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The Null Hypothesis's avatar

My reading of the markets and the economy is very similar to Arnold's but even more simplistic. Nobody can understand what to do because everything looks broken simultaneously. Was there an "everything bubble"? Is it popping? where do those assets go in a flight to saftey? How much of this is due to excessive leverage taken out by large financial institutions on top of super easy money? My "as good as anyone else" bet right now = S&P as piece of long term holdings, hedged with rolling puts, Puts on long term treasuries, Bitcoin as long term inflation hedge. I'm tempted by gold, but spent a decade watching it do nothing and i don't trust the custodial arrangements for this asset class (unless that is the one institution that won't fail us).

I see multiple gold-bug comments here. Bitcoin makes as much sense as an asset for this thought process, and has outperformed gold by orders of magnitude in 3, 5, & 10 year period. A small allocation there could be a hedge within a hedge.

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Gordon Tremeshko's avatar

"In eight years, these four stocks just about tripled in value relative to the scale of the economy. That will never happen again. Never. Happen. Again. Even if their stocks appreciate in value, the rate of increase is bound to be lower than it has been."

For the whole group, I would agree, but I could imagine certain breakthrough technologies that do in fact replicate that kind of increase for one particular company. E.G., software for self-driving cars, problem-solving AI, Alphabet's research on life extension/anti-aging, reliable and safe drone delivery (okay, this one might be a stretch), new types of wearable devices, quantum computing, etc. I guess kinda the way I look at it is that there is a winner take all quality to many tech products or services, and existing companies with lots of talented people on the payroll and lots to spend on R&D should be well-positioned to continue to be winners in the future with regard to new products and services, so they still stand to grow at a greater clip than NGDP.

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