Ask HN: Do you feel like the world we live in is increasingly speculative? | Hacker News Reader

Ask HN: Do you feel like the world we live in is increasingly speculative?

22 pointsdonsupreme12 comments

Dogecoin went up 200% in matter of days.

Public companies that have perpetually losing billions are trading all-time high.

Sport cards are selling for hundred of thousands.

Pokemon cards went for millions.

NFT is basically printing money.

I can't help but feel like a chump for trying to invest my money based on the good old fashion way, based on fundamental. Being analytical seems to not to work anymore. It seems you have to just embrace whatever the masses are after, whether that Dogecoin, GME or NFT.

But all these make me feel very sad about the state of the world, it feels like we are in one big casino and people just mindlessly "investing" or really just gambling and somehow it just keeps growing exponentially. At first I thought this won't last ... but it has been going on for a year now.

Feeling powerless and why am I still resisting to FOMO into these things I really don't believe in. Basically joining the other side. Have you guys been thinking about this at all?

It's starting to feel like gambling is the bedrock of the economy, rather than a side show. Everyone has a 'portfolio' of stocks and coins that they in no way contribute any value to, but expect huge returns from. 'Net worth' has nothing to do with value created, only returns on bets.

Jobs are just an activity required to build capital for further gambling for yourself, and to pump the portfolio of those who own stock in your company.

Is anyone actually doing anything useful in 2021? (other than the people we pay like crap, including teachers, nurses, carers and environmentalists of course)

I have often thought this, but what balances my FOMO is the old story about the stockbroker in 1929 who got a stock tip from his shoeshine boy, and immediately decided to sell all his stocks because if the shoeshine boy was into stocks even, that meant the bubble was about to burst.

I have no idea when the speculative bubble bursts, but I am pretty sure that I am the equivalent of the shoeshine boy. If I'm ready to speculate, that means we are very late in the cycle and a burst is coming. This helps me shrug off any FOMO; if I did decide to speculate, it would be a sure sign that the fall is imminent.

But the question becomes, will it burst when the Fed seems to quantitatively ease by printing more money? Will they allow it to burst at all? Or will we just get inflation and the best way to hedge against that is to buy up these speculative properties since they're increasing at a rate faster than inflation?

A lot actually. I think it is human nature to want the easier and more lucrative route but we are reaching to some new levels. And I think the issue has gotten worst with these digital megaphones we have in our hands. A lot of people are just adding fuel to the fire of chaos by inviting anybody who can hear them to take easy routes, lose their hard earned money on silly investments.

I think the solution to this is to consume less content, only read the verifiable sources, think a lot, reflect a lot, change perspectives a lot, and act smarter. and that is definitely true for investments as well.

Two things drive up the price of investment assets. Crazy people who increase relative price to value in the short term but that usually tends to return to average in the long run; so in a sense anybody who stayed calm in crazy times and away from madness of crowd, will reap the benefits by actual economical and wealth output of their investments.

> Have you guys been thinking about this at all?

Yes, a lot.

Personally, I've been trimming my positions slowly over the last 3 months. And I will continue to do so. With basically every single day I can justify any of these prices less and less. We'll see what happens. Either it's gonna be hyperinflation, or it's gonna be a huge historical correction, for sure it'll be interesting (or maybe it'll just continue with slight hiccups and nothing of significance will happen within the next decade?).

I am not an economist, and really, I have no clue. But for sure I won't be fomoing into something that I can't justify price for.

I just ignore it. Nature is thrifty in all its actions, so this current madness will eventually come to an end too. I like the attitude of Charlie Munger, and whenever I feel like my head is starting to spin too fast I think about the wise things he has said about the madness of crowds, keeping your head straight and focusing on your duties right in front of you.

ignore it. a single big correction will send all if this into a tailspin

My partner, who isn't usually all that money-wise, said this a couple nights ago, and reminded me about what happened last Spring when the novelty of legal cannabis stocks wore off. So even financial bystanders are noticing the pattern.

People who might point out that some of the stocks are coming up should look at the year to see the general trend is still going downward. Of course that looks discouraging, but don't let it - we're almost out of this. Sooner or later they'll actually trend upward. It's a LOOOONG way back up for those who bought into it last Spring, and an equally long way up for those who buy in at the bottom. But the ones who buy in at the bottom will be the ones smiling next Spring.

For example, I'm tracking ACB downward waiting to buy once it finally bottoms out. I think a lot of the stocks that are suffering due to Covid restrictions are going to have a nice tall climb back up once we start reaching herd immunity and the survivors start seeing profits again. But that won't start happening for a few months yet.

Just hold on and don't panic. And definitely don't throw your money into the very next bubble.

PS: If you look at percentages, as one should, Bitcoin is doing well, but there are stocks out there performing better. The big numbers are impressive, but going from $40K to $60K is exactly the same as going from $4 to $6.

I keep wondering why I'm still working when money seems to flow so easily to some...

This is a US centric answer. We were taught that retirement funds and portfolios needed to outpace inflation to increase spending power. But inflation is not the right metric to measure against. Maybe the right metric is the percentage growth of the federal reserve balance sheet. Since it has recently inflated at a rapid pace, people are left with relatively much less purchasing power and facing economic uncertainty. We can not rely on conventional investments like real estate or the stock market to keep pace so you need to allocate a larger portion of portfolio towards more alternative (read: risky) investments.

Not too long ago the conventional wisdom was to stick your money in S&P 500, or a mix of stocks and bonds and forget about it. Bond real yields went negative. Bank savings rates are a pittance. While all that happened, indexers lost out on all the gains from TSLA until the end of 2020. More people are catching onto this regime change. Growing piles of money are chasing smaller pockets of growth in the same way the pool of well paying careers is drying up.

You can't get by with an average portfolio unless you have an above salary with above average savings. Stay tuned for more creative destruction ahead.

People live in the now less and less.

Hence they buy products and services less and less...it's only natural that they'd look to do something with their money because interest rates have been at 0% since 2008 now.

You can see this everywhere.

People drink less and less, they smoke less and less, they have very few sexual encounters etc.

"The flagship industry of the definite optimism of the 1950s was engineering. The flagship industry of the indefinite optimism of the 2010s is finance. Finance is about “making money when you have no idea how to create wealth”. While the engineers plan out specific dams and rockets and so on, the more abstract levels of finance invest in “the market”, a vague aggregate of all economic activity which is expected to go up because Progress."

From Scott Alexander's review of Thiel's Zero to One:

https://slatestarcodex.com/2019/01/31/book-review-zero-to-on...

Reply on news.ycombinator.com