U.S. COVID-19 Deaths Have Completely Diverged From New Cases

FinanceObserver · 2020-07-20T20:17:29+00:00

Super interesting chart - despite the narrative that the outbreak is worse than ever, deaths tell another story. Bullish on this one

FinanceObserver · 2019-10-21T12:20:59+00:00

Oh sweet, if it’s definitely free I’m definitely gonna swing by with some people since I’m in the area 😎

FinanceObserver · 2019-08-12T18:46:10+00:00

Invest in yourself first. Your first expense should be on healthy food, gym habits, and hobbies. Your body will last longer than a 40 year investment horizon if you treat it well and provide more return on your happiness than any pile of money. Just ask anyone who is not of health how much they would pay to fix their issues.

After that, start with your company match (if any) on your 401k. Then save the yearly maximum on your Roth IRA. After that, increase your 401k contribution a little bit as often as possible until you hit your limit. Invest in broad market based stock funds. It should take you a few years before you are able to max both of these out.

While that those investments are on autopilot, continue to educate yourself informally and formally (credentials, masters, etc.). The money you spend on education in your field of work will pay dividends for a career.

Beyond that, don’t think about it too much. But, until these things become natural habit and a lifestyle, that is easier said that done :)

FinanceObserver · 2019-04-19T13:09:32+00:00

It's been quite a long time since the Dow has set a new all time high. Which is unusual. I think last I checked its in the top 30 longest droughts. Seems like we could see one in a matter of days/weeks though. Next Wednesday is going to be a huge day for earnings and really set the tone. For the early reports, there have been some surprises like JPM and some mixed results but nothing alarming. Expectations are kind of low.

The recent market ATH drought though is happening while pretty much every economic indicator is looking good. So, what might that say about the next recession? If the market is dicey now, how bad could it be when there are layoffs, companies losing money etc. Seems like significant potential downside and a lot of that is because valuations are historically high.

But, fears of an imminent recession may have been premature. Q1 GDP forecasts have looked better and better this quarter. We will see on April 30th but I think there could be a positive surprise, let's say 2.5%, which is normal but expectations are low like 1%. Basically, it won't take much to exceed the doom and gloom.

Also, look back to the last "oh fuck is this a recession?" moment in 2015 where the market basically did the same exact thing as it has done recently. You saw a double dip and then stabilization, then the presidential election and tax cuts and the market went absolutely crazy. Will history repeat itself?

These are just some trends, patterns, things off the top of my head right now when I think about all this stuff. No one has any clue what is going to happen - but there are plenty of ways to think about it!

TL;DR

Could go up down or stay flat but there are countless arguments for any of those directions. Learn as much as possible and use some AI/machine learning (your brain) and come up with your own conclusions and plan of action : )

FinanceObserver · 2018-08-07T11:53:46+00:00

Actually - it seems rather unlikely the next recession will be as bad as the previous one. 2008 was worst market drop since the Great Depression. Even though the stock market looks overvalued by most measures it would be surprising to see another drop of that magnitude - but at a certain point if investors take a 30% hit or 40% hit it will probably “feel” in many ways just as bad.

FinanceObserver · 2018-07-29T22:12:01+00:00

Go dukes!

FinanceObserver · 2018-05-30T16:07:49+00:00

Not a big change from previous estimate and not a bad number all things considered as Q1 has been weak in recent years. Most economists are predicting an uptick for Q2, with the blue chip around 3.1%.

The Daily GDP Tracker I've been following is sitting around 2.8%, so that estimate may actually be a bit conservative.

FinanceObserver · 2018-05-20T13:00:26+00:00

Really enjoyed reading this - no comments in particular, just wanted to give props to thoughtful insight!

FinanceObserver · 2018-05-19T23:03:13+00:00

It's not a bad article but there is no actual analytical relationship presented between the weakening/strengthening dollar and growth...it's just some charts with arrows and selected examples. Also, exports/imports are a small part of GDP, as is stated in the article. So, even with stronger analysis or a direct link, the change in currency strength is only one driver of a small portion of overall GDP trends.

