Comments on: Have the Rules Changed? http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/ personal finance tips, tricks, and commentary Sun, 22 Nov 2009 03:39:46 -0500 http://wordpress.org/?v=abc hourly 1 By: Dawn/FFL http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129732 Dawn/FFL Mon, 02 Mar 2009 20:56:06 +0000 http://www.fivecentnickel.com/?p=3128#comment-129732 I believe it is best to use history as a guide, but not a rule book. I believe it is best to use history as a guide, but not a rule book.

]]> By: Jim http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129620 Jim Thu, 26 Feb 2009 00:13:03 +0000 http://www.fivecentnickel.com/?p=3128#comment-129620 "Countries like India produce the equivalent of MILLIONS of MIT graduates in fields of science, engineering and high tech." No they don't. USA graduates more engineers annually than India. On average the quality of education in India is not as high as US colleges. China graduates more engineers but again the quality isn't all MIT level. In both cases of India and China what they count as engineering / science graduate is vague and often includes 2-3 year college level which is not the same as bachelors. Don't get me wrong. There are certainly many great engineers and scientists in countries like India and China But there simply aren't millions of MIT quality engineers & scientsts. Jim “Countries like India produce the equivalent of MILLIONS of MIT graduates in fields of science, engineering and high tech.”

No they don’t.

USA graduates more engineers annually than India.
On average the quality of education in India is not as high as US colleges.

China graduates more engineers but again the quality isn’t all MIT level. In both cases of India and China what they count as engineering / science graduate is vague and often includes 2-3 year college level which is not the same as bachelors.

Don’t get me wrong. There are certainly many great engineers and scientists in countries like India and China
But there simply aren’t millions of MIT quality engineers & scientsts.

Jim

]]> By: Trav http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129617 Trav Wed, 25 Feb 2009 21:45:34 +0000 http://www.fivecentnickel.com/?p=3128#comment-129617 The hypothesis is "this time it's different from times in the past." These comments that "in the past, it hasn't been different" do nothing to weaken the hypothesis. The whole question is whether this time *isn't* like those other times! We already know there's been a perfect record of events that looked different but weren't. Empiricism is the wrong way to answer this question. By the way, if you want to see something that qualifies as "different", check out stock index growth between 1980 and 2008, and compare it to all the time before that. Now who's different? The hypothesis is “this time it’s different from times in the past.”

These comments that “in the past, it hasn’t been different” do nothing to weaken the hypothesis.

The whole question is whether this time *isn’t* like those other times! We already know there’s been a perfect record of events that looked different but weren’t. Empiricism is the wrong way to answer this question.

By the way, if you want to see something that qualifies as “different”, check out stock index growth between 1980 and 2008, and compare it to all the time before that. Now who’s different?

]]> By: Corporate Barbarian http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129602 Corporate Barbarian Wed, 25 Feb 2009 18:08:49 +0000 http://www.fivecentnickel.com/?p=3128#comment-129602 Unless we see a wholesale change in the way people do business and make money, I don't think the rules have changed. I think back to the time after 9/11, when everyone pulled together and helped each other. Attitudes changed for a short while, and people were actually polite to each other. But our normal patterns eventually returned. I see the same thing happening with the economy. There are too many people interested in turning this around for it not to happen. Unless we see a wholesale change in the way people do business and make money, I don’t think the rules have changed. I think back to the time after 9/11, when everyone pulled together and helped each other. Attitudes changed for a short while, and people were actually polite to each other. But our normal patterns eventually returned. I see the same thing happening with the economy. There are too many people interested in turning this around for it not to happen.

]]> By: David http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129597 David Wed, 25 Feb 2009 16:21:33 +0000 http://www.fivecentnickel.com/?p=3128#comment-129597 I don't think the rules have changed, and I don't think they will in our lifetime. If anything, the behavior of the past 10 years has been the exception to the rule, and things are finally returning to normal. People got careless - notice I said careless, not greedy - and it finally came back to bite people. We'll go through a correction, and then things will continue much as they were before. I don’t think the rules have changed, and I don’t think they will in our lifetime.

If anything, the behavior of the past 10 years has been the exception to the rule, and things are finally returning to normal.

People got careless – notice I said careless, not greedy – and it finally came back to bite people. We’ll go through a correction, and then things will continue much as they were before.

]]> By: Ray http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129585 Ray Wed, 25 Feb 2009 05:44:45 +0000 http://www.fivecentnickel.com/?p=3128#comment-129585 I am not sure what you mean by rules, I am assuming it means that this recession is different then the past. The cause might be different, the solution will be different, but at the end it will come out the same. Those who believe this will be different I encourage you to ask yourself: 1. Will I stop eating 2. Driving or taking transportation 3. Will I cut off my cell phone, cable and internet 4. will i stop going to the movies 5. I will stop my mortgage, loans and other credit cards The answer is most likely NO, NO, NO, NO and NO. We may cut down on things right now, but we will get back to "normal" live. Unless you say yes to those and are planning to go back in time, no the outcome of this recession will be the same as any other. I am not sure what you mean by rules, I am assuming it means that this recession is different then the past.

The cause might be different, the solution will be different, but at the end it will come out the same.
Those who believe this will be different I encourage you to ask yourself:

1. Will I stop eating
2. Driving or taking transportation
3. Will I cut off my cell phone, cable and internet
4. will i stop going to the movies
5. I will stop my mortgage, loans and other credit cards

The answer is most likely NO, NO, NO, NO and NO. We may cut down on things right now, but we will get back to “normal” live.

