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Re: The Next Depression ?
Old 03-10-2006, 01:19 PM   #41
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Re: The Next Depression ?

Quote:
Originally Posted by wab
Here's a math exercise I like to do.

Calculate the probability of a depression. We all know that the market is volatile, and that's usually expressed in terms of standard deviation (sigma). A depression like we experienced from 1929-1933 is a four-sigma event. Very rare. Once in 400 years.

But if you plan to be in the market for the next 40 years, that means there's a 10% chance you'll see such an event in that timeframe.

The chance of your being killed in a car accident is much smaller, but you wear seatbelts, don't you?
Lets see...where to start with this one...

Death is a finality, a depression or downturn is not. Waiting for 2, 5, 10 years wont result in your being alive. Also, while in the downturn, you wont just be 50, 60 or 80% dead. Its 100%.

Driving and your interactions with other people are relatively random compared to the stock markets behavior over long periods of time.

I'll also bet if you drove continuously for 400 years, you would be hit and killed a good number of times.

I'd be willing to bet that if stock traders periodically started putting on makeup and pouring coffee on themselves, causing them to slam a 4000lb weight into other stock traders without warning...stock traders would start wearing seatbelts.
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Re: The Next Depression ?
Old 03-10-2006, 01:33 PM   #42
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Re: The Next Depression ?

Quote:
Originally Posted by Cute 'n Fuzzy Bunny
Death is a finality, a depression or downturn is not.* Waiting for 2, 5, 10 years wont result in your being alive.* Also, while in the downturn, you wont just be 50, 60 or 80% dead.* Its 100%.
I see, so you only want to protect yourself from total devastation.* *60% devastation isn't worth worrying your little bunny head over, eh?

That's a perfectly sane approach, as long as you know the risks.* * It's the "fat tails" of the economic probability distribution that usually catch investors flat footed.

There are 10 types of investors in the world.* *Those who understand binary, and those who don't.*
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Re: The Next Depression ?
Old 03-10-2006, 01:36 PM   #43
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Re: The Next Depression ?

What is the devastation exactly? The selling value of some paper assets temporarily losing value for an unsustained period of time is "devastation"?

Apparently you've never seen me swing a 20lb sledge. THATS devastation
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Re: The Next Depression ?
Old 03-10-2006, 01:37 PM   #44
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Re: The Next Depression ?

Quote:
Originally Posted by wab


There are 10 types of investors in the world. Those who understand binary, and those who don't.
haha, i dont really understand binary, but i get that joke!
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Re: The Next Depression ?
Old 03-10-2006, 01:38 PM   #45
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Re: The Next Depression ?

C'mon, you're losing your touch. * The correct response was "and stop talking about my fat tail again."
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Re: The Next Depression ?
Old 03-10-2006, 01:40 PM   #46
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Re: The Next Depression ?

Eh, everyone else wants to talk about my ass all the time, i've grown immune to it.
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Re: The Next Depression ?
Old 03-10-2006, 02:38 PM   #47
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Re: The Next Depression ?

Quote:
I'll also bet if you drove continuously for 400 years, you would be hit and killed a good number of times.
I've only been driving for 250 years and have only been killed twice.
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Re: The Next Depression ?
Old 03-10-2006, 04:05 PM   #48
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Re: The Next Depression ?

Quote:
Originally Posted by Cute 'n Fuzzy Bunny
So bennevis, the big question on my mind is...what is the point of posts like this? Usually when I post something, I have an expected outcome. What was your expected outcome?
The point is up for discussion. How can anyone know for sure what the future will bring, but there are lots of smart people on this board with lots of interesting opinions and ideas. That ok with you ?
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Re: The Next Depression ?
Old 03-10-2006, 04:43 PM   #49
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Re: The Next Depression ?

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Originally Posted by saluki9
Nords, does that mean the state of Hawaii will be returning some of money I left there as part of that business friendly 11.5% hotel tax? If for some reason they don't, I'm just going to have to come back for a couple weeks and start asking around
"Business friendly"? Hawaii!?? Well, perhaps compared to California... but Hawaii is mostly friendly to taxation & retirees. Workers get taxed a lot here. Visitors do too, but you hardly feel the bite when you're sipping another Blue Hawaiian. So come on over, don't worry about your expenses, Waikiki's streets are paved with gold!

Funny how that tax is 11.5% and that's about how far ahead the tax receipts are of projections. Must be quite a coincidence. There was rash talk of a rebate this year until some smart-aleck pointed out that the state tax-receipt surplus was just about the size of the public school maintenance/repair backlog. And the teacher's contracts are coming up for renegotiation in the next year or two.

