead of the amateurs in both
| departments.)
| Tenoke wrote:
| >maybe they should try not to create a system where workers are
| punished and gamblers are rewarded.
|
| I find it hard to see how people are even thinking that it's
| the gambling that's being rewarded. It doesn't take much to
| check that pure gambling is unlikely you to win you money on
| average, and that those who do make money are (again, on
| average) doing _something_ more than just gambling.
| the_local_host wrote:
| Professionals don't gamble _with their own money_. They gamble
| with other people 's money, and keep a percentage if they win.
|
| "Common people" are entering the game without the most
| important piece of equipment they need, namely a pile of money
| that doesn't come out of their own pocket if they lose.
| alex_anglin wrote:
| Thanks to fees, professionals can also keep a portion if they
| loose. If they under-perform, they also win as long as their
| clients aren't calling them on it.
| [deleted]
| bennysomething wrote:
| This is really broad stroke. Everything we do is a gamble.
| Investment firms work for their clients if they didn't they
| wouldn't last very long. Contrary to what most people think
| they play a important roles. For example spending time with
| firms to decide if they are worth investing in. Capitol
| allocation is really important. It allows someone like me to
| delegate investment choices for my pension. This funds things
| new medicine development, new technology etc. Sure there are
| things like high frequency trading. But taken as a whole I know
| who'd I prefer to give my money to to invest: people with
| something to lose if it doesn't work out. I'm not sure how else
| to allocate capitol with out totally eroding personal choice.
| jayd16 wrote:
| >Financial elites have been gambling for decades. They seem to
| be really upset that the plebs now can also do it.
|
| I really don't understand this sentiment, as if a professional
| gambler would not gladly gamble with novices...but putting that
| aside...
|
| I think the emphasis is more about how there's no other game in
| town that can compete, not that gambling is new.
|
| Interest rates are so low that there isn't a simple/safe
| investment entity to pull out a reliable 10%. We're all stuck
| gambling whether we want to or not.
| bondarchuk wrote:
| > _I really don 't understand this sentiment, as if a
| professional gambler would not gladly gamble with novices..._
|
| The existence of a financial elite hinges on the existence of
| a non-elite that actually does the work. If workers are
| putting 25% of their paychecks in an index fund and retire a
| few years earlier, instead of paying off their too-expensive
| car loan or something, it will be bad for the current
| financial elite.
|
| In the end money is just an abstraction to determine who has
| to do back-breaking work all day, and who doesn't.
| anonporridge wrote:
| I do actually wonder if the FIRE movement will come under
| criticism in the coming years. Does the economy still work
| if too many people are checking out of their careers in
| their 30s and 40s?
|
| But yeah, it's mostly the financial elite freaking out that
| their kids might actually have to be a wage slave for a
| living.
| Shaanie wrote:
| I really doubt FIRE is popular enough for them to matter
| in practice. I suspect very few can stand pinching
| pennies for the 10-25 years it takes to save up the
| capital.
| anonporridge wrote:
| It probably matters more for highly paid professionals
| who can do it in 5-10 years.
| Aunche wrote:
| > If workers are putting 25% of their paychecks in an index
| fund and retire a few years earlier, instead of paying off
| their too-expensive car loan or something, it will be bad
| for the current financial elite.
|
| Nobody is complaining about people placing their paychecks
| in index funds though. Index funds are a reasonably good
| proxy for the future health of the economy, so your gains
| from it will likely represent real growth. By contrast,
| gains made from cryptocurrency and speculative stock must
| be coming from someone's losses.
| ksdale wrote:
| Index funds go up because more people want to buy them
| than sell them, cryptocurrencies go up because more
| people want to buy them than sell them.
|
| Index funds happen to represent ownership of productive
| assets, but the assets don't really care who owns them,
| your investment in an index fund doesn't increase the
| number of productive assets in the world, likewise with
| cryptocurrency.
| arcticbull wrote:
| Index funds are positive sum because companies are
| positive sum. You buy shares in a productive enterprise,
| which then generates revenues, and profits. These profits
| are returned to shareholders via dividends or buybacks,
| or just through the accretion of value within the
| enterprise.
