A Wealth of Common Sense

Typically, no. It's been shown time and time again that people cannot reliably time the market. If they could, with leverage you could become the richest person on the planet in a short time.

You have to understand that if indeed people could in general know that the market was going to crash, then people would have already sold, and the impending crash would already have been priced in.

It follows from that, that the current price essentially is our collective best guess at what the future will bring, including any expectations of recessions. Selling beyond that point means you're seeing something that nobody else does, which either makes you a genius (or lucky), or wrong, and the odds are typically not in your favour.

You can find articles on recession indicators flaring up every month for the past decade. Suppose we had no sense of time, and just a sense of the daily weather to track the seasons. A few warm days in a row may indicate summer has landed, or it's just a normal fluctuation, a few weird days as winter turns to spring. And vice versa with cold days. There'll always be some indicators which may signal something bigger, and it could be just noise, or it could be truly indicative. You don't really know until after the fact. And if you could predict it, then it's likely everyone else could, too, and it'd have already been priced in so trying to time the market tends not to work.

This simplifies things a bit, but unless you're close to retirement (at which point…

In short, we are now an army of proofreaders, in addition to readers, interpreters and users/implementers of written material.

> At work I was sent a long design document and asked for my thoughts on it. As I read, I had a really hard time following it. Eventually I guessed correctly

> Parts of it sounded like a decent design document, but there was just way too much fluff that served only to confuse me.

> Intent is the core thing: the lack of intent is what makes reading AI-slop so revolting. There needs to be a human intent—human will and human care—behind everything that is demanded of our care and attention.

I am reminded of the "writing lesson" scene in "A River Runs Through it", pretty obviously reflecting the author's education as a writer.[0]

> Norman is at his desk hard at work writing a paper which he then turns into his father for review. His father marks it up with a red pen and simply says, “Half as long.”

> Norman goes back to work, cuts the length of the paper in half and turns it in for further review. His father marks it up once more and says, “Again, half as long.”

> Following a final round of edits, his father looks over the finished product and says, “Good, now throw it away.”

Well, we don't throw away polished work on the job. The scene is about education. LLM's are uneducated in communicating to readers, compared to skilled writers, and technical writing, especially, is not like summer reading, where nothing really matters but some vague plot…

> Regardless if it fits to FT’s thesis or not, note that the S&P recent gains can be attributed to 7 tech companies

Exxon Mobil (XON) was the #3 company in 2001, but not even in the top twenty in 2021:

* https://www.bespokepremium.com/think-big-blog/largest-25-stocks-in-the-sp-500-now-vs-20-years-ago/

<5% of companies have driven most of the returns of equities:

This is important because most stocks suck:

> We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full sample. Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251

> Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important…

> A Keynesian beauty contest is a metaphorical beauty contest in which judges are rewarded for selecting the most popular choices among all judges, rather than those they may personally find the most attractive. This idea is often applied in financial markets, whereby investors could profit more by buying whichever stocks they think other investors will buy, rather than the stocks that have fundamentally the best value, because when other people buy a stock, they bid up the price, allowing an earlier investor to cash out with a profit, regardless of whether the price increases are supported by its fundamentals and theoretical arguments.

* https://en.wikipedia.org/wiki/Keynesian_beauty_contest

Plenty of folks may think these companies are garbage but are 'playing along' because it's not necessarily what they themselves think that is important, but what others think. You can make money in a bubble, even when it eventually pops. What we're seeing now is hardly new, either:

* https://en.wikipedia.org/wiki/Technological_Revolutions_and_Financial_Capital

This is why I stick with index funds, as I don't really can't be bothered playing the game:

* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street

I generally check my portfolio once a year, in January, when I top things up when new contribution room becomes available with the new year. It's 'fun' to follow along with the gyrations and drama as things happen, but I don't sleep over it. If you're reasonably…

See Ben Clarson's post introducing the topic - http://awealthofcommonsense.com/2018/07/something-i-changed-my-mind-about-recently/

Highlights from the article:

- More people in the 18-25 years old age group regularly watch and play esports than any other traditional sport.

- A small town in Poland hosted an event this year that was watched live by people from 180 different countries. The audience was 3x as large as it was for the most recent MLB World Series. More people attended this event in person than the last 3 Super Bowls combined.

- The esports audience in Asia is 4x larger than it is in the U.S., so this is truly a global phenomenon.

- One event in a tournament called the League of Legends was viewed by 80 million fans.

- Twitch is one of the streaming services that allows people to view these events. The service already has a bigger audience than CNN or MSNBC. They get more than 15 million daily unique viewers. They’re owned by Amazon (because of course, Bezos was on top of this trend before anyone else).

- The video gaming audience is 5x the size of Netflix subscribers.

- There’s a league called Overwatch which has teams owned by people who already own a professional sports team. This list includes Robert Kraft (New England Patriots), Jeff Wilpon (New York Mets), Stan Kroenke (LA Rams and Denver Nuggets) and Dave Scott (Philadelphia Flyers). The teams cost them $20 million a piece.

I think this....

> Mr. Dalio returned to run Bridgewater earlier this year after stepping back to a mentor role six years ago.

Is what's driving almost all of his new found desire for a unified AI to run everything.

Here you have a man who by any measure has been wildly successful, he tried stepping back and letting other take over but ended up finding that the team he left in charge didn't make the exact decisions he would have.

If the story ended there it wouldn't be in any way surprising, who hasn't left a team and second guessed the decisions that the new leaders have made.

It turns out that when you are worth 15 Billion one of the things you can do is hire a shit load of AI experts, like one of the heads of IBM's Watson team, to build an AI to make decisions based on WWRDD, "What would Ray Dalio Do"?

Since his first retirement failed, this is his new take on how to have his second retirement go smoother. Just build an AI that bases all decisions on the Bridge water principles that he wrote down years ago.

see: https://www.principles.com/

As an aside, he recently let Tony Robbins publish his ideal portfolio, the all weather portfolio. It's actually a pretty strong portfolio for the average person.

http://awealthofcommonsense.com/2014/11/back-testing-tony-robbins-weather-portfolio/

http://www.moneysense.ca/invest/raining-on-the-all-seasons-portfolio/