Quote:
Originally Posted by brewer12345
Add-in the net earnings from DW's business (roughly $5k) and we are down to $11 an hour.
I don't even want to think about what childcare would cost in a relatively expensive area like suburban NJ, but it would pretty much wipe out the rest of her earnings.
No-brainer for her to quit.
Business Week did this math in an article a few years back and arrived at the same pitiful wage rate.

But then they made in interesting point-- that the mothers who were working for less than minimum wage were developing job skills that provided a source of income if they were divorced, and within 10 years they were making a much higher salary with more compelling math. BW's conclusion was that everyone should develop work skills instead of being totally dependent on the family's one salaryman.

Quote:
Originally Posted by Cute 'n Fuzzy Bunny
No, actually I dont think so.* Not even a little bit.* People post to learn something, tell a joke, share something, have something explained to them, see if someone can change their mind, get concensus, see if they can change someone elses mind, garner support for a decision they've made that they're unsure of, see if they can start a squabble...
Give the man a break-- he's venting and hoping that someone will make him feel better about the economy. Many of us have repetitively demonstrated that we don't always have to post with a purpose!

Quote:
Originally Posted by Cute 'n Fuzzy Bunny
I'm just curious about the basis of this and the other 'doom and gloom are coming' posts. They all seem to contain the same content, are received the same way, and end the same way. We dont know whats going to happen, if and when it could happen, when it has happened in the past there was little if any consistent warning from any set of "indicators", few people's "guts" told them to get out before it happened, few peoples "guts" were right on when it was going to stop, its a good idea to plan for downturns or decide that you're only going to plan for the 95% of non-disaster scenarios, and its a waste of your life to gather all of your fears and concerns into a bathtub and wallow in it, wringing your hands over the possibilities...and in the process, invest in a manner that assures you will suffer the very fate you fear.
This type of post serves another vital function, as demonstrated by today's stock-market jump. Without a wall of worry, the market can't rationally climb higher. The more doom & gloom, the more I'm inclined to be fully invested. Then when it nosedives, I'm ready to ride it out, or even get out. But when everyone's smiling & cheerful while the market rockets up in 200-point daily increments, that's when I get worried.

Weren't you looking at leading economic indicators a few months back? When were their dire predictions due to manifest themselves?
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Re: The Next Depression ?
Old 03-10-2006, 05:19 PM   #50
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Re: The Next Depression ?

My favorite (and mostly positive) economic blogs that I read daily include:

http://lkmp.blogspot.com/

http://www.econopundit.com/

http://www.marginalrevolution.com/



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Re: The Next Depression ?
Old 03-10-2006, 06:16 PM   #51
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Re: The Next Depression ?

Bruce - Thanks for the links! I'll be sure to check those out.

These two are among my favorites that focus on economic news and analysis:

http://www.rgemonitor.com/blog/setser/

http://calculatedrisk.blogspot.com/

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Re: The Next Depression ?
Old 03-10-2006, 06:16 PM   #52
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Re: The Next Depression ?

Quote:
Originally Posted by Nords
Waikiki's streets are paved with gold!

You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?" *I was shocked, Honolulu just seems like too small a town to support such a specialized community. *Evidently many guys don't know they are a John to a "John" (vice "Jane") when they pick up their dates. *Just a friendly warning to any of you single guys/sailors who visit that lovely state. *

Hmm....upon reflection, if this post doesn't set me up, nothing will....
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Re: The Next Depression ?
Old 03-10-2006, 06:46 PM   #53
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Re: The Next Depression ?

Quote:
Originally Posted by Laurence
You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?"
Wow! That John Nords Jane sure is a nice host hostess ... oh nevermind. :P
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Re: The Next Depression ?
Old 03-10-2006, 08:43 PM   #54
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Re: The Next Depression ?

Quote:
Originally Posted by Nords
Business Week did this math in an article a few years back and arrived at the same pitiful wage rate.

But then they made in interesting point-- that the mothers who were working for less than minimum wage were developing job skills that provided a source of income if they were divorced, and within 10 years they were making a much higher salary with more compelling math.* BW's conclusion was that everyone should develop work skills instead of being totally dependent on the family's one salaryman.
Well, a couple of (drunken) thoughts on this one:

- I like to think I am an above average salaryman. The many letters after my name and this year's earnings indicate this is so, and I have (unfortunately) not had a spell of unemployment since 1998. I like to think that its not much of a worry. The research showing that married men earn morethan their single couterparts suggest that I have reason not to worry.

