Is This Time Different?

[donheff]

"Are interest rates really that high" - Life is rough when you first go off the heroin, even with some medications to help the withdraw.
(No personal experience here, but this is what I've been told.)

p.s. when I googled to get the name of a drug used for such a purpose, I have page after page of how I can get help.

Were you looking for methadone?

 

[MRG]

Were you looking for methadone?

Suboxone is the new methadone.


I don't think it's different this time, perhaps more challenging than others. Should I just sell everything? I have no plans for that.

 

[arcyallen]

One way it's different is we have a bunch of investors that have gone 14 years without any sort of really sustained market drop. The sort of (temporary) courage that builds up with that is going to have some unknown effects. There are a LOT of people that are pretty sure they know what the market is going to do and haven't seen any shocking surprises. Those surprises are coming - they always are.

I'M shocked and surprised that the markets haven't seemed to care much about some ridiculously huge global events - like a freaking pandemic.

 

[VanWinkle]

Recency bias is strong, this time is different, but not enough to change the way long term investment works best.

 

[Which Roger]

Just an observation: While we were fretting on this thread yesterday, the stock market had one of its best days in a long time.

 

[Super Trooper]

What scares me this time is we've had low rates for so long, then Zirp.

The entire economy is addicted to low rates. Now that rates are rising, and honestly, they're not even close to being high enough, I wonder what is going to collapse because of it.

I really think what happened in England is the canary in a coal mine. What else is out there that most of us have no idea about is ready to collapse because of rising interest rates.

And if the Fed pivots (look at what the UN was saying today) how will inflation get reduced.

And one last thing which I believe is different this time is the Fed is limited by how high they can raise rates to stop inflation. If it gets too high, eventually, a much larger portion of tax revenue goes towards the debt. And if the government can't pay it's bills we have to print again.

Have you seen some of the inflation rates in Europe. Are we naive enough to think ours can't get higher, significantly higher??

This is one hell of a mess we're in.

Well put!

Interest rates aren't THAT high (historically) but they've gone up incredibly fast and if you consider how fast home prices have gone up in the last year it's a horrible combination.

Gas prices aren't THAT bad unless you look at how quickly they've increased.

Inflation isn't THAT bad unless it stays with us for an extended amount of time.

Government spending isn't THAT bad unless it continues, the amount of people that don't want to work isn't THAT bad unless they are getting government benefits, crime isn't THAT bad unless you are affected, homelessness isn't THAT bad unless it's in your town, food inflation isn't THAT bad unless we keep seeing food shortages.

This does seem like the perfect storm and this time will be different... unless it's not.

 

[38Chevy454]

I think there are several "different this time" factors. The general economy shutdown from Covid was pretty unprecedented. The war on fossil fuels in spite of the fact that oil is lifeblood of the economy. Govt spending on a level not seen before. Zero or even negative interest rates for a period of time, that is now being corrected back to more normal levels.

But in the end I still have confidence on the market and the long term prospects, so that is where I keep the majority of my savings. There might be some recent factors not seen before, but if you are diversified the market will result in similar long term avg returns. Just stay buckled in for those unpleasant times like we are currently experiencing.

 

[aja8888]

Just an observation: While we were fretting on this thread yesterday, the stock market had one of its best days in a long time.

Excerpts from Wolf Street article today (the crashing of Office REITs):

(On the market run up today)

Commentor: "Looks like we are back to Pivot Hoping (FED stopping rate increases)."

Wolf: "Yes. And notice how the wailing and gnashing of teeth about the Fed “breaking” something has suddenly died down?

Every one of these bear-market rallies makes it that much easier for the Fed to do this business of hiking rates. The market is now giving the Fed another all-clear-for-a-rate-hike signal.

This is how the market digests those rate hikes — I’m going to do some more thinking about this because it may be worth an article. This is why the Fed cannot hike too fast because the market won’t be able to digest the rate hikes. And these rallies are part of the digestion process. It’s messy — like all digestion processes — but it seems to work."

Some food for thought in those comments.....

 

[Aerides]

All of this has happened before; all of this will happen again

 

[daylatedollarshort]

The Roaring Twenties and the Great Depression have happened before. I just try to have an all weather portfolio and low overhead.

 

[W2R]

Just an observation: While we were fretting on this thread yesterday, the stock market had one of its best days in a long time.

Exactly! The NYSE has always been a roller coaster (see below! ). What goes up, must come down, and vice versa, if we can manage to wait patiently for long enough.

All of this has happened before; all of this will happen again

That's my sense of it too; I have yet to see anything that persuades me that this time is different, if we are patient and don't act on emotions.

