are not at all mutually exclusive. The market is not a normal distribution of i.i.d. samples or anything similarly wrangleable
absence of evidence (not proven correct yet) < evidence of absence (if/whenever the hypothesis is observed).
This just shows that for 6 years he was not yet right, not that he's a 'broken clock', implying he isn't adapting to evidence (, which, I don't know and may be true -- but I can't say either way).
He can't claim anything beyond what's been observed, but neither can we claim the prediction (or any) not being yet observed as suggesting it'll never happen, regardless of how clickbait-y it can be packaged and whatever the intentions are behind that decision..
Depends on your model of things. You could bake other assumptions into a distribution explaining why someone like him who has taken these past positions is in less likely than someone else to be right. You assume you we can't say anything informative about his prediction. Disagree.
> You assume you we can't say anything informative about his prediction.
OK, can you show me a model that is better? What I'm saying is not dependent on the arbitrariness of subjective "baked-in assumptions", nor that each market observer has a subjective perspective and is not omniscient, nor is it about whether or not you may have the gut feeling that he's trying to scam you into unnecessary doomsday preparation. In stats terms: not about how each of us have different perspectives so KL-divergence > 0.
What I am saying is: all of the people who say "because these past positions never definitely happened yet, we should be more skeptical of his predictions than everyone else saying things will be just fine" are getting it wrong. You should be extremely skeptical of everyone asking you to withhold skepticism as if past observations (samples) prove the distribution is a stationary ergodic process (truly observing the generator).
When someone has predicted things successfully in the past, it means they answered a falsifiable question before it - so there is a burden of proof before you can call them a good predictor. But a prediction that has never been falsified does not demand a burden of proof, you can't say it's incorrect or correct at all - no matter the duration, the question "are his positions wrong?" is meaningless.
I am not privileging his opinion that much, tbh - imo, someone saying "catastrophes in the future will be worse" is a nearly-zero surprisal/maximum entropy statement. What influence could I exert over the outcomes that I depend on of processes far beyond what I can control? None. "just the way she goes, boys."
All I can do is say memento mori, insure myself against catastrophe (when the cost is negligible, so the waste is low if the catastrophe never came), and not dull my senses.. meaning that it is preferable to ignore salesmen reaffirming one another saying "but we've never sold this much before!" over to ignore someone without special insight who you suspect is only fomenting fear irrespective of if they stand to benefit, deceitfully or not, from that fear.
"We can infer Jim Rogers is unlikely to be correct about the future of catastrophes because the last 6 years of recorded performance did not contain a catastrophic event" != "somebody who had said everything is fine 6 years in a row would have been more correct than Jim Rogers over the last 6 years THEREFORE his predictions are less likely to be right", which ignores the point that ).
Unless it's a 24-hour clock, then it's only once. Or the break isn't just a stoppage but simply a mis-setting. Or running fast or slow, at which point it will be right with some period other than twice/day. (The original phrase specifies a stopped clock, which eliminates the second two exceptions).
> We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one.
A fringe nobody screaming the world is going to collapse for the last 30 years. The only thing this guy can predict is that if he yells and screams the sky is falling loud enough, his next book will do well.
Well, the shiller CAPE 10 year averge is at 30 right now, which is as high as it was in 1929 right before the great depression.
But, If you look at the CAPE graph for the last 30 years, the average seems a bit higher than normal. I wonder if we're heading for a new normal where the CAPE averages higher due long term changes in allocation of capital, and long term reduced productivity gains.
all the technical analysis says the next 10 years won't be pretty but that doesn't mean it's going to be a steep drop, we could just be going sideways for a long time.
Don't know anything about Jim Rogers' creds / authority in this matter. How much should be we concerned / alarmed at these statements?
> Rogers: It could be an American pension plan that goes broke, and many of them are broke, as you know. It could be some country we’re not watching. It could be all sorts of things. It could be war — unlikely to be war, but it’s going to be something.
and
> Rogers: It’s going to be the worst in your lifetime.
Most of my little 'nest egg' is in Total Market Index ETFs (ex: SPY, QQQ ). Should I take action, or will that be foolish / premature optimization?
Do your own research, don't do this if you don't know anything about options etc etc etc, but If you're concerned about a huge market crash (like I kind of am) here's what I'm doing:
In addition to your regular portfolio distribution, Buy long expiration UVXY puts. UVXY tracks volatility futures. Higher the volatility, higher UVXY price. A put gives you the option to sell shares by a certain date. ETNs that long volatility tend to decay like crazy, buying puts makes this work in your favor so it's not so expensive to hold long. This step is optional, I just like the collecting a premium off the vicious decay while I wait for the "real opportunity".
Now at some point we'll probably encounter some kind of crisis that'll make your long expiration UVXY puts look terrible if you've got any. This is when you buy even more, short expiration UVXY puts. (Weeklies and monthlies.) When the crisis passes, your short term weeklies should be worth quite a bit of money and your long terms will have recovered as well.
