If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

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MrCheapo
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If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by MrCheapo »

As a student of history I'd like to understand which time period (and why) we are now in is most like a period from the past.

Some thoughts. Certainly not like 2001 .com Tech crash. The tech companies now have had a material impact on society and mostly justify their high valuations. Perhaps more similar to the 2008/9 sub-prime mortgage crisis because a global event caused a major disruption?

It seems we are entering a higher inflationary environment with the stock market at highs due to excessive cash due to government funding and margin lending?
Last edited by MrCheapo on Wed Dec 01, 2021 3:30 pm, edited 1 time in total.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by AK_Kiter »

I'm no historian, but I do see some parallels to the post-WW2 years. Global supply chain disruptions. Heavy governmental spending to combat a major problem. Post-recovery demand explosion resulting in massive demand-pull inflation.

The years immediately following the war were subpar for equities, but in 1949 that gave way to the bull market of the early 1950s, one of the most impressive ever (at least for the US).
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by jebmke »

MrCheapo wrote: Wed Dec 01, 2021 2:41 pm I think we can all see the markets are moving in the wrong direction.
All I see is up and down; mostly up over the long haul with periodic dramatic down-ticks from time to time (e.e. 2008-09).

The most dramatic time I can remember is one day in October, 1987.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by ApeAttack »

jebmke wrote: Wed Dec 01, 2021 3:07 pm
MrCheapo wrote: Wed Dec 01, 2021 2:41 pm I think we can all see the markets are moving in the wrong direction.
All I see is up and down; mostly up over the long haul with periodic dramatic down-ticks from time to time (e.e. 2008-09).

The most dramatic time I can remember is one day in October, 1987.
I also disagree with OP's premise.
Just another lazy index investor.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by MrCheapo »

ApeAttack wrote: Wed Dec 01, 2021 3:14 pm
jebmke wrote: Wed Dec 01, 2021 3:07 pm
MrCheapo wrote: Wed Dec 01, 2021 2:41 pm I think we can all see the markets are moving in the wrong direction.
All I see is up and down; mostly up over the long haul with periodic dramatic down-ticks from time to time (e.e. 2008-09).

The most dramatic time I can remember is one day in October, 1987.
I also disagree with OP's premise.
Fair enough I got rid of that part. So whether you see it as a the right/wrong or what-ever direction. What does today's situation remind you of?
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by jebmke »

MrCheapo wrote: Wed Dec 01, 2021 3:31 pm What does today's situation remind you of?
Not to be argumentative but exactly what situation do you mean?
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by interwebopinion »

I don't see a historical parallel tbh.
  1. One of the rare bipartisan consensus points is the fed's pumping of liquidity into the economy in response to black swan shocks - cf the housing crash, the pandemic. So we don't compound the mess with our actions. This was a big factor in making the 1929 crash worse that it otherwise would have been. We are now ever ready to deploy helicopters to drop money on a massive scale.
  2. Technology's progress has been relentless and dramatic, on a scale not seen since the Industrial Revolution.
  3. The prevalence of nuclear weapons have paradoxically made the world safer, since it forecloses the risk of large-scale wars. The autocrats that have taken power in countries with nuclear weapons have deep business interests, and so have a vested interest in the global economy. If Poland or France had a nuclear deterrent in WW2, then Hitler would never have been as dangerous.
  4. Large swathes of the planet have become prosperous and can participate in the global economy. The savings of the new global middle classes is driving a cash glut, leading to low interest rates.
My view is that this unique combination of factors has led to a very stable and prosperous era that is unprecedented in human history.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by AnnetteLouisan »

1913: before WW1 - now we have Ukraine, Belarus and Taiwan
1928: Smoot-Hawley tarriff, global tax & climate agreements today
1940: before things got suddenly more serious militarily - see above
1977: high inflation, economic malaise among the working class
1999: stock market bubble

But on the bright side it could also be 1987-1989: era of entrepreneurialism and revival from the sclerotic behemoth manufacturing based economies of the 1960s and 70s. Reinvigoration of individual choice and greater opportunities, partly due to new technologies.

Most likely 2021 and 2022 will be distinguished in their own right.