 

[Dtail]

Just an observation: While we were fretting on this thread yesterday, the stock market had one of its best days in a long time.

And it appears another one today.

 

[W2R]

And it appears another one today.

Hot dog! Even though I don't plan to buy or sell, I love to see the market bouncing back like this.

 

[marko]

And it appears another one today.

Hot dog! Even though I don't plan to buy or sell, I love to see the market bouncing back like this.

Head fake, IMO. (hope to be wrong!)

 

[W2R]

Head fake, IMO. (hope to be wrong!)

Well, what goes up, must come down. And what goes down, must come up. So, in a sense they are all "head fakes" as you put it. Probably best not to count your chickens!

 

[Major Tom]

The past 2-3 days I have been watching youtubes with original footage of the 1930's dustbowl migration. The determination and resourcefulness shown by those farming families, who lost everything in those dust storms, are absolutely inspirational. Didn't mean to change the topic, but to me it is very impressive.

Watching documentaries and films, I am often struck by how much harder the average person's life was 100-150 years ago. Even when times were relatively stable, when the middle class was much smaller, and without the help of the machines we have today, life for a regular person was quite a slog. There was a TV show in the UK called "The 1900 House", in which a modern family was transplanted into a house from 1900, and lived the life of an average family back then. The house was from the era, and was completely retrofitted with the types of amenities and gadgets that would have been present then. Just the seemingly simple act of doing laundry for the family took 2 or 3 full days every week. It was a labor-intensive process!

Most of us are blessed, and many of us don't realize it.

 

[copyright1997reloaded]

Watching documentaries and films, I am often struck by how much harder the average person's life was 100-150 years ago. Even when times were relatively stable, when the middle class was much smaller, and without the help of the machines we have today, life for a regular person was quite a slog. There was a TV show in the UK called "The 1900 House", in which a modern family was transplanted into a house from 1900, and lived the life of an average family back then. The house was from the era, and was completely retrofitted with the types of amenities and gadgets that would have been present then. Just the seemingly simple act of doing laundry for the family took 2 or 3 full days every week. It was a labor-intensive process!

Most of us are blessed, and many of us don't realize it.

This it?

Looks interesting, thanks for the post.

 

[braumeister]

Most of us are blessed, and many of us don't realize it.

That's certainly very true of course, but in fairness it only seems to us that folks 100 years ago had it so tough. It didn't appear that way to them; it was simply life as they knew it.

Now that we all have flying cars, robot servants to do all our chores for us, and weekend vacations on the Moon, we can look back and shake our heads at what those poor primitives had to go through. But it's hindsight, and we should remember that. A hundred years from now, people (if there are any left) will look back at our lives and think the same.

 

[W2R]

Watching documentaries and films, I am often struck by how much harder the average person's life was 100-150 years ago. Even when times were relatively stable, when the middle class was much smaller, and without the help of the machines we have today, life for a regular person was quite a slog. There was a TV show in the UK called "The 1900 House", in which a modern family was transplanted into a house from 1900, and lived the life of an average family back then. The house was from the era, and was completely retrofitted with the types of amenities and gadgets that would have been present then. Just the seemingly simple act of doing laundry for the family took 2 or 3 full days every week. It was a labor-intensive process!

Most of us are blessed, and many of us don't realize it.

So true. By the time we made our entrance, life was much easier, I suppose due in large part to the ingenuity and hard work of our ancestors.

I can't even imagine being a farmer today, much less back in the 1930's. And then to have those nightmarish dust storms blowing all the soil away? wow. The video of failed farmers (through no fault of their own) loading up a dozen kids and a couple of chairs on their car or pickup truck, and heading west through a black dust storm to an unknown place and unknown future was just insane. I don't think many of us today can even imagine doing something that brave.

But it gives me hope for the future. We are a strong people and can survive a lot more than we think.

 

[braumeister]

The video of failed farmers (through no fault of their own) loading up a dozen kids and a couple of chairs on their car or pickup truck, and heading west

Seemed to turn out OK for some.

 

[Major Tom]

This it?

Looks interesting, thanks for the post.

Yes, that's it. I found it quite engaging.

That's certainly very true of course, but in fairness it only seems to us that folks 100 years ago had it so tough. It didn't appear that way to them; it was simply life as they knew it.

Now that we all have flying cars, robot servants to do all our chores for us, and weekend vacations on the Moon, we can look back and shake our heads at what those poor primitives had to go through. But it's hindsight, and we should remember that. A hundred years from now, people (if there are any left) will look back at our lives and think the same.

