5 ms·

Okay? And 1.5 trillion was wiped off of the US equity market.

by mule1 5y ago

bla3 5y ago
Over the last month: VTSAX is down 9%, AMZN (hardest-hit Big 5) is down 16%, BTC is down 34%.
- SeanAnderson 5y ago
  Netflix is down 35%, not sure why Google would be seen as the hardest-hit FAANG.
  - carabiner 5y ago
    What's the catalyst for all this? Did it start with Netflix?
    - carlivar 5y ago
      Fed rate policy
    - akmarinov 5y ago
      Rates are going up, so stocks are being cashed out to be invested in better yielding bonds
      - podgaj 5y ago
        I want to push the cause further back. The problem is not that rates are going up, the problem is that rates were close to zero for so long,
      - iso1631 5y ago
        What rate are you getting on bonds today? What did you get last month?
    - tim333 5y ago
      Personally I sold all my crypto after reading Grantham's thing on Friday. https://news.ycombinator.com/item?id=30036797 https://news.ycombinator.com/item?id=30036797
  - bla3 5y ago
    My bad, didn't check Netflix. It's not "really" part of FANG in my head, I suppose. Edited my comment to say "Big 5" instead.
    - qazpot 5y ago
      > It's not "really" part of FANG in my head What do you thought the "N" stood for or you thought it was a placeholder so that acronym is not offensive.
      - bla3 5y ago
        Well sure, the N literally stands for netflix. But semantically, it's often used as "the big tech companies". At least that what it means in my head. And that's Apple, Microsoft, (gap), Google, Amazon, (gap), Telsa, Facebook, at least by market cap. Netflix isn't anywhere close.
      - iso1631 5y ago
        He made a GAAF, no need to read anything into it. Big Tech stocks have changed since FANG/FAANG was coined, the term doesn't necessarily relate to what was big and heading for explosive growth back then. "FAANG" is a noun that doesn't necessarily mean "Facebook Amazon Apple Netflix Google" any more
        aaron695 5y ago
        > He made a GAAF, no need to read anything into it. But did not say they were wrong and Netflix was actually the same as Bitcoin. They edited it to another group to prove their point. Which to be honest confirms the original implication, they are picking and choosing for politics. OP point is clear to me, everyone can trash talk Bitcoin from twitter rote, but no one is actually thinking. How does it relate to the US equity market? The top comments are currently very uninspiring.
        iso1631 5y ago
        Certainly is clear, big tech stocks are falling, not as much as crypto, and that probably has something to do with big tech stocks have fundamental value.
  - kmeisthax 5y ago
    The dirty secret of "FAANG" is that Netflix is not a FAANG company anymore despite literally being the N of the acronym. The idea behind FAANG was to create a catchy acronym for "high-growth, big-cap tech stock". At the time, maybe it made sense to stick Netflix in the acronym - but their business model was also radically different than it is now. It also wasn't really sustainable: Facebook, Apple, Amazon, and Google all own their "moats[0]", Netflix is just a middle-man that licenses content. The FAANG business model is all about creating your own sovereign territory on the Internet through capex and licensing. You spend a lot of money building out the best tech platform possible, and then license that out to as many people as possible so you can take 30%[1] off of the top of every transaction ever. This also implies being "cynically inclusive": trying to onboard anyone and everyone, regardless of their absolute economic value as a customer or the company's ability to support them. 30% of pennies adds up across billions of individual publishers. Netflix does not do this, never have, and never will. They only license premium video content, which means they're exclusively working with people who actually have negotiating leverage. Furthermore, the people selling that content are better-capitalized than Netflix and can afford to just DIY/self-host their own streaming service. Thus, their business model is less like YouTube, and more like Comcast. The amount of profit Netflix can make off of premium content is far lower than FAANG companies make off of the "30% of pennies" model. That's also why they moved into content production - owning the shows is more valuable than owning the screens they are showed on. Counting Netflix as a FAANG makes absolutely no sense and we should just pretend the N stands for, oh... I dunno. Does Alphabet own an "N" company yet? Is there any other platform owner out there that has an "n" somewhere in their name? [0] A tech company euphemism for a monopoly. Amazon likes to call it a "flywheel". Other companies use the phrase "stickiness". [1] A lot has been made of "the 30%", especially in the context of Epic v. Apple. In my opinion, the problem is not the fact that the cut is 30%, or even that it exists at all; it's just a convenient shorthand for market power gained from owning the platform.
    - jcranmer 5y ago
      > Counting Netflix as a FAANG makes absolutely no sense and we should just pretend the N stands for, oh... I dunno. I always mentally treat the 'N' as standing for Microsoft. The letter isn't right, but FAAMG isn't as easy to pronounce as FAANG...