Never fight the last war; puts blinkers on - look ahead.
Last edited by AnnetteLouisan on Wed Dec 01, 2021 10:23 pm, edited 1 time in total.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Californiastate »

History repeats itself albeit with broad brushstrokes. Technical analysis would rule the roost if it replicated itself verbatim. The devil is in the details.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by MrCheapo »

jebmke wrote: Wed Dec 01, 2021 3:32 pm
MrCheapo wrote: Wed Dec 01, 2021 3:31 pm What does today's situation remind you of?
Not to be argumentative but exactly what situation do you mean?
Well that's part of the question. What does today look like in the lens of the past.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by 7eight9 »

1789 - The peasants have no money for bread. "Let them eat cake."

2021 - The peasants can't afford $4/gallon gasoline. "Let them buy electric cars."
I guess it all could be much worse. | They could be warming up my hearse.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by 000 »

1929:
Permanently high plateau / TINA / this time it's different mindset
Rampant speculation during the preceding decade
Individual investors becoming speculators
High leverage (margin regulations don't really address hidden leverage in the system)
Central bank involvement in market movements
Supply issues and other real world economic issues
Social decadence
Political volatility and intrigue
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by mortfree »

December 1, 2021. Just another day
Mid-40’s
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by jebmke »

MrCheapo wrote: Wed Dec 01, 2021 10:10 pm
jebmke wrote: Wed Dec 01, 2021 3:32 pm
MrCheapo wrote: Wed Dec 01, 2021 3:31 pm What does today's situation remind you of?
Not to be argumentative but exactly what situation do you mean?
Well that's part of the question. What does today look like in the lens of the past.
Nothing in particular. I don’t believe in the “history repeats itself” doctrine.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by nisiprius »

It honestly doesn't remind me of anything, except in the most general way.

Obviously it is a trite observation to see aspects of some kind of mania, boom, or bubble, but nothing close enough to tempt comparison.

I don't know yet whether we are in a period of high inflation, but if we are it's fairly different from previous ones, which seem pretty objectively associated with "the end of a war."

I don't think people traveling into the nearby city to "daytrade" at special brokerage offices providing T1 links are a close parallel to people buying dogecoin in their Robinhood accounts on a smartphone.

I don't know if negative interest rates represent anything unspeakably terrible, but if you aren't looking at past time period with negative interest rates, then there certainly isn't much of a parallel to look at.

I've commented before that we are always in "uncharted territory," and that memories of "normal" are just the usual mythmaking about a past Golden Age. So there's nothing unusual about feeling that we are in uncharted territory. But I certainly do feel that we are in uncharted territory.

Ah, the Golden Age when Toynbee was still right, the Golden Age when history moved in regular cycles, and nobody was ever surprised by the news because everything was predictable...
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Valuethinker »

AnnetteLouisan wrote: Wed Dec 01, 2021 3:47 pm 1913: before WW1 - now we have Ukraine, Belarus and Taiwan
1928: Smoot-Hawley tarriff, global tax & climate agreements today
The global agreements on tax and climate are actually the reverse of Smoot-Hawley. To be fair, you could argue for economic neutrality.

The US trade retaliation measures of the last few years are closer (but of a far smaller magnitude).
1940: before things got suddenly more serious militarily - see above
I can't agree with that characterisation.

By 1940 things were very serious militarily. US industry had been highly stimulated by British and French orders. Soviet Union was already militarized and so was Japan (which had been in a multi-million man war in China since 1937). Britain & its Dominions and Empire, France, Germany (& Italy from June 1940) were at war.

The world was at war. Americans were not exempt.
1977: high inflation, economic malaise among the working class
Probably a better time to be a blue collar worker than now. High level of unionisation, and contracts were CPI-indexed.
1999: stock market bubble

But on the bright side it could also be 1987-1989: era of entrepreneurialism and revival from the sclerotic behemoth manufacturing based economies of the 1960s and 70s. Reinvigoration of individual choice and greater opportunities, partly due to new technologies.
GDP growth was higher in the 1960s and 1970s than the 1980s. The problem in the 1970s was inflation and macroeconomic volatility (and in particular 2 massive energy price shocks in 1973 and 1979-80, each of which had a very tangible impact on western economies).