- DW is the recipient of 2 master's degrees from a very snooty East Coast university. I suspect that if I were not around she would be more than capable of earning a very nice living. I have supported her every step of the way (financially and , more importantly, emotionally) in setting up her business because I know that it keeps her skills fresh, keeps her options open, and makes her feel like more than just a housewife. That benefits both of us. Having said that, I suspect that she will never be an employee again, since she likes being self employed and our net worth is definately on teh trafjectory that means it will never be an issue.
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Re: The Next Depression ?
Old 03-10-2006, 09:02 PM   #55
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Re: The Next Depression ?

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Originally Posted by bennevis
The point is up for discussion. How can anyone know for sure what the future will bring, but there are lots of smart people on this board with lots of interesting opinions and ideas. That ok with you ?
Perfect okay with me, gus. Just wanted to know what you expected. We seem to have these "doom and gloom" posts about twice a day. Always with the same results.

Those that believe there will be doom and gloom will do what they do and no matter what anyone else says, will still believe all there will be is doom and gloom. Those that dont will do what they do and will believe what they believe.

Just wondering what was expected. Same thing or something different this time.

Quote:
Originally Posted by Nords
Give the man a break-- he's venting and hoping that someone will make him feel better about the economy. Many of us have repetitively demonstrated that we don't always have to post with a purpose!
Wasnt 'breaking' on him at all, I was honestly curious as to what his objective is, as the same posts keep coming up...only thing I cant think of is he's expecting something and not getting it.

Quote:
Without a wall of worry, the market can't rationally climb higher. The more doom & gloom, the more I'm inclined to be fully invested. Then when it nosedives, I'm ready to ride it out, or even get out. But when everyone's smiling & cheerful while the market rockets up in 200-point daily increments, that's when I get worried.
I completely agree.

Quote:
Weren't you looking at leading economic indicators a few months back?
Not seriously. I look at all of them. When they all say the same thing and folks here are concerned, I give it shrift. When most of them are saying all is well, I feel ok about things, and there are just a few bears posting the same dang stuff three times a week, I feel like i need to buy more equities.
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Re: The Next Depression ?
Old 03-10-2006, 09:05 PM   #56
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Re: The Next Depression ?

Freebie on doom & gloom:

If you want to (cheaply) hedge against a market collapse, buy deeply out of the money puts on the major money centaer banks (JP Morgan, Goldman, Bear, Lehman, etc.). In a market "event" these stocks will collapse, especially since anyone in the business will realize that they have no clue about their derivative counterparties. You'll reliably lose money, but it can be a cheap way to sleep at night.
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Re: The Next Depression ?
Old 03-10-2006, 10:57 PM   #57
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Re: The Next Depression ?

Quote:
Originally Posted by brewer12345
Freebie on doom & gloom:

If you want to (cheaply) hedge against a market collapse, buy deeply out of the money puts on the major money centaer banks (JP* Morgan, Goldman, Bear, Lehman, etc.).* In a market "event" these stocks will collapse, especially since anyone in the business will realize that they have no clue about their derivative counterparties.* You'll reliably lose money, but it can be a cheap way to sleep at night.
Thanks for the suggestion. I'll do it Monday.

Ha
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Re: The Next Depression ?
Old 03-11-2006, 07:52 AM   #58
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Re: The Next Depression ?

Quote:
Originally Posted by Laurence
You know, my last business trip to Hawaii, the host took me out drinking at a Martini bar near the office, then on our walk back to the office to pick up our cars, she turns to me and says, "hey did you know this street is where all the transvestite hookers ply their trade?" *I was shocked, Honolulu just seems like too small a town to support such a specialized community. *Evidently many guys don't know they are a John to a "John" (vice "Jane") when they pick up their dates. *Just a friendly warning to any of you single guys/sailors who visit that lovely state. *

Hmm....upon reflection, if this post doesn't set me up, nothing will....
HBO had a special on this . . . from what I remember . . . the he/shes were rarely picked up by someone who didn't know the score, and they professed that they made more money than straight hookers.
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Re: The Next Depression ?
Old 03-11-2006, 10:18 AM   #59
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Re: The Next Depression ?

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Originally Posted by Laurence
Hmm....upon reflection, if this post doesn't set me up, nothing will....
So how much did it cost and did you still act "surprised"?
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Re: The Next Depression ?
Old 03-12-2006, 11:51 AM   #60
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Re: The Next Depression ?

Quote:
Originally Posted by HaHa
Thanks for the suggestion. I'll do it Monday.

Ha
Ha, were you joking or not? Sometimes hard to tell around here.
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