Global Macro Trading Journal
- Thread starter Daal
- Start date
No way gold outperforms stocks, long-term. You can get bursts of outperformance lasting a few years, and it may be useful as a portfolio component, but in terms of standalone returns…
A macro theme for you to think about is whether the equity risk premium won’t be eroded to effectively zero, over the coming decade or so. The justification for a meaningful ERP is that stocks carry more risk, but in the era of QE and fully socialized risk, there’s IMO a strong argument to be made that diversified indices are in fact less risky than sovereign debt.
The implication is that PE ratios on the SPX and similar indices may go to perhaps 50x-100x (as rates continue to fall) and stay there forever.
A macro theme for you to think about is whether the equity risk premium won’t be eroded to effectively zero, over the coming decade or so. The justification for a meaningful ERP is that stocks carry more risk, but in the era of QE and fully socialized risk, there’s IMO a strong argument to be made that diversified indices are in fact less risky than sovereign debt.
The implication is that PE ratios on the SPX and similar indices may go to perhaps 50x-100x (as rates continue to fall) and stay there forever.
For gold, im actually raising the possibility that it will be significantly disrupted by technology. Similar to how horse riding (4000+ year long method of transporation) was disrupted by cars. If AI/Robotics will produce goods at an ever higher level of productivity, this should affect the output for ALL commodities including gold. Long-term, commodities have been a terrible investment, inflation adjusted, if productivity is about to increase (as the stock market seems to believe, along with many thinkers) then I think that should affect gold also, particularly as bitcoin will be preferred by anyone under the age of 35 and almost all newborns. so long-term, i think gold will fall into irrelancy. I still own it and plan to ride this trend but it feels more and more that its a doomed asset (in terms of returns or as a portfolio helper) regardless of its long-term tradition
As far as ERP of stocks and bonds, I have no opnion of it but I will try to think more about this
I did this in 10 minutes using ChatGPT, in the past it would have taken me hours, AI is really a game changer. Im currently trying to understand and estimate the impact of AI in the world and how to position myself. I think it will be massive, so massive, it will not be allowed to happen, so it wont be massive, at least in terms of everything happening quickly.
A psychologist once told me how there are certain blind people that are blind for decades, but they can have a special operation to be able to see again, some of those people have issues adapting to sighted life and come back to their doctors expressing the desire to become blind again. The change is so massive and fast it actually creates mental health problems for them
"Mental health concerns: Some reports suggest that a subset of individuals experience profound mental distress after regaining sight, leading to conditions like depression or anxiety. In extreme cases, individuals have expressed regret about the surgery, though this is not the majority." - ChatGPT
AI whose IQ is just allowed to explode non-stop, it would be like that to the entire planet. So even if a minority were to experience something like that, the consequences would be disastrous. We are talking civil unrest, revolutions, political instability (in some cases in countries with nuclear weapons), etc. Not to mention the sheer psychological trauma of large scale unemployment in many sectors and having to rellocate these people onto new jobs. I just dont think regulators will allow this to happen. Peter Thiel was on Joe Rogan the other day and he seem to be in that camp, in the same way that regulators have killed innovation and progress in many areas (like genetic editing CRISPR, biotech, nuclear power) they can do it here too, and they must. So, while ChatGPT is this nice companion tool that can boost peoples output and make their jobs more productive, everyone will be on board, but once these turn into something taking jobs away from people and become truth telling machines delivering them realities they cant bear, the authorities will come knocking and an easy way to slow this down is to limit the amount of GPU power you can train this stuff on. I wouldnt want to own NVDA if that happens
I have done quite a bit of psychadelics this year and it has been extremely helpful and gave me a clarity of thought i had long lost, but one thing that I learned is that the truth is not for everyone. I believe that if the entire world knew the truth about what really happens in the world, the world would end. AI at the current trajectory would be like a giant psychadelic pill to the whole world, people just wouldnt be ready for it, they need to believe their little fantasies and stick to their limiting beliefs. One of the reasons psychoterapies take time is because if people change too quickly or if they get the truth thrown in their face very fast, they would completely break mentally down. So because of that, AI exponential growth must be stopped, and right now, Im thinking it will
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Is that the equivalent of blind people who having been cured of their blindness asking to be made blind again. They cannot handle the change.