|
| On the other hand cryptocurrencies are negative sum. The
| only way the early folks make money is when late folks
| put money into the system. At the same time, the house
| (miners) are constantly extracting massive amounts of
| actual liquidity. The "sum" of Bitcoin is negative
| 21,000,000,000 per year. This welfare is extracted by
| Chinese mining cartels bribing their local governments
| for access to coal-powered electricity. Enough to offset
| _all_ of the solar panels installed in the entire world.
|
| The total amount of wasted power per Bitcoin transaction
| is now 30 days of power for the average household, and
| generates 100 grams of non-recyclable e-waste.
| scarmig wrote:
| > our investment in an index fund doesn't increase the
| number of productive assets in the world
|
| Not directly, but it creates an incentive landscape that
| encourages the formation of more capital, basically
| making the potential payoff of starting a company larger
| and more likely.
| Aunche wrote:
| > your investment in an index fund doesn't increase the
| number of productive assets in the world
|
| Eventually, some rich people will notice that they aren't
| getting as much money from buybacks and dividends as they
| used to and will place their money elsewhere. It would be
| relatively more attractive to invest in developing
| countries or buy PR in the form of charity.
| paulgb wrote:
| Amazingly, _some_ people are complaining about index
| funds. It's a pretty fringe position, but it comes up
| frequently enough that "should index funds be illegal?"
| is one of the recurring headings of Matt Levine's
| newsletter.
|
| https://www.theatlantic.com/ideas/archive/2021/04/the-
| autopi...
| anonporridge wrote:
| Index funds being illegal just means they're illegal for
| the poor and middle class. Any person with sufficient
| wealth could construct a personal index fund manually by
| buying the individual stocks. You would probably need
| millions to make this a worthwhile exercise.
|
| Somewhat related, I really want to see someone offer some
| kind of customizable index fund. Let me start with a base
| index, and then exclude or include companies at will.
| e.g. start with the S&P 500, kick out companies like
| Exxon and Facebook and add in Tesla (pre inclusion),
| while the service auto weights investments appropriately.
| enraged_camel wrote:
| >> Index funds are a reasonably good proxy for the future
| health of the economy
|
| Were.
|
| Index funds _were_ a reasonably good proxy.
|
| They have been completely detached from reality for at
| least a year, and arguably for several years.
|
| S&P has doubled over the past 5 years. Does that mean the
| economy has also gotten twice as healthy?
| feoren wrote:
| > Nobody is complaining about people placing their
| paychecks in index funds though
|
| There was an article on the front page of Hacker News in
| the last couple days about how index funds were
| supposedly ruining the economy.
| sixstringtheory wrote:
| > In the end money is just an abstraction to determine who
| has to do back-breaking work all day, and who doesn't.
|
| Maybe, but are you insinuating that no back breaking work
| would need to be done if money weren't to exist?
|
| Pretty sure the introduction of money reduces the total
| amount of backbreaking work to be done. Instead of hauling
| grain to trade for axe heads and carrying those back to
| your farm, you carry coins, paper, or in modern times, tap
| a few buttons on your smartphone.
| angus-prune wrote:
| The grain still needs to be hauled to somewhere else
| though.
|
| If the grain only ever exists on your farm, it has no
| value to anyone else whether for coins or axe heads.
| cambrianentropy wrote:
| Barter economies have never existed. Myth starts with
| Smith.
| legulere wrote:
| Very likely much less "work" would need to be done. There
| are a lot of bullshit jobs that are not productive and
| are just making people feel bad.
| toomuchtodo wrote:
| The market would need to find ways to perform the back-
| breaking work, either by wages increasing or the
| development of automation. Supply and demand. The more
| people who can accumulate wealth and capital, and
| intelligently manage that wealth, the greater the
| reduction in the labor supply (as they will fund their
| expenses using investment returns versus engaging in
| labor activities to do so).
|
| Money is an abstraction, but the status quo as a whole
| (monetary policy, capital markets, labor policy) is
| designed to ensure a supply of labor. Capital begets
| capital [1], so those who don't have will engage in
| riskier behavior to get off the wage slave treadmill.
|
| [1] https://news.ycombinator.com/item?id=16592414 ("I
| think capitalism is much simpler: capital begets capital.