1987-89 was not particularly about "new technologies"? We already had PCs & cellphones. Lower interest rates post the 1987 Crash led to a flood of liquidity and a resumption of market exuberance. The largest LBO in history (KKR taking over RJR Nabisco) was done at that time. A lot of money went into real estate - Canary Wharf was built in London by the Reichman family - setting the stage for the largest commercial property default in history (up until that time) in the early 1990s.

What amazing technologies got their start in 1987-89? Equivalents to Google or Microsoft or Amazon or Apple (the former 2 already existed)?

Manufacturing? Continued with its decades long restructuring. China not yet a big factor in global manufacturing - as it would become in the 1990s.

What did happen was the Savings & Loan crash. In retrospect, a precursor (with many similar causes) to the US housing bubble 2003-06 and subsequent bust.
Most likely 2021 and 2022 will be distinguished in their own right.

Never fight the last war; puts blinkers on - look ahead.
Agree with that.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Zeno »

nisiprius wrote: Thu Dec 02, 2021 7:58 am It honestly doesn't remind me of anything, except in the most general way.

Obviously it is a trite observation to see aspects of some kind of mania, boom, or bubble, but nothing close enough to tempt comparison.

I don't know yet whether we are in a period of high inflation, but if we are it's fairly different from previous ones, which seem pretty objectively associated with "the end of a war."

I don't think people traveling into the nearby city to "daytrade" at special brokerage offices providing T1 links are a close parallel to people buying dogecoin in their Robinhood accounts on a smartphone.

I don't know if negative interest rates represent anything unspeakably terrible, but if you aren't looking at past time period with negative interest rates, then there certainly isn't much of a parallel to look at.

I've commented before that we are always in "uncharted territory," and that memories of "normal" are just the usual mythmaking about a past Golden Age. So there's nothing unusual about feeling that we are in uncharted territory. But I certainly do feel that we are in uncharted territory.

Ah, the Golden Age when Toynbee was still right, the Golden Age when history moved in regular cycles, and nobody was ever surprised by the news because everything was predictable...
+1

Not only that, but time itself is an illusion. See, e.g., Rovelli, C. “The Order of Time.” Einstein of course proved (at least until such time as his theories may be disproven) that time is relative (e.g., a clock sitting on the floor runs slower than one resting on a table top). So if you want to live longer (by a second maybe), move to the sea shore. Don’t live in the Alps. Photons are believed to not experience time. All of those particles/waves impacting your retina as you read this did not experience time.

Indeed, the “t” variable doesn’t appear in the fundamental equations governing the universe. And current physics suggest that even if the day arrives when a time travel machine were to be constructed, one could not travel back to a time prior to when the device was constructed.

The future is unknowable. Time is an illusion. So set an AA and sleep well at night.
Last edited by Zeno on Thu Dec 02, 2021 8:57 am, edited 4 times in total.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Valuethinker »

7eight9 wrote: Wed Dec 01, 2021 10:20 pm 1789 - The peasants have no money for bread. "Let them eat cake."

2021 - The peasants can't afford $4/gallon gasoline. "Let them buy electric cars."
Except the price of gasoline was much higher in 2008?

Cyclical movements in gasoline prices are nothing new. There's a tendency to take 1998 as a baseline, but that was in fact the all-time low of real gasoline prices.

https://energyathaas.wordpress.com/2021 ... ffordable/

eyeballing that last graph, I would say US gasoline prices (outside of California) are about median of their level since 1929. However there are big deviations from trend in saying that.

US fuel economy has been declining and Vehicle Miles Travelled rising, suggesting affordability of gasoline is not a big issue.

EVs are a dominant platform shift. The reasons for it kicking off are externalities associated with the environment.* However they are now starting to reach significant economies of scale & network effects are beginning to kick in. Lifecycle cost of ownership at or below petrol-engined cars-- gasoline prices are far higher in most other developed countries, of course, so that point is being reached more quickly there.

There is an initial cost barrier & implications for affordability for lower income deciles. That will play out in a lot of different ways -- but I don't think anyone has the single solution, as yet.

