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The market's huge selloff is a pretty clear indication tariffs are a net-negative. any gains in some small manufacturing are negated by losses elsewhere in the economy.
My personal opinion is that markets are highly overvalued, and a correction needed to be made at some point. The rise of index funds, ironically, have made markets less efficient. But, that is, like, my opinion man.
Tariffs do have a secondary negative effect on financial markets. As I said in my original post, reducing the trade deficit will decrease the amount of US dollars "abroad", which will reduce foreign investment in the US. This is a bad thing if you are a retiree spending your accumulated savings; it is a good thing if you are young and looking to buy a house or invest in stocks (as these investments become cheaper).
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They’re a net negative at present because most companies are tooled for a free-trade environment. They generally outsource the labor needed to produce goods by building factories overseas or importing goods or inputs. Depending on what happens, 5 years from now it might not be a problem at all.
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Unless the market expected the tariffs to be worse and is reacting negatively to the badly to the news that they're lower than expected. Of course, I don't really think that's what's going on.
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No, they are an indication tariffs are a net negative for currently existing publicly traded companies.
If every market participant believes there will be major creative destruction as not yet public companies replace existing public ones, stock prices will go down even while every participant believes this will be good for the world.
(Not a tariff defender, just think it's worth making explicit what market movements mean.)
To be even more precise, it means that the people who trade in the market believe it's a net negative for those companies. They may not prove to be correct.
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Only if you believe that markets are universally rational and efficient in practice not just theory.
They aren't. But they're the best prediction tool we have.
Stonk markets only predict themselves. Unlike prediction markets which resolve and pay out to an outcome, most publicly traded companies won't go bankrupt anytime soon and pay an arbitrarily decided pittance as dividend.
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Are they?
They really aren't. You could predict AI being a big deal much better by reading blogposts than looking at stock prices.
Easy to say with hindsight. What do you think looks good in the next 10 years?
Markets are pretty efficient. We as individuals are significantly less efficient.
Still AI, the market's still not pricing it in AGI
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Pretty sure. If you can find something better at predictions than the market is, you should be able to make tons of money (and incidentally make the market as efficient as your source).
Not always. Yudkowsky's example of "if the world will end in ten years, and you know this, this won't help you make money" holds water. Things shaped similarly to this also tend to be hard to make money from, due to difficulty collecting winnings and/or spending them; being a nuclear doomer might mean that I'm unusually well-equipped to survive a nuclear war, but I haven't figured out a way to actively profit from it.
There's also the famous (or perhaps infamous) saying, "the market can remain irrational longer than you can remain solvent". Frauds tend to go up and up and up before they come down; knowing they're fraudulent without knowing the exact timing of said fraud's discovery means you might not be able to hold out against the margin calls.
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No, all you really have to believe is that the markets are more rational than Donald Trump, which is not a hard sell.
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They are in the long run. Although bitcoin is doing it's best to disprove that too.
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