You'll have to learn about cotango/backwardation to get a robust execution strategy, but my heuristic is to start building a small position when the VIX is 14, and if the vix gets to 20 start going hard on those monthlies. If "the big one" hits we could see the VIX get to 50+, so if you're guarding that maybe fewer weeklies and more monthlies. :P
What's the end game here - when SHTF you don't care about your puts, because you've finally got a great buying opportunity for the bulk of your cash reserves? How low does it have to go before you start trading the other direction?
I don't have firm rules for when I exercise my puts. I should probably work on some. I basically weigh a few heuristics.
If you look at the VIX historically, it has an extremely strong mean reversion. This should make some sense. The whole market is based on people trying to find a price consensus. Volatility should decrease over time as consensus is reached. Sometimes the `underlying level` will lazily drift up, but that's not what this strategy is really trying to capture. This strategy is trying to capture volatility created by NK scares and rumors of chinese trade wars.
The initial panic of all these catalysts is always (so far) relatively short lived, even if it results in an increase in the underlying volatility level moving forward.
If I were to algorithmize this strategy, it would probably be something along the lines of buying tons of puts whenever the volatility goes to 2x its 10-20 day EMA, and selling out of the position whenever it returns to within 20% of the previously established EMA limit.
I might be off on my estimated coefficients, but I bet that such a semi-optimized version of that backtests pretty well.
I struggle to imagine what would double the spot of vix and have it stay in a long term sustained backwardation.
If I ever see it happen, and sustain for 3+ months, I'm buying guns and alcohol.
Typical advice is if you're older, say within 10 years of retirement push towards treasury bonds, commodities etc. (ultra safe investments). If you're young, you can try to time it, but even if you screw-up just hold through the crash and it'll recover in a couple of years. Do some more research, you don't want to put stock in random internet comments... including mine!
Given that the fed is about to start unwinding QE and selling off its massive store of bonds, it may be prudent to wait a year or two before shifting your assets into bonds.
Everyone buying put options, expecting doom and gloom, is contributing to keeping the markets high.
When you buy a put, the market maker sells a put and stays delta neutral by buying shares (or more generally, goes long the underlying asset). When everyone buys puts, everyone is making shares get bought.
The puts expire worthless and no affect was done to the market except keeping it bullish.
edit: I got that wrong, way wrong. Is there any way that hedging is having the effect of buoying the market?
That's only half the story. To stay completely delta and gamma neutral, the market maker typically buys not just the share but additionally shorts a call with the same strike as the put.
When he shorts the call it means that someone else buys it. Probably another market maker, who might want to hedge as well, this time by selling the share and buying a put, etc..
If a market maker sells a put and wants to stay delta neutral, they would need to sell shares -- not buy. Selling a put is a long position, not a short.
He would be a lot more credible if he could explain what will cause a crash. Basically, he is just betting on a crash every year for whatever reason. Doubtlessly, he is selling something.
He kind of did. He expects the market to become a bubble. Bubbles always crash.
What is a bubble? Here's my definition: A bubble is an asset going up because it's been going up. It works like this: Something (the stock market, say) looks good because of fundamentals: because earnings are up, or because interest rates are down, or whatever. People take note: Hey, the stock market looks good. So people buy stocks, so stocks go up. Then more people take note: Hey, the stock market's going up. So more people buy stocks, because they want to own stuff that's going up. So stocks go up more. So more people buy stocks. That's the start of a bubble.
But it doesn't get truly dangerous until people are buying stocks with borrowed money. Then a drop means that people sell in a panic, because they can't take a loss, so the price drops more, so more people sell in a panic, and so on. And the people that lose money, lost (at least in part) borrowed money, which means that it can ruin not just the borrower, but also the lender.
Now: Are stocks currently in this territory? My impression is no, not yet, but I don't know for sure. Is there a good measure of how much borrowed money is invested in the stock market?
"But it doesn't get truly dangerous until people are buying stocks with borrowed money. "
Currently, the borrowed money is nearly free money via low interest rates. A lot of games are being played to juice out every cent that can be made on being able to get cheap money. When the value of assets used to play these games are ignored vs. the diminishing profit. It becomes musical chairs.
I doubt we get your everyday Joe betting on margin like the dotcom bubble, but we have the same effect, just different users.
Given that the current practice for anyone with money in China is to get that money out of China and converted to foreign currency as quickly as possible... I'd counsel against it.
First jobs were replaced by simple tools, then by livestock, then by machines. What makes software any different from any other advancements made throughout history?
All of the earlier advances require human maintenance that scale with the scope of deployment.
The whole reason software is a hot area of investment is that it's support requirements don't scale that way, which means is good for the capitalist from a cost perspective, but bad for the wage-labor dependent class.