| Those who have capital will accumulate more capital,
| almost infinitely, until the capital/income ratio reaches
| an equilibrium who knows how high (in the absence of
| major corrections like wars and hyper inflation). Add
| inherited wealth and low taxes. Capitalism's winners are
| those who already have capital. Thomas Pickety's book
| "Capital in the 21st Century" cogently illustrates this
| using massive tax return based data sets.")
| golemiprague wrote:
| No need to increase wage, there are enough people around
| the world willing to do it for cheap, either in their own
| place or comming in as immigrants, legal or illegal.
| bennysomething wrote:
| Money being lost or won is not that. It's a signal that the
| public as a whole has benefited from the endeavour or not.
| Loses are a really important signal to stop wasting scarce
| resources .
| lamontcg wrote:
| The problem is that the economy is being driven by rent
| seeking behavior and cantillion effects. This is great for
| the elites, but at the same time they can see how the ground
| is starting to crumble. As "the plebs" start to gamble
| they're working to blame any future collapse on the
| irresponsibility of the crowd. Shrinking responsibility for
| the fact that this is the system that they have lobbied for
| and created and the plebs are behaving rationally irrational.
| anonporridge wrote:
| "We taxed work generated income greater than investment
| generated capital gains and now everyone is speculating!
| Why oh why would the plebs do this to us?!"
| arcticbull wrote:
| Do you have any evidence at all for the economy being
| driven by cantillon effects? That is pretty much fringe
| economic voodoo.
| Ekaros wrote:
| Professionals have more money and experience. They should be
| winning really. Or at least know when to cut losses and move
| to other side...
| paulpauper wrote:
| yeah ..had he ever head of house edge or the house cut/vig.
| paulgb wrote:
| > I really don't understand this sentiment
|
| I agree, but I also don't see this sentiment coming from the
| industry itself, with the exception of some people who go
| along with that narrative to get some TV time. It really
| seems to me more like the financial TV media are the ones who
| feel threatened by the emergence of WSB etc. and portray it
| as if it's the sentiment of the broader investing community.
| But largely that community is just excited by any novelty as
| it creates opportunities that boring times don't.
| ska wrote:
| > isn't a simple/safe investment entity to pull out a
| reliable 10%.
|
| Long run even the stock market only averages about 7%, and
| that isn't simple or safe - but it beats other asset classes
| on return. Asking for a risk-free 10% is pretty much a
| fantasy.
|
| One weird thing about the amount of volatility in recent
| years is that people are simultaneously used to the idea that
| their "cash savings" earn approximately nothing, but turn
| their noses up at a 5%-7% return. Historically speaking this
| irrational.
| [deleted]
| jayd16 wrote:
| Sorry, you're right. I was lazy in my rounding. That said,
| the exact number isn't too relevant to my point.
| noxer wrote:
| The simple/safe/reliable 10% was a fluke that should never
| exist. Profit and risk must be in balance. If it isn't it
| should attracts more and more people until the balance is
| reached. Making it hard for people to join to keep it
| unbalanced is what happened and its slowly going away now.
| slumdev wrote:
| > I really don't understand this sentiment, as if a
| professional gambler would not gladly gamble with novices...
|
| It depends on the situation and the game. Some poker
| professionals don't gamble significant sums with novices
| because the novices are far less likely to behave in a manner
| that is predictable according to statistics or some other
| strategy.
| aaroninsf wrote:
| You're only "stuck" if what you need is to inflate your
| wealth at the expense of someone losing theirs.
| noxer wrote:
| That's a fairy tail they teach in school.
|
| You dont get money because someone else lost some. You get
| money because you helped stabilizing the market by
| predicting it right. The losers lose because they predicted
| it wrong. Its a net gain for everyone who is somehow
| affected by the market which means basically everyone on
| this planet. There is no moral problem with winning or with
| loosing as you help either way.
|
| Also there is no need for anyone to lose, everyone could be
| right all the time that would give a perfectly stable
| market, but people are terrible at predicting the future so
| that will never happens.
| backtoyoujim wrote:
| we all gamble that have excess money to do so.
|
| there is a huger "we all" that don't.
| stouset wrote:
| Well of course there's no "safe" 10% investment. That's true
| across the board! Higher returns correlate with higher risk
| (otherwise a smart investor would pick the investment with
| the same returns and less risk).
|
| That aside, you know what's averaged returns of 10% that's
| simple and hasn't risked your money going to zero (assuming
| you have the good sense to buy and hold)?
