Related story - my first job out of school was in investment banking. My desk worked on some esoteric securitization products (basically bonds backed by aircraft and shipping container leases) where all issuance had basically disappeared when I started, which was right after the 2008-9 crisis. These products generally were in the A/BBB area, and generally had traded like high yield bonds before the crisis. When I first started, we struggled to find investors and were generally seeing 6-8% yields on some small deals. By the time I left three years later, yields were getting down to the 4% area, issuance sizes had tripled and new paper was routinely 3-4x oversubscribed. I have some friends who still work there and tell me not only have yields kept coming down, but lower quality leases are being thrown into securitization pools. I 100% agree on all the comments here saying the big story is lower rates driving people into riskier investments. When the next crisis hits, people will talk about how negative rates forced people to reach for junk companies and questionable securitization paper.
> lower quality leases are being thrown into securitization pools
Shocked, shocked, do you hear me!
Not to snark at this poster, but in general,
if we learn anything from experience in markets, we learn:
People want higher returns without higher risks, and
other people can profit from convincing buyers that the returns are higher, or the risks are lower.
Also, money is more nimble than legislation. While
Congress is trying to outlaw the most recently
exposed scam or malfeasance, people are inventing the
next several workarounds to existing or upcoming law.
> People want higher returns without higher risks, and other people can profit from convincing buyers that the returns are higher, or the risks are lower.
That does happen, but what may be even more common (and more important is a slightly different form:
People want high returns, and are willing to accept risks, but are required by law to invest in safe securities, and are happy to pay high fees for people who can find a way around this.
A huge driver of this isn't scams or outright fraud, but "regulatory arbitrage". Not saying it's fine, but if your mental model is "how can we protect unsophisticated mom and pop investors from these predators selling exotic asset backed securities", well, they're not the ones buying them. The bigger question is, how can we (or should we?) stop pension funds from knowingly seeking higher risk/higher return investments as part of their ongoing effort to try and reduce their massive unfunded liabilities.
Reimbursement for work is on a slow decline, and has been for a while (in radiology at least). Hardware vendors and conference talks are often centred around a theme of ‘doing more with less’.
This link is an example and discusses revenue declining but the development of new tools might help to get more value out of imaging.
https://www.alliancehealthcareservices-us.com/12-imaging-mar...
The average multiple on a healthcare services business is 10x and HCIT assets are trading on revenue multiples. It works exactly like this everywhere. Livongo, Health Catalyst and Phreesia just went public at multiples that didn’t exist 5 years ago
Yes, but... isn’t this basically a bunch or rich folks saying “I was forced to take risks with my money because treasury bonds barely pay anything!”
My gut response is that, yes, if you’re buying risk-free treasuries, why should you get a return above inflation at all? Rewards and risks should be commensurate.
According the Planet Money's Giant Pool of Money, which I've come to realize is a superb postmortem on the 2008 financial crisis, this is exactly what happened:
Adam Davidson: All right. Here's one of his speeches that really drove that army of investment managers crazy.
Alan Greenspan: The FOMC stands prepared to maintain a highly accommodative stance of policy for as long as needed to promote satisfactory economic performance.
Adam Davidson: You might not believe me, but that little statement, that is central banker's speak for, hey, global pool of money, screw you.
Alex Blumberg: Come on, that's not what he said.
Adam Davidson: It is. I speak central banker. Believe me, that's what he said. What he is technically saying is he's going to keep the fed funds rate-- that's when you hear, the fed interest rate-- at the absurdly low level of 1%.
And that sends a message to every investor in the world, you are not going to make any money at all on US Treasury bonds for a very long time. Go somewhere else. We can't help you.
To the question: why should you get a return above inflation at all?
I guess one way of looking at it is: do you want to treat low-risk returns for conservative investors as a sort of public utility guaranteed by the government? Or do you want to put it in the hands of private industry?
What I´ve never understood in all these arguments, is why do economists think that the laws of supply and demand supposedly (given that from this article it´s clear that they´re not), suspended for debt?
If for whatever reason (and having a moderately stable currency is the answer there) there is more demand for bonds than supply, then the price will fall. This has nothing to do with economic reality and everything to do with market pricing mechanisms. Whether it´s good in the long term for the government to increase its lending this way, is a completely separate question.
