I've been keeping an eye on the stock market lately. I would guess that you have too. I spent some time with an economist several weeks ago and we traded perspectives about the market. He was interested in both the rate of change and rate of the rate of change but in the end I think what we're seeing play out, in the markets and in cultural life, is the long arch of a regression to the mean. The stock market tends to go up, on average, about seven to ten percent per year. In 2021 the S&P Index zoomed up by about 30%. Most of that, I think, was driven by pent up demand from the first year of the pandemic. Some was driven by the underlying euphoria of dodging (just barely) the burdensome yoke of authoritarianism. And a good deal of the general froth in the markets was a secondary effect of federal money pouring into the general consumer market in terms of stimulus checks. All combined to distort the normal trajectory of the markets. Add to this the psychology of considering every fiscal upside as the new normal.
Now my friends, who saw their net worth leap skyward last year (factoring in the elevating values of their real estate) are dismayed and tormented by this quarter's stock market correction. While I'd love to see my simple investments return 30% every single year I think that's irrational and that what we are seeing right now is more just a regression to the mean. A return. A somewhat painful return. To bringing the market back in line with statistical averages.
I also see a corollary with the hobby of photography. The newness of digital drove the market for cameras like a runaway freight from 2001 to 2013. Sales nearly doubled every year. The components of the basket of camera goods constantly changed and rebalanced but the acceleration of overall growth was impossible to argue against. But since 2013 cameras sales have dropped in almost an exact expression of "Kirk's Laws of Market Parabola." This states that the rise of a market or a company's value rises to a high point and then because of market pressures, new competition, maturing tech or some other reason the value or the market then descend. The rate of acceleration before the high point generally equals the rate of deceleration after the high point. The trajectory of the curve up and then down is more or less the same on either side of the midpoint. In an artillery analogy a bullet shot into the air completes an arc at the end of it's flight (if unimpeded) that is equivalent on both sides of the apex of the bullet's flight.
I think the camera market is a perfect example of R to M. We're heading back to a time when only advanced amateurs and people bent on making money with their passion carried around cameras and shot lots of images of things other than selfies and food shots. We're heading back to the late 90s when you either did photos for love or money but you didn't switch stuff every few years. The market reflects this now. At some point the decline in sales will stop and camera makers will adjust back to a sane parametric.
I more or less believe in the regression to the mean in both culture and finance. The markets may dip this year but over an X year period I'm betting we'll continue to see a seven to ten percent rate of return per year. Painful in the short run but comforting over the long haul.
I believe that what we're seeing in our cultural landscape is an attempt by conservatives to force a regression to the mean on social issues. My only curiosity is just how big a curve are they trying to address. Will we go all the way back to biblical times and pass laws allowing us to stone adulterers and to also make slaves of peoples that we conquer in war? Or will we just be asked to give back more recent achievements of kindness and civilization? It will be interesting to see where the mean lies in the whole social equation and whether those pushing for regression really understand the math and how it will inevitably affect themselves.
Here are some building shots I took this morning. I like them. They came from the Leica SL camera and the Panasonic 50mm f1.8 lens.
15 comments:
And maybe socially it's some sort of regression to meaness.
Ummm...I think, maybe, you wanted "parabola" (a U-shaped curve), rather than "parabellum" ("prepare for war"). Though I imagine there are days when the latter term might feel pretty darn appropriate.
I've often thought the regression is driven by emotions. And ignorance. Apparently these wannabe revolutionaries are driven by some innate desire to feel they're serving a cause. Instead, they're following the toxic rhetoric of those using them as fodder in their desire for unbridled authority. And I'm with you in finding it curious how they are blind to the negative implications which will affect even those willingly participating in the demise of our republic. They've no idea of a means, Kirk. They can't even identify or articulate an objective.
The objectives are obvious to me. They want to imagine and impose a "Christian Theocracy" in America in the hopes of preserving the power and wealth of a single demographic currently enjoying outsized privilege. I can't imagine what conservative women are thinking. Just a savage roll back of rights that were fought hard for.
Americans in general talk a great game about leveling the playing field but it's generally followed up by..."but not in my back yard." Or "my lifestyle." or "my tax bracket."
Thanks Stephen, Not enough coffee. Corrected and appreciated.
To add to your corollary with the hobby of photography; similar to how vinyl records outsold CDs in 2020, I forecast film cameras outselling DSLRs by 2025! ;-)
Kirk
To help me understand your 5:09 comment, how do the proles have have wealth and privilege ? The top quintile of wealth and income, where the power is, would overwhelming agree with you.
What are your news sources that you read during your coffee and Danish after swimming?
Jay
Kirk, I would submit that a substantial part of the damage we are experiencing in the market is the result of the Fed artificially managing the interest rate instead of letting the market do it. That is why we saw 30% jumps in the S&P. There was no where else to put your money.
I would like to sit down with you and discuss our different politics, particularly your view that all of us who are Christian and conservative desire to force others into our way of thinking and be autocratic or authoritarian as you say. I feel the same way about the demands of those who want me to give up my views or to not express them. I believe we should all be able to express our opinions to each other and to be polite to each other and not engage in hyperbole.