|
| The stock market. Bog-standard index funds, available to
| anyone and everyone. VTSAX has returned just about 10% since
| Jan 1, 2000. Ironically, it's about _double_ that for the
| past ten years (since the recession caused it to be roughly
| even over the first ten years of that span).
|
| The average person doesn't need to gamble on options to get
| ahead. They already _do_ have access to products with outsize
| returns compatible with a level of risk tolerable for one's
| retirement nest egg. What we need are jobs that allow the
| average wage-earner to actually save a meaningful amount of
| money in these instruments.
| syntaxstic wrote:
| 100% percent agree. Here in Toronto, it's very difficult
| for the average person invest a meaningful amount of money.
| ameister14 wrote:
| >I really don't understand this sentiment, as if a
| professional gambler would not gladly gamble with novices...
|
| There are a few cases I can think of immediately where this
| applies - gambling with novices in Blackjack, for example, is
| not ideal. They'll screw up the flow of cards and can cause
| your math to go haywire. The same happens with Hold-em or
| Omaha Poker - you want people to have enough skill to play
| the game _properly,_ but if you 're looking to fleece them
| not enough skill to play the game _well._
| mrfox321 wrote:
| Your blackjack outcome is independent of other player's
| decisions.
|
| This is a statistical fallacy.
| ameister14 wrote:
| >Your blackjack outcome is independent of other player's
| decisions.
|
| >This is a statistical fallacy.
|
| Yes, "Your blackjack outcome is independent of other
| player's decision" IS a statistical fallacy. You're
| correct.
|
| It's pretty easy to prove this.
|
| Is there a finite number of cards in play? Yes. Can other
| people at the table get more cards than they begin with?
| Yes.
|
| So if someone can impact the number of cards left in the
| deck, wouldn't they have the potential to change your
| outcome?
| Tenoke wrote:
| I've bought counted cards at casinos and played poker semi-
| professionally and this is just wrong.
|
| In Blackjack the other players are not really relevant, the
| count stays the same and on average you will be about
| equally profitable with or without them. They might
| increase the variance a little but they reduce the
| attention the dealer pays on you and my team never minded
| others on the table.
|
| In Hold'em and Omaha you WANT weaker players, they are in
| short supply, and you will expect to have an edge against
| someone that barely knows the rules, too.
| danenania wrote:
| That's not the case in poker. If someone thinks a novice
| player is messing them up somehow with poor play, it means
| they're not a good player either. A good poker player wants
| their opponents to play as poorly as possible.
| ameister14 wrote:
| I never liked having true novices, especially in
| tournaments or when I was running multiple tables at once
| - it was easier to make notes of play style and predict
| when people knew how to play at a basic level.
|
| Sure, I'm more likely to beat the person that is going
| all in with a 2 5 off suit but bad beats are incredibly
| annoying. Over time, in a sit and go situation I'd beat
| that player, but online and in tournament play I found
| that was a hazard. I'll take a consistent bad player over
| a complete novice any day.
| danenania wrote:
| Sure, playing correctly against a maniac, novice, or
| otherwise unpredictable player can be more difficult and
| have higher variance, but it's also as lucrative as it
| gets if you know what you're doing. All the strong
| players I've known would be elated to play against people
| like that.
| ameister14 wrote:
| >Sure, playing correctly against a maniac, novice, or
| otherwise unpredictable player can be more difficult and
| have higher variance, it's also as lucrative as it gets
| if you know what you're doing. All the strong players
| I've known would be elated to play against people like
| that.
|
| I don't know about you, but when I was grinding, I didn't
| really want to increase variance. I wanted a stable
| mental state with low focus on multiple tables to
| maximize the rate of return over that period. I found
| that alterations in that caused me to play more loosely,
| which ended up leading to avoidable mistakes, magnified
| because I'm playing multiple tables at once.
|
| The same thing was true for a tournament. There's a far
| more limited return from players like this, in part
| because you meet them early. It's a fact of the online
| game that people just go all in a lot especially in the
| beginning, but it ends up being a gauntlet you just need
| to get through. I wouldn't call them my ideal opponents;
| it's not what I prefer, it just exists.