* You may not have been around, but when catalytic converters were brought in (and air bags) they were decried as "unaffordable". Society had simply decided that a level of smog, or of death & severe injury, was no longer acceptable (aka "an exogenous shock"). Once they became mandatory, the costs of manufacturing fell, an ecosystem built up around recycling, etc. The same will happen with EV batteries. And EVs are otherwise much simpler than ICE cars, so they will cost less to maintain.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by balbrec2 »

I think we are in uncharted territory. Stay diversified.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by jebmke »

balbrec2 wrote: Thu Dec 02, 2021 6:11 pm I think we are in uncharted territory. Stay diversified.
aren't we always?
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by prioritarian »

The four waves of the 1918-1920 USAnian Flu Pandemic* and the resulting morbidity, death, and supply/production disruptions.

*First cases were detected in the USA.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Tdubs »

jebmke wrote: Thu Dec 02, 2021 6:58 am
MrCheapo wrote: Wed Dec 01, 2021 10:10 pm
jebmke wrote: Wed Dec 01, 2021 3:32 pm
MrCheapo wrote: Wed Dec 01, 2021 3:31 pm What does today's situation remind you of?
Not to be argumentative but exactly what situation do you mean?
Well that's part of the question. What does today look like in the lens of the past.
Nothing in particular. I don’t believe in the “history repeats itself” doctrine.
+1

It's just one damn thing after another.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by AnnetteLouisan »

Valuethinker wrote: Thu Dec 02, 2021 8:12 am
AnnetteLouisan wrote: Wed Dec 01, 2021 3:47 pm 1913: before WW1 - now we have Ukraine, Belarus and Taiwan
1928: Smoot-Hawley tarriff, global tax & climate agreements today
Added a few rejoinders below after my initials. good discussion.


The global agreements on tax and climate are actually the reverse of Smoot-Hawley. To be fair, you could argue for economic neutrality.

The US trade retaliation measures of the last few years are closer (but of a far smaller magnitude).

AL—- Smoot Hawley increased protectionist tariffs. Recent tax and climate agreements increased taxes and regulations internationally.
1940: before things got suddenly more serious militarily - see above
I can't agree with that characterisation.

By 1940 things were very serious militarily. US industry had been highly stimulated by British and French orders. Soviet Union was already militarized and so was Japan (which had been in a multi-million man war in China since 1937). Britain & its Dominions and Empire, France, Germany (& Italy from June 1940) were at war.

The world was at war. Americans were not exempt.

AL:—- the US didn’t enter WW2 until December 1941.
1977: high inflation, economic malaise among the working class
Probably a better time to be a blue collar worker than now. High level of unionisation, and contracts were CPI-indexed.

AL— fair point except for the double digit inflation, high mortgage rates, gas lines and lack of consumer choices (plus lack of access for women, minorities, immigrants etc).
1999: stock market bubble

But on the bright side it could also be 1987-1989: era of entrepreneurialism and revival from the sclerotic behemoth manufacturing based economies of the 1960s and 70s. Reinvigoration of individual choice and greater opportunities, partly due to new technologies.
GDP growth was higher in the 1960s and 1970s than the 1980s. The problem in the 1970s was inflation and macroeconomic volatility (and in particular 2 massive energy price shocks in 1973 and 1979-80, each of which had a very tangible impact on western economies).

1987-89 was not particularly about "new technologies"? We already had PCs & cellphones. Lower interest rates post the 1987 Crash led to a flood of liquidity and a resumption of market exuberance. The largest LBO in history (KKR taking over RJR Nabisco) was done at that time. A lot of money went into real estate - Canary Wharf was built in London by the Reichman family - setting the stage for the largest commercial property default in history (up until that time) in the early 1990s.

What amazing technologies got their start in 1987-89? Equivalents to Google or Microsoft or Amazon or Apple (the former 2 already existed)?

AL:— after the 1986 tax cuts, computers were becoming more broadly used throughout society, faxes and fedex replaced telex and messengers, shipping container and logistics systems were revolutionizing international trade, and the internet was being developed for later commercial use.