- bpodgursky 5y ago
  Yeah but then look over the past year.
- neogodless 5y ago
  Yup - there are other factors that affect what investors think of tech stocks and crypto, but they are also on the riskier end of the spectrum, so when the general market sentiment swings, they swing too, and to a greater degree.
fullstop 5y ago
I looked at my 401k and it wasn't pretty.
- ajross 5y ago
  Are you making leveraged trades in a retirement account? It's off 9%. If someone told you you'd have to make do with only 91% of your planned income, you'd be OK. This is what markets do.
  - fullstop 5y ago
    I won't touch leverage with a 10 foot pole. With that being said, 9% is a lot depending on how much you have in the account.
    - iso1631 5y ago
      It's annoying, but it doesn't matter too much unless you're retiring soon. I suspect it will drop another 20% though, back to mid 2020 levels. Fed will start to intervene if it goes beyond that, too many votes. Its like house prices in the UK, the government won't allow them to drop.
      - fullstop 5y ago
        I am paying my daughter's college tuition from a 529 plan, so this affects me even though I am not retiring soon.
        ajross 5y ago
        Tough love: if you are currently making needed payments out of an account invested primarily in volatile assets, you have invested it incorrectly. More likely you left the 529 money in stocks because it's a tax shelter, not because you were actually setting that money aside for tuition. It's the same point above: this is what markets do. Investment strategies are risk management strategies. You can't just dump money into whatever is going up right now and then complain when it goes down.
ajross 5y ago
The S&P 500 is down about 9% off its high from a month or two ago. BTC just crossed under half of it's peak. It's true that's not captured in the headline, but this is a newsworthy crypto crash. It's not the first or the worst, but it's worth covering.
- tchalla 5y ago
  It depends on the base rates. BTC has a 66% volatility while S&P 500 doesn't. One should expect such crashes with BTC.
- mule1 5y ago
  It's very standard for bitcoin and won't be going away for a while as the asset is still realizing its value across all global liquidity. It's scary and why the SEC dragging their feet on a spot ETF approval i.e. an investment vehicle that a non-crypto fanboy can use (yours truly) is criminal.
  - dpark 5y ago
    Yes, it’s truly criminal that the SEC hasn’t approved more ways for speculation in cryptocurrency. It’s not as if an Average Joe can just go out and buy cryptocurrency or something. Can you imagine what the market volatility would be if cryptocurrency proponents were allowed to convince naïve people to invest their money, too?
    - immibis 5y ago
      also, DeFi leverage is not censorable by the SEC
    - inter_netuser 5y ago
      a SEC approved spot ETF is needed for institutional access, not retail. Several countries have already approved such vehicles, and nobody imploded. Retail is already all the way in. Institutions have mandates that restrict them to trading venues, types of instruments, jurisdictions (some can only invest domestically, and so cannot use foreign ETFs), and so on and so on. There is a reason why MSTR was able to raise mountains of debt to buy Bitcoin. It's all institutional money.
dragontamer 5y ago
US equity doesn't pretend to be a low risk investment vehicle resistant to inflation worries.
- 3np 5y ago
  There is no cryptocurrency in the top 10 pretending to be low-risk. There are probably way more financial advisors claiming that US equity is low-risk than there are people claiming the same for any cryptocurrency.
- mule1 5y ago
  Except it does
  - simonh 5y ago
    It historically has grown reliably overall at the market level, but individual equities are not that at all. BTC specifically was supposed to be that, and it isn't.
  - endisneigh 5y ago
    How?
    - mule1 5y ago
      It's common financial advice if you invest in the US equity market index you will get a 7% return a year
      - endisneigh 5y ago
        Over long periods, on average, historically - no one is saying you will always get that in any given year.
        mule1 5y ago
        Same with crypto. We have 10 years of data so far.
endisneigh 5y ago
Is Bitcoin a currency or an equity? I forget.
- mule1 5y ago
  It's a commodity
  - obese44 5y ago
    'commodity' okay. Show me one legitimate use case for btc without converting it into a real currency
tootie 5y ago
The US equity market is behaving predictably. Assets were overvalued per their fundamentals and Fed actions are being taken to cool them off. A correction was widely predicted as is the eventual recovery. Crypto is meant to be immune to these effects yet it had an even more dramatic reaction than traditional equities. And while it's recovery seems likely there's still no fundamentals on which you can hang your hat and say what will drive it. It could keep dropping, it could stay flat, it could hit $100k and there's nothing you can point to as evidence it will do any of those.