I agree. I grew up listening to the very memorable tales of my Mum's side of the family. They all grew up close to each other. Materially, they had what they needed, and not much more. Stories included the one man on their street who actually owned a car, and gave everyone a ride to church on Sunday. The car struggled going uphill, and they often had to jump out and help push. The family were close, and helped each other out. My Mum was widowed in WW2. Her brothers pulled together and helped her. They didn't have a lot, but they worked hard, and had each other. Perhaps I'm looking at the past through something of a rose-tinted lens, but this is how great memories are made, IMO.

On a vaguely related note, I occasionally wonder at the historical changes we are living through. Then I realize that you could probably pick any 20 or 30 year period in history, and the people living then would have thought the same - that they were living through interesting and rapidly changing times.

 

[daylatedollarshort]

Watching documentaries and films, I am often struck by how much harder the average person's life was 100-150 years ago. Even when times were relatively stable, when the middle class was much smaller, and without the help of the machines we have today, life for a regular person was quite a slog. There was a TV show in the UK called "The 1900 House", in which a modern family was transplanted into a house from 1900, and lived the life of an average family back then. The house was from the era, and was completely retrofitted with the types of amenities and gadgets that would have been present then. Just the seemingly simple act of doing laundry for the family took 2 or 3 full days every week. It was a labor-intensive process!

Most of us are blessed, and many of us don't realize it.

IMHO, some of the most interesting papers and books on just that subject are by John Maynard Keynes and John Kenneth Galbraith. Keynes wondered what future generations would do with all their free time once the "economic problem", i.e. basic food, clothing and shelter, had been solved by technology. Which we have now - supermarkets for food, washing machines, automatic dishwashers, we can buy soap at the store instead of making our own lye, etc.

Post Keynes, Gailbraith lamented in his book, "Affluent Society", that despite advances in technology and human productivity, people were working even more hours per week in modern times for low value and useless items, that really didn't add that much to their happiness levels. He gave credit to marketers for creating demand where none should logically exist.

I think a lot about what these guys wrote, and also look at current happiness studies. The actual research on happiness tends to validate their ideas. Factors outside the necessities of life that really make people happy usually don't cost a lot and include social connections, art, music, forest bathing, expressing gratitude, and being a part of the community. All things that are hard to do if one if working and commuting 60 hours a week just to acquire more items that do not contribute to true happiness. My lifestyle now is really centered around a lot of what these guys wrote, and avoiding wants only created by corporate marketing.

 

[W2R]

Seemed to turn out OK for some.

Well, a few well nourished, rich actors just don't get it across to me as well as the real thing. I didn't look to find the video which was most poignant (that I saw yesterday) but here's another one showing real people from the era:

 

[braumeister]

I realize that you could probably pick any 20 or 30 year period in history, and the people living then would have thought the same - that they were living through interesting and rapidly changing times.

In a more serious vein, I honestly believe that what's called "the greatest generation" in Tom Brokaw's words were in fact something very special.

America's citizen heroes and heroines who came of age during the Great Depression and the Second World War and went on to build modern America. This generation was united not only by a common purpose, but also by common values--duty, honor, economy, courage, service, love of family and country, and, above all, responsibility for oneself.

 

[aja8888]

Yes, that's it. I found it quite engaging.



I agree. I grew up listening to the very memorable tales of my Mum's side of the family. They all grew up close to each other. Materially, they had what they needed, and not much more. Stories included the one man on their street who actually owned a car, and gave everyone a ride to church on Sunday. The car struggled going uphill, and they often had to jump out and help push. The family were close, and helped each other out. My Mum was widowed in WW2. Her brothers pulled together and helped her. They didn't have a lot, but they worked hard, and had each other. Perhaps I'm looking at the past through something of a rose-tinted lens, but this is how great memories are made, IMO.

On a vaguely related note, I occasionally wonder at the historical changes we are living through. Then I realize that you could probably pick any 20 or 30 year period in history, and the people living then would have thought the same - that they were living through interesting and rapidly changing times.

I have a book copy (pdf of it) I found in the Library of Congress that was written between the late 1890's and early 1900's detailing the settling of the Naugatuck Valley in Connecticut (late 1600s) where I was raised. This book took years of research to write and re-edit based on new information. What a great piece of work. This book is nearly 900 pages long and written in great detail with many maps and drawings.

If one thinks it was tough living in this country in the early 1900's, the struggles settlers had in the early 1700's were many times worse. And in some cases, towns were settled, lost from bad crop years, Indian attacks, etc, and then resettled again.

Back then, women had many children and sometimes 10 or more. Some offspring died at birth and the mother did too. Children were needed to work the farms and help in many ways. Disease was always a problem and in many cases, entire families and villages were decimated by it. Tough life, for sure.