|
| Maybe I'm not what you would consider a strong player but
| I did win consistently enough to feed myself with it for
| a couple of years, mostly online before it became
| illegal. It wasn't really my experience that high risk
| high reward play was the way to go. Most of the people I
| played with worked to limit variance's effect on their
| game, not increase it.
|
| Again though, that's just me - not the strongest player
| ever, you clearly have a different opinion about it. All
| good.
| danenania wrote:
| My understanding after spending a lot of time digging
| into and discussing this stuff was that playing better
| and increasing your win rate has a _much_ greater effect
| than style of play (whether yours or your opponents ').
| So while your short term swings might be bigger, you'll
| have a lower chance of a losing month (or a longer slump)
| and make more overall by eking out every last drop of EV.
|
| It doesn't mean you were a bad player, but it sounds like
| you might have been avoiding some potentially +EV
| situations due to lack of comfort with trickier
| opponents/situations. That's fair enough if it worked for
| you--it's not at all necessary to play every situation
| perfectly to have a healthy win rate. Towards the end of
| my poker career I was playing mostly heads-up, which
| teaches you to be pretty fearless about exploiting any
| and every edge, and to get comfortable with aggression.
| But there was a point in my progression where I'd get
| thrown off as well. And even after I felt like I was
| pretty damn good, I knew players who were clearly head
| and shoulders above me, so it's all relative.
| ryandrake wrote:
| When someone is playing randomly (as some very newbie
| players might), it's a little difficult to directly
| exploit, but more of a patience game. It's only a matter
| of time until you stack them.
|
| When someone just consistently plays bad, that's the
| ideal situation.
| rud7udehev wrote:
| This is the sort of statement that sounds good to idiots
| and people who've never played poker. Anyone who's made
| money at casino poker is aware of how much of a hassle
| retards spasming at the card table can make things even
| if they're going to lose in the end.
| danenania wrote:
| I played professionally for years. I wanted my opponents
| to play as badly as possible.
| pcthrowaway wrote:
| It changes the strategy, and it might take you a while to
| hit, but it _greatly_ improves your potential to win.
|
| I once played 1/2 NL uncapped at a casino, a guy sat down
| and put $1000 on the table. Every other hand he would
| raise $25-50 preflop, and call re-raises. Got all in pre-
| flop and pre-turn a bunch of times, every time he bust he
| put another $1000 on the table. This is _exactly_ the
| best player to play with. Yes, you have to sit and wait
| for good cards before getting involved, but if you get
| something good, you have very good odds of stacking them.
| waprin wrote:
| No, totally wrong, it's the exact opposite. Novices and
| only novices think "you can't beat bad players cause
| they're unpredictable!"
|
| Even your more moderate point you'd rather not have them
| in the game is totally wrong.
|
| In reality, every professional player loves players who
| do terrible, random things. Variance might go up, but
| variance is going to be annoying either way. Other
| players doing dumb things is where your EV comes from.
| I've only ever heard complaints about crazy players being
| a hassle from inexperienced amateurs who dabble. Pros
| want "live ones" in their games.
| smogcutter wrote:
| Like in chess for example - a kind of player who has more
| trouble with extreme novices than people their own level
| is someone who knows how the game "should" be played, but
| doesn't actually have the skill to go off-book themselves
| or punish mistakes when an opponent deviates.
|
| An actually strong player won't have that problem.
| sunnyps wrote:
| Except that chess is a perfect information game, but
| poker is not. Which means it's possible to tell if your
| opponent made a mistake in chess, but it might not be in
| poker.
|
| Disclaimer: chess novice, don't know anything about
| poker.
| pcthrowaway wrote:
| Playing poker against very novice players makes it a more
| volatile game. You might lose big and you might win big,
| but that's actually _good_ for your EV; the beginner has
| no concept of bet sizing and that 's where you shine. An
| expert playing against many intermediate player may end
| up winning on average 5 big blinds / hr over the course
| of a month. They'll certainly have losing sessions as
| well.
|
| An expert playing against beginners might 'lose' 50% of
| the hands they get involved in still, and make a ton more
| money on the ones they win. It's the difference between
| an average of 5 big blinds / hr, and 50 big blinds / hr.