Okay? And 1.5 trillion was wiped off of the US equity market.

by mule1 5y ago

Okay? And 1.5 trillion was wiped off of the US equity market.

bla3 5y ago

Over the last month: VTSAX is down 9%, AMZN (hardest-hit Big 5) is down 16%, BTC is down 34%.

SeanAnderson 5y ago
Netflix is down 35%, not sure why Google would be seen as the hardest-hit FAANG.
- carabiner 5y ago
  What's the catalyst for all this? Did it start with Netflix?
  - carlivar 5y ago
    Fed rate policy
  - akmarinov 5y ago
    Rates are going up, so stocks are being cashed out to be invested in better yielding bonds
    - podgaj 5y ago
      I want to push the cause further back. The problem is not that rates are going up, the problem is that rates were close to zero for so long,
    - iso1631 5y ago
      What rate are you getting on bonds today? What did you get last month?
  - tim333 5y ago
    Personally I sold all my crypto after reading Grantham's thing on Friday. https://news.ycombinator.com/item?id=30036797 https://news.ycombinator.com/item?id=30036797
- bla3 5y ago
  My bad, didn't check Netflix. It's not "really" part of FANG in my head, I suppose. Edited my comment to say "Big 5" instead.
  - qazpot 5y ago
    > It's not "really" part of FANG in my head What do you thought the "N" stood for or you thought it was a placeholder so that acronym is not offensive.
    - bla3 5y ago
      Well sure, the N literally stands for netflix. But semantically, it's often used as "the big tech companies". At least that what it means in my head. And that's Apple, Microsoft, (gap), Google, Amazon, (gap), Telsa, Facebook, at least by market cap. Netflix isn't anywhere close.
    - iso1631 5y ago
      He made a GAAF, no need to read anything into it. Big Tech stocks have changed since FANG/FAANG was coined, the term doesn't necessarily relate to what was big and heading for explosive growth back then. "FAANG" is a noun that doesn't necessarily mean "Facebook Amazon Apple Netflix Google" any more
      - aaron695 5y ago
        > He made a GAAF, no need to read anything into it. But did not say they were wrong and Netflix was actually the same as Bitcoin. They edited it to another group to prove their point. Which to be honest confirms the original implication, they are picking and choosing for politics. OP point is clear to me, everyone can trash talk Bitcoin from twitter rote, but no one is actually thinking. How does it relate to the US equity market? The top comments are currently very uninspiring.
        iso1631 5y ago
        Certainly is clear, big tech stocks are falling, not as much as crypto, and that probably has something to do with big tech stocks have fundamental value.
- kmeisthax 5y ago
  The dirty secret of "FAANG" is that Netflix is not a FAANG company anymore despite literally being the N of the acronym. The idea behind FAANG was to create a catchy acronym for "high-growth, big-cap tech stock". At the time, maybe it made sense to stick Netflix in the acronym - but their business model was also radically different than it is now. It also wasn't really sustainable: Facebook, Apple, Amazon, and Google all own their "moats[0]", Netflix is just a middle-man that licenses content. The FAANG business model is all about creating your own sovereign territory on the Internet through capex and licensing. You spend a lot of money building out the best tech platform possible, and then license that out to as many people as possible so you can take 30%[1] off of the top of every transaction ever. This also implies being "cynically inclusive": trying to onboard anyone and everyone, regardless of their absolute economic value as a customer or the company's ability to support them. 30% of pennies adds up across billions of individual publishers. Netflix does not do this, never have, and never will. They only license premium video content, which means they're exclusively working with people who actually have negotiating leverage. Furthermore, the people selling that content are better-capitalized than Netflix and can afford to just DIY/self-host their own streaming service. Thus, their business model is less like YouTube, and more like Comcast. The amount of profit Netflix can make off of premium content is far lower than FAANG companies make off of the "30% of pennies" model. That's also why they moved into content production - owning the shows is more valuable than owning the screens they are showed on. Counting Netflix as a FAANG makes absolutely no sense and we should just pretend the N stands for, oh... I dunno. Does Alphabet own an "N" company yet? Is there any other platform owner out there that has an "n" somewhere in their name? [0] A tech company euphemism for a monopoly. Amazon likes to call it a "flywheel". Other companies use the phrase "stickiness". [1] A lot has been made of "the 30%", especially in the context of Epic v. Apple. In my opinion, the problem is not the fact that the cut is 30%, or even that it exists at all; it's just a convenient shorthand for market power gained from owning the platform.
  - jcranmer 5y ago
    > Counting Netflix as a FAANG makes absolutely no sense and we should just pretend the N stands for, oh... I dunno. I always mentally treat the 'N' as standing for Microsoft. The letter isn't right, but FAAMG isn't as easy to pronounce as FAANG...
bpodgursky 5y ago
Yeah but then look over the past year.
neogodless 5y ago
Yup - there are other factors that affect what investors think of tech stocks and crypto, but they are also on the riskier end of the spectrum, so when the general market sentiment swings, they swing too, and to a greater degree.