Manufacturing? Continued with its decades long restructuring. China not yet a big factor in global manufacturing - as it would become in the 1990s.

What did happen was the Savings & Loan crash. In retrospect, a precursor (with many similar causes) to the US housing bubble 2003-06 and subsequent bust.
Most likely 2021 and 2022 will be distinguished in their own right.

Never fight the last war; puts blinkers on - look ahead.
Agree with that.
Last edited by AnnetteLouisan on Sat Dec 04, 2021 3:58 pm, edited 1 time in total.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by willthrill81 »

"No man ever steps in the same river twice, for it's not the same river and he's not the same man."
-Heraclitus
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Nathan Drake »

Reminds me of the 70s mixed with the late 00s. Very strange times we are going through. I think the amount of speculation now is the greatest I've ever seen.
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Post by Blue456 »

But river is river and when you step in wet you feel it. I do think that history does repeat itself.
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Post by 000 »

willthrill81 wrote: Sat Dec 04, 2021 1:29 pm "No man ever steps in the same river twice, for it's not the same river and he's not the same man."
-Heraclitus
Does this also apply to ships that have had all their components slowly replaced over time? :mrgreen:
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Post by willthrill81 »

Blue456 wrote: Sat Dec 04, 2021 3:06 pm But river is river and when you step in wet you feel it. I do think that history does repeat itself.
As the Mark Twain quote goes, it does tend to rhyme. There are always similarities, and there are always differences. But it's never exactly the same, and seemingly minor differences can have a huge impact on the outcome.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Hatch Batten »

In terms of what seems to drive stocks -- corporate profits and the fed funds rate -- I think you'd be looking at around 1993 or 1994. Before the dotcom boom there was a lot of money being made on personal computing hardware and software. Real profits on the back of real innovation. And the fed funds rate had dropped to a relatively low 3 percent or so in the wake of a recession.

If you want a period where you have those factors plus high inflation, I think you'd have to look back to 1950 or 1951. That period also featured lower unemployment numbers than the early to mid-1990s.

Both of those junctures saw the stock market run significantly higher in subsequent years. The 1990s were more similar in terms of everyone asking "can it keep going higher from here?" due to already high historical valuations, although I imagine the 1950s market had to climb its own wall of worry with the Great Depression still in the back of many minds.

Those aren't very many data points in the past 70 years. I'm hunkered down with a well-diversified buy and hold portfolio and planning to keep it that way for some time.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Mike Scott »

Whatever "happens next" will almost certainly be a surprise. Otherwise, tomorrow is just the beginning of another day that is a lot like the end of the previous one.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by peskypesky »

Kinda feels like 2006 or early 2007 to me. I knew then that the housing market was in big bubble, and yet home prices were still rising dramatically. I vividly remember sitting with a friend at a cafe in NYC and discussing the bubble and the fact that it was bound to collapse. And it did.

I feel the same way now about the stock market and the housing market. Seems like a house of cards that is ready to collapse.
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Post by 000 »

peskypesky wrote: Sat Dec 04, 2021 6:26 pm Kinda feels like 2006 or early 2007 to me. I knew then that the housing market was in big bubble, and yet home prices were still rising dramatically. I vividly remember sitting with a friend at a cafe in NYC and discussing the bubble and the fact that it was bound to collapse. And it did.

I feel the same way now about the stock market and the housing market. Seems like a house of cards that is ready to collapse.
Might want to reconsider your AA then. :shock:
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Post by livesoft »

Reminds me of September 2021. Remember what happened then?
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by peskypesky »

000 wrote: Sat Dec 04, 2021 6:28 pm
peskypesky wrote: Sat Dec 04, 2021 6:26 pm Kinda feels like 2006 or early 2007 to me. I knew then that the housing market was in big bubble, and yet home prices were still rising dramatically. I vividly remember sitting with a friend at a cafe in NYC and discussing the bubble and the fact that it was bound to collapse. And it did.