I can't possibly imagine where you have read/heard that any self respecting Economist thinks that yields (interests, cost of credit/capital) are somehow exempt from supply-and-demand.
If the US can sell treasuries at rates not much above inflation, then it is because they are not loaning enough -- is there really no bridges or other infrastructure that could benefit the economy if they are built?
Check out the price tags on most infrastructure projects these days. As badly needed as they are, the US government currently doesn’t have re ability to execute them for less than the mid-horizon returns, if that.
Much of the infrastructure we need is self-financing. Eg bike lanes, transit etc. increase tax base and keep money in the local economy, while increasing foot traffic and retail sales. There’s no reason curing the 20th century’s car hangover shouldn’t be profitable.
If this were true, they would be easier to get done. Borrowing money to finance is fine, but a lot of these projects have to borrow a vet long way in the future, and the longer the term of the loan, the more interest rates eat into the real return from the project.
Secondarily, many prospective borrowers of these projects are already in debt, and have cash flows which are not growing fast enough to borrow more.
why should a gov't project need to have any real returns? Social returns is enough. If the city is nicer to live in, if the businesses thrive because of increaed foot traffic, lower car accident rates, cleaner air etc.
The city has to pay the money back at some point. This either requires higher tax rates, reduced services, or a larger pool of money to tax. The first two are quite unpopular.
No good reason- but like I said, check out the price tag; a mile of subway development in the U.S. can cost billions (with a B!) of dollars. Additional foot traffic along that mile couldn't get you that much back.
I would say most of the solidly profitable infrastructure projects, in the US are gone, combined with pretty much all the state legislatures and Congress being taxation adverse.
We're running our governments like businesses and you're not going to find any nimble or disruptive startups in the mix.
And so we circle back around to, "All socialism is evil except the parts that benefit me."
Which isn't to say that I think the government should do what it do out of spite. Is there any chance of... I dunno, cutting off the public handout and then regulating the private vacuum-fillers sufficiently? Or does the implied drug analogy here reach its logical conclusion (on the black market)?
That "postmortem" explains nothing at all about how real estate factored in. I'd have to be in-the-know enough to understand that people overinvested in real estate partly because they could get loans easily from low interest rates. But even then, doesn't cover how financial markets were repackaging mortgages and hiding or miscalculating the risk.
If you listen to the episode, or even scan the transcript, you'll find that all of this covered. For a one hour show, it does an amazing job of putting everything together.
> “I was forced to take risks with my money because treasury bonds barely pay anything!”
... is the system working as intended, because the policy rationale behind issuing lots of government bonds is precisely to make investors seek higher risks.
When downturns (like 2008) happen, this is investors fleeing to safe, money-like assets and and so wonks recommend that governments flood the markets with bonds, printed money, whatever to make that unprofitable.
The problem is with trying to fix the economy with policy levers. You can force people towards riskier investments (especially if they can be disguised as safe ones). But investment that is actually productive on average requires conditions where people on the ground can actually build useful stuff at a profit.
But that's an anathema to macro-economists (who want to advise on how use those levers) and also to politicians (who want to be seen to be "doing something").
Every state, city, country has a lot of favored sectors and grant opportunities, it's then up to investors to come up with projects that actually turn a profit.
VC/startup investors do this by simply doing a semi-blind search, funding everything they think is at least minimally sound.
If investors are still unable to turn a profit they are not taking on enough risk. (They are not thinking big enough.) And that might be okay. There's no moral imperative to keep every investment fund alive, every investor happy. And the only difference between business as usual periods and now is that the numbers are now scary (negative yields!).
But the fundamentals haven't changed.
Negative yields just mean that too many investors are risk averse, too many people (pension funds, passive funds, low-risk funds, inflation tracking funds, basic savings accounts) just want to park money. And that's okay. Eventually one of the following will happen: the fund managers will take on more risk, the people behind the funds will use the money for something else (eg spend it), or the people behind the funds will pester Congress to spend more and finance it all from debt.
US Treasuries may be the closest thing to 'risk-free' that there is, but isn't 100% risk-free. If the investor does not hold the bond to maturity, then he/she is open to interest rate risk (the risk that rates have changed, and so has the bond's value).
