Are we heading for a worldwide economic depression?

[spacesailor]

OLD cars Are a luxury,  only for the wealthy.

My old bombs would be be worth heaps, IF l could afford to have kept them !.

S S  jag, Austin A 40 Devon 1948.

Old ' very old ' Indian Squaw, & Chief , 1937 Empire star 250 BSA. Airial square four.

Just a few that l couldn,t afford to keep.

Oh to be rich enough to salt them away.

Just like " Jay Leno,s garage ".

spacesailor

[old man emu]

Inflation in the USA has hit 8%. There's a fire sale on Wall Street. Ukrainian grain harvest is expected to be only 40% of the usual. China's property market is imploding. Energy prices are rocketing upwards.

 

As Barry McGuire sang in 1965 - "And you don't believe we're on the Eve of Destruction?"

[Old Koreelah]

Back to food security: After suffering too much vandalism from cockatoos, I built a large frame over my fruit and nut trees and covered it with bird netting. Worked a treat and it has chicken wire around it as well, in case we get chooks again.

Perhaps I should have used fine insect netting to keep the fruit fly out, but they have only been a problem in rainy years.

 

Urban gardens can feed people, as shown during The War. There is also potential that high-rise hydroponics and automated gardens could provide much of the fresh food needed in our cities.

[Marty_d]

4 hours ago, old man emu said:

 

 

As Barry McGuire sang in 1965 - "And you don't believe we're on the Eve of Destruction?"

Bloody long evening, if it's been going for 57 years.

[Jerry_Atrick]

https://www.reuters.com/markets/us/us-yield-curve-inverts-again-what-is-it-telling-us-2022-06-13/

[old man emu]

I was going to post this comment in the thread about AI writing our books, but this is more appropriate place to talk about AI and money. 

 

About a month ago there was a lot of talk about a programme for share trading. You had to invest a relatively small amount - $350 - to open an account, then the software did the buying and selling according to the rules the designers coded in. The initial reports were that within a day or two, people's investment of $350 had grow. Not extravagantly, but reasonably steadily to satisfy investors. Now, I wonder, what is happening to the size of those accounts as Wall Street teeters and  the ASX shakes like jelly on a plate.

[Jerry_Atrick]

These are commonly known and quant (or quantitative) funds. The often use high frequency, ultra-low latency trading algos. Although, I would consider myself at the very best, a rank amateur, my better th penultimate role was to try and stop them from wreaking havoc on the markets.

 

There are AI algos, and classical algos, which use very complex histograms to try and work out the best time to place orders, and remove them. The often place thousands of orders/second on and off the markets. The markets often placve throttles to even it out, but they use clever techniques to foil that, and the markets (venues/exchanges are always playing catch up). AI algos are entering the market, but they are not that much more advanced than existing models. and we really don't have the computing power today to give them that much of an edge. Both sets of models are predictive, but classical models tend to have more reactive attributes about them.

 

To be honest, I have not done the maths on whether quant funds do any better than normal funds. Quant funds rely on day and "swing" trading strategies, both of which mean holding positions in financial securities for short periods of time, and cashing out wins and losses, and "hoping" the wins far outweigh the losses. Normal asset management (investing) relies on portfolio theory, or variations of it to hold positions for a profit - the former is clearly specualtive, the latter may be, but often is a well defined investment strategy.

 

This jury is out on which one is better. Vanguard low cost funds have been producing decent returns, and if you have a more risk accepting disposition, there are various emerging funds, which do very well, or try a venture capital fund (though, they often have high minimum investment thresholds). I was reading about a quant fund in Melbourne that consistently out-performed Berkshire Hathaway (Warren Buffet's firm) in the good times, and only lost money oncein a 20 year span, when Berkshire lost up to 15% on three occasions. However, when I looked them up, they weren't 20 years old, so not sure where those numbers are from.

 

My intuition tells me, you can strike it lucky with either quant funds or normal funds. Most normal funds with have modelling to determine their investment strategy; they will not allow the system to automatically take positions.

[Jerry_Atrick]

Oh.. by the way... in answer to the OP's question.. definitely recession... depression, from memory is a full year of negative growth.. that will be harder to predict.. By they way, I can't remember the actual definition.