Unless you say yes to those and are planning to go back in time, no the outcome of this recession will be the same as any other.

]]> By: ObliviousInvestor http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129581 ObliviousInvestor Wed, 25 Feb 2009 03:47:57 +0000 http://www.fivecentnickel.com/?p=3128#comment-129581 Well I guess that depends on what precisely we mean by "the rules." Assuming we're referring to the most basic of financial principles like: 1. Spend less than you earn 2. Buy and hold profitable companies ...then I don't see any reason why they wouldn't still be true. :) Well I guess that depends on what precisely we mean by “the rules.” Assuming we’re referring to the most basic of financial principles like:

1. Spend less than you earn
2. Buy and hold profitable companies

…then I don’t see any reason why they wouldn’t still be true. :)

]]> By: the weakonomist http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129579 the weakonomist Wed, 25 Feb 2009 03:26:33 +0000 http://www.fivecentnickel.com/?p=3128#comment-129579 Every 10 years we have some kind of recession and this question is asked. The answer has been, and will always remain, NO. Boomer said it best above. Every 10 years we have some kind of recession and this question is asked. The answer has been, and will always remain, NO.

Boomer said it best above.

]]> By: Sam http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129578 Sam Wed, 25 Feb 2009 02:40:21 +0000 http://www.fivecentnickel.com/?p=3128#comment-129578 The rules haven't changed but there has been a fundamental shift in the players. America will soon be burdened with 79 million boomers retiring and not producing a single thing. Countries like India produce the equivalent of MILLIONS of MIT graduates in fields of science, engineering and high tech. the markets will continue to function and wealth will continue to be made but it will be done in places like Asia and the Middle East not the U.S. if things don't seriously change. The rules haven’t changed but there has been a fundamental shift in the players.

America will soon be burdened with 79 million boomers retiring and not producing a single thing. Countries like India produce the equivalent of MILLIONS of MIT graduates in fields of science, engineering and high tech.

the markets will continue to function and wealth will continue to be made but it will be done in places like Asia and the Middle East not the U.S. if things don’t seriously change.

]]> By: Boomer http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129577 Boomer Wed, 25 Feb 2009 02:34:10 +0000 http://www.fivecentnickel.com/?p=3128#comment-129577 An economic recession (or boom for that matter) has its roots in collective human behaviors. And our collective memories are rather short. Accordingly, we create and live through cycles of prosperity and contraction. Always have, always will. An economic recession (or boom for that matter) has its roots in collective human behaviors.

And our collective memories are rather short. Accordingly, we create and live through cycles of prosperity and contraction. Always have, always will.

]]> By: Howell http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129574 Howell Wed, 25 Feb 2009 01:26:19 +0000 http://www.fivecentnickel.com/?p=3128#comment-129574 Whenever you hear people say "this time it's different," the trend (whatever it is) is about to end. In the dot-com boom, people said, "this time it's different," that stock prices no longer correlated with earnings. We know what happened next. In the housing bubble, people said, "this time it's different," that house prices will never fall. Now again we are hearing, "this time it's different." My first rule of investing is, it's never different. Whenever you hear people say “this time it’s different,” the trend (whatever it is) is about to end. In the dot-com boom, people said, “this time it’s different,” that stock prices no longer correlated with earnings. We know what happened next. In the housing bubble, people said, “this time it’s different,” that house prices will never fall. Now again we are hearing, “this time it’s different.” My first rule of investing is, it’s never different.

]]> By: Jim http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129570 Jim Tue, 24 Feb 2009 23:29:20 +0000 http://www.fivecentnickel.com/?p=3128#comment-129570 I don't think the rules have changed and history is still as good an indicator as it ever was. History always has ups and downs. This recession will get averaged in with all the others in the past 70 years but the overall picture of history won't change a huge amount. A lot of people thought the rules included buying homes with 0% down, they thought homes never dropped in value, they thought stock always gave 12% annual returns, they thought the stock market wouldn't drop 40%, they thought that having 100% of their retirement funds in stocks at age 60 was safe. That way of doing things was never a good idea and still isn't. Jim I don’t think the rules have changed and history is still as good an indicator as it ever was. History always has ups and downs. This recession will get averaged in with all the others in the past 70 years but the overall picture of history won’t change a huge amount.

A lot of people thought the rules included buying homes with 0% down, they thought homes never dropped in value, they thought stock always gave 12% annual returns, they thought the stock market wouldn’t drop 40%, they thought that having 100% of their retirement funds in stocks at age 60 was safe. That way of doing things was never a good idea and still isn’t.

Jim

]]> By: Josh http://www.fivecentnickel.com/2009/02/24/have-the-rules-changed/comment-page-1/#comment-129569 Josh Tue, 24 Feb 2009 23:01:20 +0000 http://www.fivecentnickel.com/?p=3128#comment-129569 I think our global economic system is too complicated for the rules to suddenly change. When Warren Buffett says he still adheres to investing principles he read in a 50-year-old book, the rules can't have changed much at all. I think our global economic system is too complicated for the rules to suddenly change. When Warren Buffett says he still adheres to investing principles he read in a 50-year-old book, the rules can’t have changed much at all.

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