fullstop 5y ago

I looked at my 401k and it wasn't pretty.

ajross 5y ago
Are you making leveraged trades in a retirement account? It's off 9%. If someone told you you'd have to make do with only 91% of your planned income, you'd be OK. This is what markets do.
- fullstop 5y ago
  I won't touch leverage with a 10 foot pole. With that being said, 9% is a lot depending on how much you have in the account.
  - iso1631 5y ago
    It's annoying, but it doesn't matter too much unless you're retiring soon. I suspect it will drop another 20% though, back to mid 2020 levels. Fed will start to intervene if it goes beyond that, too many votes. Its like house prices in the UK, the government won't allow them to drop.
    - fullstop 5y ago
      I am paying my daughter's college tuition from a 529 plan, so this affects me even though I am not retiring soon.
      - ajross 5y ago
        Tough love: if you are currently making needed payments out of an account invested primarily in volatile assets, you have invested it incorrectly. More likely you left the 529 money in stocks because it's a tax shelter, not because you were actually setting that money aside for tuition. It's the same point above: this is what markets do. Investment strategies are risk management strategies. You can't just dump money into whatever is going up right now and then complain when it goes down.

ajross 5y ago

The S&P 500 is down about 9% off its high from a month or two ago. BTC just crossed under half of it's peak. It's true that's not captured in the headline, but this is a newsworthy crypto crash. It's not the first or the worst, but it's worth covering.

tchalla 5y ago
It depends on the base rates. BTC has a 66% volatility while S&P 500 doesn't. One should expect such crashes with BTC.
mule1 5y ago
It's very standard for bitcoin and won't be going away for a while as the asset is still realizing its value across all global liquidity. It's scary and why the SEC dragging their feet on a spot ETF approval i.e. an investment vehicle that a non-crypto fanboy can use (yours truly) is criminal.
- dpark 5y ago
  Yes, it’s truly criminal that the SEC hasn’t approved more ways for speculation in cryptocurrency. It’s not as if an Average Joe can just go out and buy cryptocurrency or something. Can you imagine what the market volatility would be if cryptocurrency proponents were allowed to convince naïve people to invest their money, too?
  - immibis 5y ago
    also, DeFi leverage is not censorable by the SEC
  - inter_netuser 5y ago
    a SEC approved spot ETF is needed for institutional access, not retail. Several countries have already approved such vehicles, and nobody imploded. Retail is already all the way in. Institutions have mandates that restrict them to trading venues, types of instruments, jurisdictions (some can only invest domestically, and so cannot use foreign ETFs), and so on and so on. There is a reason why MSTR was able to raise mountains of debt to buy Bitcoin. It's all institutional money.

dragontamer 5y ago

US equity doesn't pretend to be a low risk investment vehicle resistant to inflation worries.

3np 5y ago
There is no cryptocurrency in the top 10 pretending to be low-risk. There are probably way more financial advisors claiming that US equity is low-risk than there are people claiming the same for any cryptocurrency.
mule1 5y ago
Except it does
- simonh 5y ago
  It historically has grown reliably overall at the market level, but individual equities are not that at all. BTC specifically was supposed to be that, and it isn't.
- endisneigh 5y ago
  How?
  - mule1 5y ago
    It's common financial advice if you invest in the US equity market index you will get a 7% return a year
    - endisneigh 5y ago
      Over long periods, on average, historically - no one is saying you will always get that in any given year.
      - mule1 5y ago
        Same with crypto. We have 10 years of data so far.

endisneigh 5y ago

Is Bitcoin a currency or an equity? I forget.

mule1 5y ago
It's a commodity
- obese44 5y ago
  'commodity' okay. Show me one legitimate use case for btc without converting it into a real currency

tootie 5y ago

The US equity market is behaving predictably. Assets were overvalued per their fundamentals and Fed actions are being taken to cool them off. A correction was widely predicted as is the eventual recovery. Crypto is meant to be immune to these effects yet it had an even more dramatic reaction than traditional equities. And while it's recovery seems likely there's still no fundamentals on which you can hang your hat and say what will drive it. It could keep dropping, it could stay flat, it could hit $100k and there's nothing you can point to as evidence it will do any of those.