[Bruce Tuncks]

Food security used to be better when there was 1/4 acre blocks. ( they were this size to accommodate a drop dunny ).

You could keep some chooks and grow some veggies, and cities could 1/3 feed themselves.

I look at the modern tenements with horror and think they will turn into death traps one day, hopefully when I am no longer around.

 

 

[red750]

The Fair Work Comission has granted a 5.2% increase in the minimum wage from July 1. 

 

Meanwhile, Members of Parliament are getting a pay rise, after a decision made by the Independent Renumeration Tribunal.
All MPs are getting a 2.75 per cent pay rise, taking the base salary for backbenchers to $217,060.
Prime Minister Anthony Albanese's salary will go up to $564,000, and Opposition Leader Peter Dutton will earn $401,000 a year.

 

That means that a backbencher earns(?) $191,382 p.a. more than someone on the full pension ($987.60 per fortnight).

 

 

[onetrack]

A 2.75% increase on a salary that is already well over $200,000 annually, is likely to be an amount that is around a third of the full pension, in actual dollar terms.

[facthunter]

The (now resigned) Blind Dogs Lady was getting 530,000 and the ex NSW Police Commissioner  near 700,000. The PM is UNDERpaid IF he does the Job properly Check on Bank CEOS and Qantas CEO. HE just bought a 24 Million House. . Nev

[Jerry_Atrick]

On 13/06/2022 at 7:35 AM, facthunter said:

You'll never make money betting on every horse in the race either and the stock market is and the stock market is Gambling 101

 

I think I get your message but I would disagree that the stock market is the same as Gambling. Like horse racing where you can bet the same amount on each horse in a race and still win if the 100:1 rank outsider comes in, it is rare to lose everything with at least quality investing. In Gambling, it is winner takes all and loser loses all. 

 

In the stock market, it is rare when quality investing, to lose it all.even if you put $100m in the all ords on Friday, today you still have $98m or thereabouts. If I put the same on a horse and it didn't get a place, I would have zero.

 

Of course I can use plays and strategies on the stock market that either liae or win (e.g futures) or can send me broke with a big enough fall (e.g. margin lending) but shares with a little research may result in short term losses, but not total losses, and often in investing in quality, they bounce back.

 

Yes, as a retail investor you will never do as well as an institutional, but as long as you don't need to sell jn a depressed market, you will still mot have lost anything.

 

At the moment I only have a handful of shares in an oil company that has been resilient. I moved out due to the massive overheating of the market. I am not concerned I could have stayed in a bit longer and made a lot more money, and I am not concerned that I will buy back in at not quite the bottom of the market.. yes they can be viewed as losses, but hardly Gambling.

 

It's only gambling if you throw money at it with nothing more than a hope it will return.. but even then you're unlikely to lose your shirt 

[facthunter]

The main motivating factors on stock investors are greed and fear. The only real Investment is at initial issue when the company is floated or first listed. After that it's speculation that may be informed or not so much.  The Company goes on and does it's thing. Share values can be manipulated and short selling has to be regulated. Insider trading is rife and the only way to do well. I've been told that by people who do it.   Nev

[willedoo]

I was listening to the ABC radio this afternoon, and the head economist for the Australia Institute was speaking to the interviewer. He said that economists have predicted eight out of the last five recessions.

[Old Koreelah]

Aren’t economists just accountants with all the charisma removed?

 

 

[Jerry_Atrick]

On 15/06/2022 at 10:05 AM, facthunter said:

The main motivating factors on stock investors are greed and fear. The only real Investment is at initial issue when the company is floated or first listed. After that it's speculation that may be informed or not so much.  The Company goes on and does it's thing. Share values can be manipulated and short selling has to be regulated. Insider trading is rife and the only way to do well. I've been told that by people who do it.   Nev

Fear and greed motivate people to do many more things than investing. I would say they are the prime emotions that motivate most things of what people do. I work to earn a living as I have a level of greed that is more than will be satisfied living on the dole, and I am scared I won't be able to put a roof over my family's head if I don't. And I am even more scared of the fallout from the missus if I don't.