|
| I'm not an expert by the way, I just consider myself an
| 'advanced beginner', who can count on making $2-4 / hr
| playing 1/2 no limit at the casino (based on having
| played maybe 200 hrs of poker in the casino). Not worth
| it as a way to make money, and I stopped caring enough
| about poker to invest the time to become better.
|
| But you can see the entire dynamic at a table change when
| a loose, novice player sits down. Players no longer play
| against each other as much because they can count on the
| loose player to raise the stakes, and they're much more
| likely to capitalize on that.
| watwut wrote:
| In chess, really no one has problems beating extreme
| novice. You just take their pieces as they leave them
| hanging and that is it.
| CodeMage wrote:
| _> I really don 't understand this sentiment, as if a
| professional gambler would not gladly gamble with novices..._
|
| "Professional" and "expert" aren't synonyms. "Amateur" and
| "novice" aren't synonyms either.
|
| An expert might be glad to go against a novice. But when
| there are artificial barriers separating "professionals" from
| "amateurs", barriers that have nothing to do with level of
| expertise, that's a different story.
| ouid wrote:
| You haven't argued this, but there should never be an
| opportunity for safe passive income that scales with your
| wealth.
| imtringued wrote:
| Who are you supposed to lend your money to? Companies are
| saving more money, they ended up becoming net lenders. That's
| why inflation is low. Ironically, low inflation also makes
| the problem worse, because companies can save even more with
| low inflation. The threat of being forced to invest the money
| is gone. Ironically (yes I am repeating myself), low interest
| rates also increase the savings rate of companies because it
| is just a windfall profit for many of them. Consumers get
| loans with bad conditions so they don't borrow and even if
| they did, incomes are stagnating, so betting on a raise in
| the future may seem foolish.
|
| The answer is to increase the total investment rate via
| infrastructure bills or to just inflate excess corporate
| savings away with stimulus checks. Inflation will allow the
| Fed to raise interest rates, which will cut into the
| corporate savings rate and after that point everything will
| return back to normal.
| derefr wrote:
| > when algorithms did it in milliseconds (when common people
| can only operate with delays of hours and days, and with
| deterrent fees) it was OK
|
| What, you think that "low-frequency" brokers weren't upset
| about the rise of HFT, and didn't try to push back/kill HFT in
| the crib?
|
| Of course they did; HFT was classic "disruption" for their
| industry. You just didn't see that disruption happening,
| because an inside-baseball conflict between two groups of very
| rich businesspeople doesn't achieve anything by roping the
| public into the discussion. The public's opinion wouldn't have
| one shred of determination over which side won that conflict,
| so why bother spending money on mass-media propaganda? Mass-
| media propaganda won't do a thing to sway the rich
| businesspeople on the other side of the table.
|
| The moralistic Op-Eds are happening _now_ because one side of
| the current conflict _is_ the public. And so the rich people on
| the other side now have great interest in swaying public
| opinion.
| eloff wrote:
| I think it's fair to snipe at speculating unreasonably when
| anyone does it. Its not good for society.
|
| But what's happening is somewhat different. It's really an
| alpha strategy to trigger a short and or gamma squeeze. It's
| not a simple ponzi scheme - it's not zero sum.
| teh_infallible wrote:
| " last year the U.S. government pulled 13 million people out of
| poverty with a few million strokes of the autopens"
|
| I am pretty sure the government forced more people into poverty
| with the lockdowns. To treat the stimulus checks as some mind of
| boon when people were forced to close productive businesses seems
| intellectually dishonest at best.
| zoshi wrote:
| All trade is speculative. Prices are a result of speculation
| between buyers and sellers.
| ppod wrote:
| "I used to be with it, but then they changed what it was. Now
| what I'm with isn't it, and what's it seems weird and scary to
| me, and it'll happen to you, too" -Abe Simpson
| tim333 wrote:
| >Welcome to the non-fungible, memeified, cryptodenominated,
| degenerate future of finance.
|
| I think a lot of that is the now of finance rather than the
| future. We'll look back on meme stonks like we do on the
| pets.coms and webvans.
| giantg2 wrote:
| Gambling is great, as long as I win.
| wayoutthere wrote:
| The "woe is me, how do I know how to invest?" drivel in this
| article is solved by a sufficiently diversified portfolio. The
| article even admits that these shenanigans have no impact on the
| larger market -- so invest there.