As to the camera market I chalk the current situation to the tyranny of large numbers. A market for digital started small and grew to be virtually all the market. That makes growth almost impossible.
Jay. I never said "proles" and I find that in my extremely affluent neighborhood the majority of adults are conservative and vote that way. They are intent on preserving wealth regardless of the overall social costs.
Pretty much every morning I read my subscriptions to: The Wall Street Journal, the New York Times, the Washington Post and Barron's.
Would you have me switch to some KKK newletter for "balance"? I think the Wall Street Journal does a good job at giving me at least rational republicans' point of view as pertains to policy.
I can't read stuff from Q,Anon, Bannon etc. I don't have a strong enough stomach or enough brain damage to jump the gap.
All wealth and privilege is contextual. A person making $25 an hour looks down at those making $15 and wants to have some way to prevent themselves from falling down the ladder. They try to create barriers to poorer people's success in the misguided belief that repressing poorer people will preserve their own positions. The general belief seems to be that anyone who is liberal is rich and vice versa. It's true that liberals are smarter, better educated, more inclined to contribute to the greater good but that hasn't stopped criminals like Trump and his cronies from grabbing a lot of ill-gotten cash.
Proles? Really? That's so "Das Kapital."
And why just look to the top Quintile? Let's look at the top 10% instead. Let's get away from playing games about earned income and look a little deeper.
Does that expand your understanding?
Kirk
I was wondering if you were going to answer.
You may think wealth and privilege is contextual but the poor sod making 15 dollars per hour doesn't. Talk to them when they're worrying if they have enough money to feed the children and getting the kids clothes clean for school next week because the 15 year old car needed repairing.
As to traditional news, WSJ and FT. Wouldn't touch the nyt. After suppressing the lab leak theory and Cuomo's stuffing infectious Covid patients into SNFs, they still haven't returned the Pulitzer for Duranty's reporting about Stalin's forced collectivization of agriculture. I could mention others.
Don't look at quanon, reddit, 4chan, or television. Rots the brain because you find your tribe. Think cnn, msnbc or fox. Everybody forgets about Gelman amnesia. Oh, and the WSJ is not conservative; it's neoliberal. Except the editorial page which I don't read.
As to your statement "It's true that liberals are smarter, better educated, more inclined to contribute to the greater good ..." well that sounds like bias confirmation. Except, as a group, Liberals don't contribute to charities. You do with your photography.
Regression to the mean is a observation, not a law or theory. Your trend observation is correct since the early 80's. Doesn't mean it will keep happening. 7 to 10 percent a year is exponential which means it won't.
As to Marxism. It was pretty much discredited and abandoned by socialists in Europe by the late 1800's because of all its internal contradictions. The only reason we talk about it today is because of Lenin.
This is enough for now. We can continue this if you want. Or by email.
Jay
On the stock market -- the real question is, what's the "mean" you're regressing to? Not a level, but the previous slope? When there's a sharp decline in the market, the recovery usually happens in a matter of months. Of course, this time, with the huge amount of money dumped into the economy because of '08 crash and Covid, things might really be different. But I sorta doubt it, and will eventually act on that doubt. But not yet. 8-)
There was another aspect to the inflation of the stock market that I find interesting. At one time, not too long ago, solid middle-class citizens who kept their nose to the grindstone, their feet on the fence, and their ears to the ground, could count on solid, safe, federal, state and large corporate bonds providing a solid return on their retirement funds. If, after a lifetime of labor, you'd managed to put away, say, a quarter-million dollars, you'd have twelve or fifteen thousand reliable dollars a year coming in, on top of your pension and social security. For the past decade, you could just about rely on federal bonds bringing in a reliable nothing, after inflation. So, desperate for ANY return, people turned to the stock market. If the fed pushes interest rates, and you can suddenly get that reliable five or six percent, I suspect a lot of money will be leaving the market. Maybe.
Rewster, I agree that everyone should be able to express their opinions and be treated with respect--but no respect for those who deny reality. I am neither Christian nor conservative, but you might be surprised at how often we could come to an understanding. You might want to read Peggy Noonan's recent piece in the WSJ about Roe v. Wade. She, and I, wish the two political parties could "regress to the mean." That may be wishful thinking and unrealistic in these days when the Rs have been captured by a lying authoritarian and the Ds are being pulled ever leftward by their supposed "base." Both parties ignore the vast majority of the population that just wants the government to work together to solve our myriad problems.
Jay: Returning Duranty's Pulitzer? Really, something from the 1930s? Is it even NYT's ability to return it? This is cherry picking of the most ridiculous kind. And the lab leakage theory is a classic case of misdirection, trying to pass the blame for Trump's appalling behavior during the pandemic onto everyone's favorite enemy, the Chinese. Even though it does nothing of the sort, as even dumb Trump knew that the disease was a very big deal, irrespective of where and how it arose. I somehow suspect you care little to understand the science of how and where the virus arose, unless it somehow exonerates the great leader. Since the Chinese are not being helpful (and I might add behaving in a similar way to Trump, if the shoe was on the other foot), this may never be proved or disproved.
Well this comment section is certainly revealing and pretty much validates everything I mention in passing in the post.
Shake off the dogma if you still want a representative democracy in America.
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