 

An active, well regulated secondary market  does not directly contribute to economic growth. But without the ability to quickly and cheaply sell your shares in an initial investment, you would find those willing to invest in the initial offering, or in start up captical to be a lot less, and far more risk averse. This would stifle initial investments. This would lower overall economic activity, and reduce the available wealth for everyone to particiapte in.  In addition, a company can use its intrinsic value to access other forms of development capital, and, again, a well regulated and liquid stock market helps prtovide an independent measure of the company's value. Typical covenants in larger corporate lending is that the market value of a company is maintained above a certain level.

 

Let's not forget, that owning stocks also gives you legal ownership in the company, too.. So, you have say in how it is run, albeit, for mum and dad investors, a very, very. very tiny share. Importantly, it provides you legal rights to future cash flows in the form of dividends and also any captial gains. While paying dividends is optional, capital gains, and losses, are not. But, also, it is a bit like buying real estate. If you buy quality, you will be subject to short term fluctuations, and then in the long term you are likely to be OK.. but not guaranteed. If you buy the crappier stuff (as in crappier areas), you are unlikely to have any real appreciation.. but like areas that were once rubbish but have become desirable, crappy stocks could also go well.. How many poeople would have purched in Redfern as a path to capital growth 50 years ago?

 

The acces to future cash flows and capital appreciation/depreciation is a motivating factor in the biggest investors in shares - funds. The valuation of a stock is based on where the market thinks the company will perform in the future - in other words, the likelihood of the size of future earnings, dividends, and assets, or not. The market was (and probably still is) overvalued.. the reality is, with more and more money porung into funds (think compulsory super, as an example), the money has to be put somewhere better than what was minimal interest rates. Supply v demand won.. .But it was very artificial. But any decent investor could see it.

 

(Darn still missed out on the glory days of Telsla rises... )

 

 

[facthunter]

Yes there's times when I've done very well on the stock market but I get to KNOW the area I'm working in. To win, someone has to lose. Yes I know if you weren't there the offer would be lower etc. I'd like to think I was more productive than just making money. Nev

[Jerry_Atrick]

You definitely have to know the area you are investing. But shares don't have to be win-loss. They can also be loss-loss or win-win. I have bought shares that had tanked, with the expectation they would bounce back, and they went worse or the company went bankrupt. They were loss-loss. I have also bought shares I later sold for a profit, and the share price went up. Yes, I forwent profit, but I still made, and I assume, as they kept going up, subsequent investors made money on them, too. So, win-win.

 

We all have our preferences how we want to earn a crust. I don't make a living out if investment - I am not that good at it to be honest; and I don't have the patience to pour over charts all day.

 

 

[octave]

I bought Tesla shares when they were cheap. I wasn’t thinking I would make a huge profit.  I bought these shares because I wanted to put my money where my mouth was.  I wanted to be a (tiny) part of a company that is changing the way we do things.  

[Jerry_Atrick]

And that is a very good point. Even in the secondary markets, if we put our money where our mouths are, we can send signals to the wider business community. I, for example, don't purchase/short shares in arms manufacturers, cigarrette manufacturers, etc. I still have shares in oil companies, but thinking of dumping those, too.

Edited June 17, 2022 by Jerry_Atrick

[Jerry_Atrick]

 

[onetrack]

One thing that blows me away is the number of people - mostly younger people it seems - who have invested substantially in cryptocurrencies.

Of all the high risk investments you could think up, cryptocurrencies rate worse than throwing all your savings on to the roulette wheel down at the casino. Yet people still regularly rush in to buy hundreds of thousands in crypto.

Unregulated, not backed by any form of security, nor any form of govt support, often operated by shady individuals, and possibly even operated by global crime gangs, the full pain of cryptocurrencies collapse has yet to be worked through.

Some people are going to end up losing a very large portion of their lifes earnings by going down this broad path that only leads to destruction.

 

https://www.abc.net.au/news/science/2022-06-18/bitcoin-crypto-crash-and-celsius-freeze-affecting-australians/101157578

[Bruce Tuncks]

Too right onetrack....   I never understood just how cryptocurrencies work, so I never bought any. Why would those behind the schemes not just take all my money, I wondered.

[facthunter]

Use too much energy also, don't they?  Nev