I feel the same way now about the stock market and the housing market. Seems like a house of cards that is ready to collapse.
Might want to reconsider your AA then. :shock:
Believe me, I am!!!!!!!!!!! But I can't find a good place to put my money. Stocks overvalued, real estate overvalued, bonds with no yields, cash not an option due to inflation, gold not performing well....which leaves the asset which cannot be named....and which has repeatedly outperformed all other asset classes in recent years. :shock:
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by 000 »

peskypesky wrote: Sat Dec 04, 2021 6:37 pm
000 wrote: Sat Dec 04, 2021 6:28 pm
peskypesky wrote: Sat Dec 04, 2021 6:26 pm Kinda feels like 2006 or early 2007 to me. I knew then that the housing market was in big bubble, and yet home prices were still rising dramatically. I vividly remember sitting with a friend at a cafe in NYC and discussing the bubble and the fact that it was bound to collapse. And it did.

I feel the same way now about the stock market and the housing market. Seems like a house of cards that is ready to collapse.
Might want to reconsider your AA then. :shock:
Believe me, I am!!!!!!!!!!! But I can't find a good place to put my money. Stocks overvalued, real estate overvalued, bonds with no yields, cash not an option due to inflation, gold not performing well....which leaves the asset which cannot be named....and which has repeatedly outperformed all other asset classes. :shock:
Look at the massive cup and handle on gold over the last decade:

Image
What goes up must come down 😎
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by peskypesky »

000 wrote: Sat Dec 04, 2021 6:43 pm
peskypesky wrote: Sat Dec 04, 2021 6:37 pm
000 wrote: Sat Dec 04, 2021 6:28 pm
peskypesky wrote: Sat Dec 04, 2021 6:26 pm Kinda feels like 2006 or early 2007 to me. I knew then that the housing market was in big bubble, and yet home prices were still rising dramatically. I vividly remember sitting with a friend at a cafe in NYC and discussing the bubble and the fact that it was bound to collapse. And it did.

I feel the same way now about the stock market and the housing market. Seems like a house of cards that is ready to collapse.
Might want to reconsider your AA then. :shock:
Believe me, I am!!!!!!!!!!! But I can't find a good place to put my money. Stocks overvalued, real estate overvalued, bonds with no yields, cash not an option due to inflation, gold not performing well....which leaves the asset which cannot be named....and which has repeatedly outperformed all other asset classes. :shock:
Look at the massive cup and handle on gold over the last decade:

Image
well, that it very interesting. As I've written on another thread, for the first time in my life, I've been examining the possibility of buying gold. Probably will do it soon with my self-directed IRA.
000
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by 000 »

peskypesky wrote: Sat Dec 04, 2021 7:28 pm well, that it very interesting. As I've written on another thread, for the first time in my life, I've been examining the possibility of buying gold. Probably will do it soon with my self-directed IRA.
Just make sure you buy the kind of gold that is allowable within an IRA (lookup IRA prohibited transactions).
What goes up must come down 😎
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by jeffyscott »

MrCheapo wrote: Wed Dec 01, 2021 2:41 pm As a student of history I'd like to understand which time period (and why) we are now in is most like a period from the past.

Some thoughts. Certainly not like 2001 .com Tech crash. The tech companies now have had a material impact on society and mostly justify their high valuations. Perhaps more similar to the 2008/9 sub-prime mortgage crisis because a global event caused a major disruption?
I see it being much more like the 1990s than 2008, wrt stocks. Like then and unlike 2008, it's only a subset of stocks that are, perhaps, overpriced or at least priced for perfection.

International and value stocks are much more reasonably priced, just like the in the late 1990s.

But maybe it's more like the "nifty fifty" era, perhaps with a smaller set of "one decision" stocks?
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by andypanda »

"September 2021. Remember what happened then?"

