Study their behaviors. Observe their territorial boundaries. Leave their habitat as you found it. Report any signs of intelligence.

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Monday, January 03, 2022

My Million Dollar Pandemic Mistake

I moved my 401Ks from equities to bonds on 2020-03-09, the week before the market bottom. For various reasons, I did not move back into equities until May 2021. I finally admitted to myself that I shouldn't try to avoid a market peak if I obviously couldn't avoid a market trough.

But my fundamental mistake wasn't merely that I tried to time (i.e. outsmart) the market. My real mistake was rationalizing the pandemic as a one-time excuse to end my 25-year streak of following Less Antman's investment strategy. Less explains it better than I could, below. (And no, I can't claim that his "check the stores" test justifies my mistake. I work in e-commerce, and we were never closed.)

(1) The wealth of a society is in the goods and services produced, and not in the monetary system. Check the stores: they're still open, providing lots of goods and services, and owning shares of the world's most profitable businesses makes your wealth as safe as the continued provision of those goods and services (if they disappear, money is useless).

(2) SOMEBODY has to own stocks at all times: the so-called "flight to quality" actually represents some people panicking out of the true source of wealth and handing ownership of these sources at fire sale prices to other people in exchange for green pieces of paper with pictures of presidents on them that aren't guaranteed to be redeemable for anything.  Someone once described a bear market as "that time period during which stocks are returned to their rightful owners."

(3) Diversify, diversify, diversify.  Own lots of businesses in lots of industries in lots of countries.

(4) The much higher rewards of equities over the long term result primarily from the uncertainty of returns over the short term.  Thank the volatility: it is your best friend in the end. Here is why:

Stockholders are owners of businesses, and owners get paid last, after employees, contractors, suppliers, and creditors. So changes in available revenue affect owners first, and that is the source of a great deal of uncertainty and occasional outright panic. Point granted: stocks are much more volatile than bonds and cash, and employees have a much more predictable flow of wages than their bosses do of dividends and capital gains. Yet since owners are paid last, in the long run they can be expected to be paid most — not always and certainly not in all companies, but for someone who owns a globally diversified portfolio of the world’s productive businesses, it’s a pretty good guess. My purpose in life is to tell my clients this as often as necessary.

So might I suggest that you remind yourself during scary times, why you’re invested in stocks? You’re providing the service of accepting the short-term uncertainty that others want to avoid. You’re the rock, the stable source of capital for businesses, without which market economies cannot function. Be a rock and react like a rock to the non-news that human nature goes through periodic bouts of extreme fear.

Saturday, January 01, 2022

My 2021 Predictions

I had a good year for predictions. The only thing I got arguably wrong was to predict the jury would convict Rittenhouse on the weapons charge, but technically the prediction wasn't tested as the judge dismissed that charge before the jury could consider it. (I still would bet that the jury would say they would have convicted on that charge if it reached them.)

In March and April I was thinking there was a reasonable chance that SARS-CoV-2 was a lab leak. But after tuning into the debate on Twitter, by August my estimate was 20% and was still dropping in November. In December I said "Expect the CCP to successfully promote indefinite uncertainty".

In May I promoted an article by The Drive about adversary drone tech, and I said "I bet China, not aliens" are behind any serious phenomena that the Navy is seeing.  Now, per Mick West, I would rate mistaken identity even more likely than adversary tech for even the most interesting incidents.

In May there was a flurry of enthusiasm over a claim of fungal spheres growing on Mars. I unsuccessfully offered Robin Hanson 10:1 odds that this claim would fizzle quickly. Nobody seems to be talking about it any more.

In June I created a question on Metaculus about whether it will be widely accepted by 2030 that alien technology has visited our solar system. The community of 59 forecasters agrees with my prediction of 1% chance. If Metaculus allowed lower bets, I would say 1/1000.

In the run-up to the Pentagon's disappointing late-June release of UFO info, I successfully predicted in May that there would by Jan 1 (today) be no public

  • CONTINUOUS multi-sensor track of hypersonic or hyper-G behavior
  • sensor data contradicting Mick West's explanations of the 3 Navy videos
  • imagery any harder to explain than the 3 Navy videos
Alas, I could not get any UFO enthusiasts to take bets on this.
In June I noted a shocking "big news" claim by anti-vaxxer Steve Kirsch about recent mortality data as the vaccines rolled out. An obscure Twitter user pointed out that the alleged anomaly was normal, and I successfully predicted his explanation would hold up.  Kirsch later deleted his "big news" tweet.
In November I successfully predicted the outcome of the Rittenhouse case and ensuing lack of riots. After the verdict I predicted that "2A advocates unfamiliar with Rittenhouse's internet footprint will be disappointed in him as a 2A poster child". The jury is still out on that one.
In November I endorsed the pre-omicron view that the ZeroCovid policies of China/Australia/NZ had clearly stopped making any sense. Omicron reinforces this view. It's going to be interesting if Omicron variolation combines with vaccination to finally turn Covid into "no worse than the flu".  Expect to hear "I told you so" from both China/NZ lockdown extremists as well as from anti-vax/anti-mandate extremists. I predict that everyone will end up believing they were right all along about this pandemic, which means that our species will be no better prepared for the next one.
After the SCOTUS abortion oral argument, I predicted on Dec 1 a 75% chance that the court will overturn Casey's viability line, and this will badly hurt the GOP.
In December I debunked a pro-vax claim about a 4-yr-old dying of Covid, but said that the rest of the list of 253 ["covidiot deaths"] at are unlikely to be debunked.
In December I published my earlier conclusions on the identities of Q. I say there is only a 10% chance that any substantial fraction of Q's output was done independently of the team I identified. All five of my specific predictions about Trump/Q in that post will continue to hold up.