|
| If you want to take on more risk, great -- but with great risk
| comes lots of market manipulation. The wider public is now
| learning what every MBA is taught in investment theory classes:
| investing is a racket where the house always wins. Either you
| play long positions in a diversified portfolio or you enter the
| water with the sharks. If you're not sitting on a billion
| dollars, you're at an extreme disadvantage in the options market.
|
| And the biggest risk in corporate America today is negative PR.
| The sharks you're playing against have the connections to get
| insider trading info, the sophistication to hide it, and the
| influence to get away with it. Retail investors are at their
| mercy. I guarantee Elon Musk is making money moves off his
| tweets, he's just sophisticated enough to hide it in a trust. And
| he's not the only one; hedge funds have been known to actively
| seek out scandals to generate negative PR, then trade on that
| info.
|
| The vibe on Reddit right now is "the system is broken and they're
| cheating like crazy". But that's no revelation, this kind of crap
| has been completely normalized because the SEC can't stop it (the
| people working there are largely the ones who couldn't hack it on
| Wall Street). I fully expect that Wall Street will end up coming
| out on top in the end because the retail investors don't quite
| understand the role of market makers and the level of
| coordination done with the investment side of things. Yeah, it's
| flagrantly illegal, but if you get away with it (as they almost
| always do because the SEC can't prove anything) you're going to
| be rich.
| freeone3000 wrote:
| >the system is broken and they're cheating like crazy
|
| You can still make money off that -- the stock market is
| baccarat, not poker, and you can make money off betting on
| whoever cheats best, or fastest, or whose manipulation you
| think will win. The strategy is difficult but not impossible.
| jfengel wrote:
| I have begun to worry that broad indexes are themselves
| becoming a problem. As that advice seeps out, a lot of people
| are buying "the market". Which has long been good sensible
| advice, because the market as a whole genuinely produces
| wealth, but it's not inexhaustible.
|
| The S&P 500 P/E ratio is up over 40, a number it has seen only
| twice before and both immediately before crashes. P/E is an
| imperfect measure, especially during a genuine crisis that
| results in fewer goods being produced, but the idea that "it
| will take 40 years to produce enough profits to return your
| money" is a little scary. The pandemic is certainly
| contributing, but it's been heading this direction since well
| before the pandemic.
|
| The broad market is still probably your best bet long term, and
| even if now isn't a great time we all know that timing doesn't
| really work. Stick it in a broad index and forget about it
| remains the best advice. But that advice eventually undercuts
| itself, if everybody invests in every company regardless of its
| merits just because it's listed. The listing itself is becoming
| a skew.
| Animats wrote:
| _The S &P 500 P/E ratio is up over 40, a number it has seen
| only twice before and both immediately before crashes._
|
| Yes. The historical market P/E is around 15.
|
| Overall market P/E [1], and median house price / median
| income[2] are classic ratios to watch as indicators of how
| close things are to a crash. Look at those graphs. When they
| shoot way up, a crash follows shortly thereafter.
|
| [1] https://www.macrotrends.net/2577/sp-500-pe-ratio-price-
| to-ea...
|
| [2] https://www.longtermtrends.net/home-price-median-annual-
| inco...
| kipchak wrote:
| I think buying the right "the market" can help too. For
| example I might think Singapore is attractive at a P/E of 12
| and buy the EWS etf.
| TRcontrarian wrote:
| Is it better to live in a world where the future is unknown, and
| the best we can do is guess where value will be, or one where the
| future is known, and the prices of all investments are stable and
| already priced at their exact values? In which world is optimism
| and class mobility possible?
| beiller wrote:
| Excellent point. And to drive a steak further into this idea -
| ironically gambling is the one where all the prices / chance /
| rewards are absolutely known up front and calculable. I guess
| that's what sets wall st. apart from gambling in a casino.
| sixstringtheory wrote:
| Excellent question that reminds me of two anecdotes:
|
| 1) In my CS ethics course, we had a writing prompt asking
| whether, assuming perfect capability, it would be better to
| replace sports referees with computers
|
| 2) I wrote a cheat program for a word game my dad liked
| playing. Super proud of my accomplishment, I showed it to him,
| and he was impressed for a minute before stating the game
| wasn't fun that way (also have an earlier version of this
| memory involving a Sega Genesis Game Genie)
| [deleted]
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