I had a birthday. One of my younger relatives died. That's all I have, but I don't think the markets reacted.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by jabberwockOG »

I believe this is a unique time with few parallels to the past. Primary factors affecting local economies in the near to middle term - 1) drastic over supply of labor - Globalization and over population will continue to drive down the value of labor, in conjunction with rapidly increasing levels of technology based "robotic" style automation. These factors at some point may cause severe issues/disruptions in economies as well as social order. 2) The current practice of continuing to ignore the profound economic cost/damage to the environment (water/air/biological food chain, etc.) due to industrial scale global production, transportation, and consumption will at some point become impossible. When the actual environmental costs of production, transportation, and consumption on a global scale at increasing population levels are transferred to producers, labor, and consumers there may be some very dramatic changes to local economies and societies.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by life in slices »

000 wrote: Sat Dec 04, 2021 7:36 pm
peskypesky wrote: Sat Dec 04, 2021 7:28 pm well, that it very interesting. As I've written on another thread, for the first time in my life, I've been examining the possibility of buying gold. Probably will do it soon with my self-directed IRA.
Just make sure you buy the kind of gold that is allowable within an IRA (lookup IRA prohibited transactions).
WSJ had an article on this point this week - worth the read:
https://www.wsj.com/articles/a-couple-s ... _permalink
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by JoMoney »

At my workplace, over the past 18 months or so, there was an explosion of people suddenly getting interested in trading. The interest seemed mostly in options, option strategies, crypto currencies, "meme stocks", and some less than reputable (my opinion) brokers like "Robin Hood."
Coupled with "SPACS" trending, and Tesla's bizarre valuation (and addition to the S&P 500 index as a top 10 holding), it spooked me.
It had some echoes of what I remember of the dot-com boom era, where low-cost online stock brokers became a thing, people at work were getting in trouble for trading stocks on work computers, and I knew people who were not otherwise working and believed they were going to make a career out of day-trading from home. I have an anecdotal connection through a friend's family member who currently doesn't have a job and believes they're making a living trading stocks from home.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by JoMoney »

Not sure if it makes sense to anybody else what I tried to do with the below image, but here goes...
I took a log growth chart that shows a $ amount invested in the S&P 500 adjusted for inflation going back to 1925 (Ibbotson data)
I then snipped out the segment from the peak of the 2000 dot-com boom to present (and recolored it yellow)
and the segment from the trough of the 2008 financial crisis to present (and recolored it orange'ish)
Then tried to find other periods on the chart that saw similar amount of growth over the same time period without squishing or otherwise transforming the time period similar growth appeared.
Image
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Booogle »

JoMoney wrote: Sun Dec 05, 2021 9:51 am At my workplace, over the past 18 months or so, there was an explosion of people suddenly getting interested in trading. The interest seemed mostly in options, option strategies, crypto currencies, "meme stocks", and some less than reputable (my opinion) brokers like "Robin Hood."
Coupled with "SPACS" trending, and Tesla's bizarre valuation (and addition to the S&P 500 index as a top 10 holding), it spooked me.
It had some echoes of what I remember of the dot-com boom era, where low-cost online stock brokers became a thing, people at work were getting in trouble for trading stocks on work computers, and I knew people who were not otherwise working and believed they were going to make a career out of day-trading from home. I have an anecdotal connection through a friend's family member who currently doesn't have a job and believes they're making a living trading stocks from home.

Yeah but plebs' investments are only like $2,000 each.

Don't worry about it.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by Valuethinker »

jabberwockOG wrote: Sun Dec 05, 2021 8:58 am I believe this is a unique time with few parallels to the past. Primary factors affecting local economies in the near to middle term - 1) drastic over supply of labor - Globalization and over population will continue to drive down the value of labor, in conjunction with rapidly increasing levels of technology based "robotic" style automation.
Actually the world is well on the way to running out of young people. By 2050 (should we be alive then - you and I) it will be striking just how few young people there are. You already see this in places like former East Germany or rural Italy. But US birthrates are now down with western European levels.

There's no developed or middle income country that has more than replacement level of fertility (at least that I know of) - 2.2 children per woman per lifetime. Fertility continues to fall to levels never believed possible. This may in part be due to environmental issues (plasticisers? lots of things flashing alarm bells) but seems to be primarily social.

Of developing countries, something similar is in prospect with certain exceptions in the Middle East, and in sub Saharan Africa.

Whilst there is a huge issue about the impact of human population in environmentally sensitive parts of the globe, the reality is if we all lived like Sub Saharan Africans then the planet has enough resources and environment (there would be a question re our food supply without advanced industrial ways of growing food). An average American has something over 50x the burden on the planet that an average Sub Saharan African imposes (it's probably greater than that, in truth). Moving me from England to Arizona or Australia does the damage of another 10 Africans (roughly, it doubles my environmental impact - but of course a Brit who lives in a badly insulated house and flies a lot could be far more harmful than someone living retired in a modest home in Phoenix).