The scale of software tool utility is pretty much unparalleled by traditional tools. Traditional tools such as livestock and machines require breeding, mining... some sort of "manufacturing" process. Okay, software has manufacturing cost too, but typically only once to create, and once to maintain. Imagine if you could dynamically spawn livestock without the overhead of mining, breeding, and trading. The jobs that software has/will eat are, imo, beyond current human comprehension.
Electrification was far more significant and far-reaching, occurred on a similarly quick timescale, and led to a massive boom in productivity across the board. If you want to predict how software and the computerization of everything will pan out then electrification is a better example to consider.
The revolutions that occurred in electrification (up to and including sophisticated home appliances), mass production (clothing, food, shelter), and transportation (from horses to cars) brought a lot more people into the workforce and into the same connected market economy. Prior to these inventions, people were spread out and almost entirely disconnected from a shared economy: in the 1870s about 75% of American families were rural and very time-intensively grew/raised most of what they needed to survive themselves. Over the next hundred or so years a bunch of wonderful inventions moved everyone together into the same very tightly-connected market economy, and reduced non-leisure time commitments at home by 80%+ (notably allowing women to join and remain in the workforce in greater numbers). There is a strong argument that this connective effort is what led to massive GDP growth - that these were a series of "one trick" ponies, by definition - and that while there are amazing inventions on the horizon, no doubt, they will have much more impact on quality of life than on traditional GDP and productivity, at least in terms of Wall Street's expectations. Even if autonomous robots come and reduce non-leisure domestic commitments to absolute zero, it wouldn't be nearly as impactful as the advancements that we've already experienced, from a productivity standpoint. I tend to agree that "it's different this time" is one of the most dangerous phrases in the English language but at some point, maybe it's true.
It's the only advancement where making a million copies of an item takes a few minutes and no raw material. Try that with tools, livestock and machines. Or anything physical.
> It's the only advancement where making a million copies of an item takes a few minutes and no raw material.
And, mire directly to the point, doesn't require additional labor inputs. (If extraction is automated by software tools driving hardware, even things that demand raw materials can have this feature.)
but before that you have to go through several iterations of failure with a bunch of costly entitled developers before you get something which sort of approximates what you wanted and is so internally broken its almost impossible to extend
not really ragging on the developers, but its not a cheap or risk free process. and if you aren't actively investing in maintenance it will die. the costs are all just per-type not so much per-instance
> but before that you have to go through several iterations of failure with a bunch of costly entitled developers before you get something which sort of approximates what you wanted and is so internally broken its almost impossible to extend
This is too often true, subject to the following observations:
- Project failure is almost always a management failure (no citations needed, really), because:
- The thing to be built is poorly conceived and explained by the leadership/stakeholders, who are seldom the devs
- The delivery schedule is wildly optimistic or infeasible, because unrealistic promises were made to customers or investors
- The operational parameters of the system (peak users, load, transactions, data size, availability, etc) are overestimated by the leadership by a couple of orders of magnitude and pushback tends to be career-limiting
- When the leadership eventually realizes the failure of its vision, it "pivots", and keeps pivoting at the speed of a turbine, "reframing" the so-called vision.
- The "costly, entitled" developers often come from some body shop which pays them $25/hour and charges $75 (illustrative values only)
- Costly, unentitled, competent developers probably ran for the hills or were rejected because they weren't "with the program" - they said something realistic in the interview.
- The process is not cheap or easy or risk free, yet many companies hire and pay as if it is.
- The mere act of getting cohesive requirements out of people is one of the hardest parts of software, and one of the largest reasons for failure.
- The rest isn't easy, either, unless it's a conceptual copy of some vanilla CRUD system that does nothing novel or "web scale" (whatever that is).
OTOH, I read some devs stating that software development is just bolting legos together, what's the problem?
If you are referring to these devs, I see your point, but they and their ilk are the creations of corporates and startups who pushed the view that devs are commodity items - resources - who aren't really skilled and can be churned out of bootcamps and will be good enough to meet the deadlines.
Now I am not criticizing bootcamps or the people who make it through them. There are many smart people who have no formal CS background who could make good devs, given time and experience. There are even more people who should not be allowed near a computer, sadly, who IMO are more commonly encountered.
I am criticizing the social forces that put money above useful education, profit above knowledge, ideology above science and engineering, the short term against the entire future.
2012: Jim Rogers: It’s Going To Get Really “Bad After The Next Election”
2013: Jim Rogers Warns: “You Better Run for the Hills!”
2014: JIM ROGERS – Sell Everything & Run For Your Lives
2015: Jim Rogers: “We’re Overdue” for a Stock Market Crash
2016: $68 TRILLION “BIBLICAL CRASH” Dead Ahead? Jim Rogers Issues a DIRE WARNING
2017: THE BOTTOM LINE: Legendary investor Jim Rogers expects the worst crash in our lifetime
https://www.fool.com.au/2017/06/14/why-you-should-totally-ig...