4 posts tagged “analysis”
Believe it or not, the United States is in a relatively good economic state right now. When the rest of the global economy improves, that's when things may start to get really bad for America.
It is ironic that while the fundamental and increasingly desperate state of US finances, debt burden, and economic growth prospects would suggest a collapse in the US dollar, and the US' ability to borrow, quite the opposite has happened. The dollar has remained strong. And the US has had no trouble borrowing unprecedented amounts and at exceptionally low interest rates. In a panic, everything is relative, and while bad, everyone else seems worse off. So there is a flight to the safety of the US dollar, and the one last apparent bastion of security, US Treasury Bills (lending to the US government). But expect another irony: when things start to look better around the world, investors will have less fear and more alternatives. The dollar will collapse and US interest rates will have strong upward pressure.
I have a lot of friends and acquaintances who think I am rather smart, even very smart. And with the exception of this post, I'm even considered rather modest. I have an MA in Economics. I've worked as an economist in the Canadian Ministry of Finance and Statistics Canada. I've been paid more than a million dollars as a business and data analyst at Morgan Stanley in Manhattan. But no one ever listens to my financial advice.
When I've told friends they should sell at least some of their dot com stock, they've hung on, sure it was going to go up to peaks again, instead of down to nothing. When I've told my friends, at just the right times, they should sell their houses and rent, they just tell me there's one more special deal to do, or it is not the lifestyle they want. When I've told them they should get out of the US economy and enjoy the 80%+ returns in India and China, they've ignored me. And when I told them I was selling everything and holding cash, they've stuck with their portfolios. To be honest, I don't really bother anymore. No one listens. But it irks me.
But I do want to point out one unassailable fact for those who never listened. On January 17th, 2008, I sold all my retirement investments and put it in cash (sometimes diversified into multiple currencies). It is what I told anyone who would listen to do. I wasn't giving radical advice, or risky advice (like shorting). If I had been wrong, all I was going to give up was what was clearly going to be modest growth at best. I actually would have done it sooner, but Fidelity blocked trades for weeks while they processed a request to transfer from a 401k to an IRA. That simple, simple, simple little action put my wealth 82% higher today than it would have been if I had done nothing.
Avoiding a loss may not be sexy, but the counterfactual return I've just quoted is just as real as a gain. In fact, human psychology is such that we feel a loss far more than a missed gain.
A lot of people read this blog. But I think most of my friends rarely do. I rather hope they're not reading this. I know many are suffering. I don't want them to suffer. I want to protect them, like I protect myself. In fact, I want everyone I come in contact with to be ok. I'm not perfect. I'm often wrong, especially about timing (I expected the economy to collapse years ago). But for their own good, I wish people listened more.
So, is this the bottom? Is it time to get back in? I'm sorry to say, but I think we are not even half way through the tough times. However much you have lost so far, there is more to lose. Look, I hope I'm wrong; but nothing about our economic situation suggests that. About two thirds of spending in the US economy comes from consumers, and they have only just begun to start feeling the real pain of this recession. I don't think every investor really understands that, especially individual investors. This will become clear to them in time, and this will drive stocks, and the economy, even further into negative growth.
Look, I'm not a financial advisor. This is just advice from someone who cares. Don't blame me if I'm wrong. But there is no way on earth I would buy now, and that means if you have any equities you could probably cut your losses substantially by selling now too. But I'm all too aware of the old adage, "you can lead a horse to water, but you can't make it drink".
I do not know quite what to make of it, but people seem to have lost interest in online data. There is a consistent multi-year trend that shows a decline in online searches for "data". Interest is approaching half the level seen in 2004. At the same time, there has been a consistent increase in references to data in online news over the same period.
A similar, though more seasonal, trend is seen with the term "analysis": a decline in searches, but a steady increase in references in the news. And the formerly hot data analysis topic "datamining" has also seen a steady loss in interest in searches (and news).
My best hypothesis at the moment is that people are losing interest (or no longer need) to find primary information through data, and analysis, and datamining, and similar subjects because they are increasingly getting richer information fed to them through a media that increasingly uses "data" and "analysis" to support its reporting. A more pessimistic interpretation would be that people are increasingly less interested in, or capable of solving problems for themselves, and happy to be spoon fed. Take your pick.
I have always been very disappointed with Vox as a blogging site because, among other defects, it is almost impossible to track viewership traffic. As an online writer, one sometimes wonders if anyone actually reads your contributions. I am left falling back on inferential tools.
One great service is quantcast.com. This is a free site which tracks usage on all major site. It also provides some great statistical audience analysis. Even tiny sites like this one are tracked: http://www.quantcast.com/lws.vox.com. According to this, on a good day, I get more than 20 readers, and I have reached out to almost 300 people. I find that pleasing.
A few people (perhaps a dozen or two including myself) have used a web bug based tracking system at http://voxr.net, created by Xantus. I threw this tracking feature onto my page about a year ago, and it has measured more than 3,644 visits to this blog since August 2007. While this is a measure of non-unique visitors, it certainly suggests that the quantcast.com metrics are conservative, at least in my case.
This is a live version:
REF: Thanks to Karlos (http://karlos3.vox.com/) for introducing me to quantcast.com, Xantos (http://xantos.vox.com) for voxr.net.