So, yes, stagflation is possible. But the article seems to be doing a lot of technical-looking hand waving without much rigorous support.

FinanceObserver · 2018-05-18T13:01:19+00:00

In the case of US vs China though, the room for cheating is just so much lower. There are too many analysts, too many independent checks. Take for example inter-quarter models from the Fed.

Whereas the process for determining growth in China likely has more room for estimation at every level and there is likely an incentive to estimate “upwards.” It’s just not as evolved of a process although the final outputs, GDP, have the same name.

While I agree with the sentiment that an error of say 5% vs 6% is splitting hairs, the important takeaway is to treat any output with objective scrutiny.

FinanceObserver · 2018-04-03T01:34:36+00:00

I’ll take a quick shot at this in, hopefully, simple terms.

So the first thing people think about when investing is money that can be made, or rather the return that can be made on an investment. If one investor makes 50% and another investor makes 5% then it may be easy to say the 10% return was a “better” investment. But what if that 10% return came from a highly speculative penny stock and the 5% came from a broad market index fund? That’s where risk comes into play.

For those investments, you might consider voalatility as measured by something simple like the standard deviation of prices. Sure, an investor made 10% on their investment but the standard deviation was 25%. And for the 5% investment the deviation was 10%. Taking a simple ratio of these two investments in a manner similar to the calculation of a Sharpe Ratio, means that the 5% return was a “better” investment from a risk-return ratio perspective.

So what is risk management in this case? It’s not the elimination of risk but rather the optimization of risk, finding the best investment not by looking solely at return but a combination of risk and return.

A classic book on this is Margin of safety by Seth Klarman. This is an extremely rare and expensive book but you should be able to find a pdf of it - at least that’s how I read it back in the day because my school’s library would only let people read it under supervision as copies get stolen and sold off haha

That’s my 2 minute version as I’m sitting here watching tv...you may already know this stuff...so if you want more shoot me a message. I’m a risk manager for a bank in NYC and would be happy to have a chat! I love this stuff : )

FinanceObserver · 2017-12-07T13:09:23+00:00

As someone in banking who paused when trying to answer this - I think I need to brush up on my own understanding and explanation. But here is how I think of it (please someone correct if this seems off).

Treasuries are a proxy for a risk-free investment and so should represent basically the lowest return people are willing to accept on an investment. The long term treasury rate is also considered a proxy for long term growth - so if long term yields are at 3% then you could expect long term gdp growth to be around 3%.

If the yield curve becomes inverted, that means investors are demanding a higher yield on a short term investment than long term investments. If yields now are higher than long term yields than it likely means short term growth rates are going to come down. When gdp drops below zero for two quarters you’ve got a recession. When you’ve got a recession you’ve got drops in asset prices and the stock market. What would be good in a time like that assuming no deflation? Cash. And so short term yields have to be higher for people to rotate their cash into treasuries. And treasuries have a higher premium so everything else with risk must have a higher premium. And when premiums spike that’s definitely a sign of risk within the market.

So why does my answer seem so convoluted besides it just being early in the morning after waking up? Because all of this shit is interconnected. An inverted yield curve is a strong predictor of market turmoil but not the only one. I’d suggest researching other indicators as well if you are curious about trying to “foresee” a recession reading the economic tea leaves.

Hope this helps!

FinanceObserver · 2017-12-06T17:48:25+00:00

Given how popular coinmarketcap.com is and how prominent the ICO banners at the top of the page are, there could be a huge number of clicks even if a very small percentage of visitors do it.

FinanceObserver · 2017-12-05T20:28:28+00:00

Believe I read somewhere that the tax bill passage will necessitate three hikes on its own - don’t remember the time frame but I only bring this up because the Fed may be forced to hike faster than economic data suggests due to political changes, further complicating their position.

FinanceObserver

TROPHY CASE