Automation? It always causes a labor surplus - or is always said to. That of course never happens - the Luddite loom weavers who wrecked automated looms in England after 1815 found other work. What *is* true is that some types of work disappear - and that can cause a lot of harm to the workers and communities in the present moment.

I can't tell you what all those minicab drivers will do if Level 5 Autonomous vehicles become widespread (color me sceptical in the next 10 years, but after that?). Or if Amazon manages to replace all those warehouse workers with Boston Dynamics robots. But I sent a list of the top 20 career opportunities to my 1980 self - and he shot back: "but what is a "website designer"? "Data scientist" - is that like a COBOL programmer? "). There's going to be an incredible shortage of home care workers as our populations age - there already is, in fact. Not easily automatable.


I agree with you about pollution, but that's a separate topic, really. We do have the technological and economic means to address that, if we choose to.
Last edited by Valuethinker on Sun Dec 05, 2021 5:10 pm, edited 1 time in total.
AlohaBill
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by AlohaBill »

This time period reminds me of the period leading up to the Civil War. The nation Is divided. Lunatics have been running the country for years. Business has fled the country and enriched our enemies. Parents send their children to kill friends at school.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by heyyou »

Conditions are such that I suppose that I will just have to muddle through whatever does occur, same as all of those other times.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by nedsaid »

AK_Kiter wrote: Wed Dec 01, 2021 3:02 pm I'm no historian, but I do see some parallels to the post-WW2 years. Global supply chain disruptions. Heavy governmental spending to combat a major problem. Post-recovery demand explosion resulting in massive demand-pull inflation.

The years immediately following the war were subpar for equities, but in 1949 that gave way to the bull market of the early 1950s, one of the most impressive ever (at least for the US).
History rhymes but does not repeat. There are similarities to the post WW2 years but also pretty big differences, the biggest difference that I can think of is demographics, we are not experiencing a baby boom now. There are also similarities to the 1975-1980 period but again some pretty big differences. So I would be careful here about drawing parallels.
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by MrCheapo »

Clearly you gave this some thought, but I'm not sure what conclusion you wish to draw from this? The two time frames overlap
JoMoney wrote: Sun Dec 05, 2021 10:24 am Not sure if it makes sense to anybody else what I tried to do with the below image, but here goes...
I took a log growth chart that shows a $ amount invested in the S&P 500 adjusted for inflation going back to 1925 (Ibbotson data)
I then snipped out the segment from the peak of the 2000 dot-com boom to present (and recolored it yellow)
and the segment from the trough of the 2008 financial crisis to present (and recolored it orange'ish)
Then tried to find other periods on the chart that saw similar amount of growth over the same time period without squishing or otherwise transforming the time period similar growth appeared.
Image
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MrCheapo
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Re: If History Repeats - From a Financial Perspective What Period of Time Does Today Most Remind you Off?

Post by MrCheapo »

jeffyscott wrote: Sun Dec 05, 2021 8:18 am
MrCheapo wrote: Wed Dec 01, 2021 2:41 pm As a student of history I'd like to understand which time period (and why) we are now in is most like a period from the past.

Some thoughts. Certainly not like 2001 .com Tech crash. The tech companies now have had a material impact on society and mostly justify their high valuations. Perhaps more similar to the 2008/9 sub-prime mortgage crisis because a global event caused a major disruption?
I see it being much more like the 1990s than 2008, wrt stocks. Like then and unlike 2008, it's only a subset of stocks that are, perhaps, overpriced or at least priced for perfection.

International and value stocks are much more reasonably priced, just like the in the late 1990s.

But maybe it's more like the "nifty fifty" era, perhaps with a smaller set of "one decision" stocks?
Interesting observation. Your point is that in 2008 everything was overpriced? Is that right?

What do you mean by " "one decision" stocks"? I think you mean it's like the 1970's where 50 stocks propelled the market to its highs and then a subsequent crash?
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