The article specifically states why they believe it is a leading indicator. For example people search for [unemployment] when they hear the rumors of layoffs or otherwise are worried, not after they happen.
Hedge funds don't use Google trends as an indicator. They hire photographers with infrared lenses to gauge the inventory of oil refineries and shipping depots, or buy non-public location/foot traffic. I would not be surprised if spotting a trend online actually would be too late to be actionable.
Given their recent performance, why would you extol the acumen of hedge funds? Despite a recent bounce, they still can't even beat the S&P 500, which has no load funds available. Hedge funds are a tool for making hedge fund managers money, not their investors.
Extolling? No. My point is that hedge funds have resources and smart people working on signals that they will trade on before you see them in Google trends.
Also, some hedge funds do well while others do not. Most are very secretive and many have proprietary investment arms that are wildly profitable.
Wildly profitable in the short term. A lot of funds also fail. In the long term there is too much money to be made by demonstrating your ability to consistently beat the market for the type of smoke and mirrors you're talking about to be a real thing.
Perhaps the most concerning stats I've seen are around fast rising consumer debt levels (and upticks in default rates on credit card debt + auto loan debt).
If life was so good for so many people, how/why are so many people borrowing in the first place and have trouble paying it back?
I would love to better understand how much borrowing that puts people in financial hot water is for luxuries/optional stuff vs. borrowing for the fundamentals like housing, transportation, food, healthcare. Ie. how much consumer debt is because people put themselves in a bad position vs. they really had no choice to begin with.
One of the reasons so many people are borrowing is the low interest rates. I could afford to buy my last car cash but for 1% financing for 3 years I'd rather have the cash.
That doesn’t explain rising late payment/default rates. Also (holy shit) the average credit card APR is 15%, apparently a record high since 1994. I do not pay interest on my cards, but I have a very high credit score and my rewards cards are all >22% APR.
Something is very wrong if banks are borrowing at record low rates and yet consumers are borrowing in record amounts at record high rates!
Credit cards are usury unless you have the cash flow and discipline to pay the complete amount due every statement. They're barely a step above payday and title loans (not in absolute effective APR, but morally).
In the same vein, Interactive Brokers will give you 3.26% on a margin loan if you have over 100k in your account. At rates like that you're better off capitalizing the interest and letting the securities you bought on margin appreciate. Obviously don't do this if you don't know what you're doing, but it's actually perfectly safe with a proper options hedging strategy that ensures you don't get a margin call.
To be clear this isn't financial advice, just an observation about what many people are doing due to the low rate environment.
Right now you might as well buy a house just cause. At 3% interest. It’s basically free money. Especially if you view inflation at 2%. Plus rental income and property appreciation. Why not?
Rising consumer debt can be seen as an increase in consumer confidence. Defaults are another story.
The economic environment is about as good as it can get. But people's attitudes towards money (and borrowing, and spending) are largely orthogonal.
I expect as older generations die off and younger ones enter the spending economy we'll see more likelihood to borrow and spend. This will continue until the current generation gets badly burned (when the economy eventually peters out), then there will be a new generation with an attitude of frugality.
Could hit as early as next year, depending on who ends up being the Democratic nominee. Bernie Sanders or someone else anti-capitalist, yet hypothetically electable? Get ready for a wild ride.
That's one recession's worth of data, barely a trend. However if you have a look at all the other indicators that have been around for over 100 years, alarm bells are ringing left right and centre...
Sooo where does one put their life savings in this scenario? I for sure am not going to follow conventional financial advice and do nothing and watch my net worth drop 50%+.
We don't have (effective) recession indicators that are 100s of years old. We're not even sure that the ones that are 25 years old still hold up in the modern day. So no, there's no alarm bells ringing "left, right, and centre." It is very possible that no recession occurs in the next few years.
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[ 3.8 ms ] story [ 65.9 ms ] threadAlso, some hedge funds do well while others do not. Most are very secretive and many have proprietary investment arms that are wildly profitable.
If life was so good for so many people, how/why are so many people borrowing in the first place and have trouble paying it back?
If anyone has any data, links, I'd appreciate it.
Something is very wrong if banks are borrowing at record low rates and yet consumers are borrowing in record amounts at record high rates!
Source: https://www.creditkarma.com/credit-cards/i/average-apr-on-cr...
Personally I prefer to just use a charge card.
To be clear this isn't financial advice, just an observation about what many people are doing due to the low rate environment.
Right now you might as well buy a house just cause. At 3% interest. It’s basically free money. Especially if you view inflation at 2%. Plus rental income and property appreciation. Why not?
But yes, mostly correct. I don't really see rates rising in a long time.
The economic environment is about as good as it can get. But people's attitudes towards money (and borrowing, and spending) are largely orthogonal.
I expect as older generations die off and younger ones enter the spending economy we'll see more likelihood to borrow and spend. This will continue until the current generation gets badly burned (when the economy eventually peters out), then there will be a new generation with an attitude of frugality.
In ancient Rome this was called bread and games.