Even if the investor plans to hold the bond to maturity, then the investor is agreeing to lock up that money until maturity. This carries the risk that the investor won't be able to take advantage of an investment opportunity before then. Or, if he decides to sell at that moment, he must accept interest rate risk.
The investor should be compensated for these risks, however small they might be, and that - in my opinion - is why treasuries should yield more than inflation.
I was right there with you until the last three words. Investors ought to be compensated, but there’s no particular reason that compensation should be greater than the inflation rate.
that's not what risk means. no investment considers early exit because of difficulty as a risk. even legislation call that "investor profile" or something meaningless or another.
By selling a bond before maturity, you're open to price fluctuations of the bond. It's not that the investor is exiting early, it's that by exiting early he is no long guaranteed the yield of the bond when he purchased it. Thurs, the yield is not "risk-free", and the risk is that the price moved in the market.
It's not just rich folks. Via pensions funds, this is also about a lot of teachers, social workers, government employees and normal folk.
Pensions were funded (or not) based on assumptions about yields. If actual yields are not hitting those assumptions (and they're not), it's not the rich that'll be eating cat food in their retirement.
(Of course, fixing the funding shortfall by making risky bets on exotic high-yield investments is uh...what's the word? Oh yeah, terrible! But let's not pretend this is strictly a problem for the 1%.)
Because the return on a bond is not just based on the expected risk, but also on the time value of money (generally we prefer consumption now rather than in the future).
The time value of money is the expected risk of inflation. For example, if a lender lends someone $100, then the interest rate is a combination of the risk of not being paid back, and the return that could have been had if the same $100 were invested elsewhere (with the same risk profile of the original investment).
> The time value of money is the expected risk of inflation.
I don't think that's the only source of time value of money.
For example, I'm fairly certain I can buy a car for the same price a year from now, but I am willing to pay a huge premium to have the car now so I don't have to ride the bus for two hours a day while I save up the cash to pay for it.
That is a preference for present consumption over future consumption that has nothing to do with inflation.
Consumption and investment are the same thing in a generalized model when comparing returns and figuring out how much interest to charge to keep up with inflation.
But those two possible uses of money have different profiles. You would have to price in how much it is worth to you to use the car vs the bus, subtract the amortization of the car - and together that's the target rate/yield that you should ask for your money plus risk of default.
Exactly, and the world is awash in goods. The only returns are in some real estate markets, where inflation is called appreciation and is underwritten by “greater fools.”
“Rich folks” include pension funds, insurance companies, and sovereign wealth funds.
The whole thing seems to me like central bankers confusing cause and effect and trying to squeeze a complex system in to linear regressions. Lots and lots of unpredicted consequences to artificially low interest rates, including effects that do the precise opposite of what was predicted.
Not necessarily. With these things there is usually a big belief aggregation going on (some central bankers think this, some that), and we end up with a silly compromise. See Japan, see all the idiotic austerity programs.
So it is very possible that the central bank is not doing enough.
The west's current monetary policy very much hurts retirees living on dwindling fixed incomes. There ought to be at least some reward associated with savings, even without taking a risk to the principal.
Returns need to be associated with value creation. As the world has become more wealthy simply having assets and lending them out stopped creating significant value, thus lowering returns.
My completely unsecured credit card only charges 10%, and that’s before inflation.
Why is it that when we see the unintended yet predictable and easily understood consequences of a policy, in this case monetary policy, all the blame goes to those whose decisions were influenced by that ill-advised policy in that predictable and easily understood way? This doesn't strike me as a good way to avoid bad policy in the future.
Owning negative yield bonds not only you don’t make a return above inflation, but you have to pay for the privilege of owning them.
Why do you think that it’s a good thing?
This is the market signaling that it no longer perceives any value in the maturity value of these bonds. They aren't being purchased for their maturity value; they're liquid assets, traded like any other in a market awash with ultra wealthy institutional investors between whom these securities flow like any other asset.
Isn't inflation simply another cost? As long as the value of these bonds (their low risk, as opposed to their maturity value) is greater than whatever cost you care to consider (inflation, negative interest, opportunity cost, etc.) they will be valued instruments. There is no "what should happen" or what is "supposed" to happen; those are fictions in the minds of spectators and until you're prepared to anger some powerful people and institutions they will remain fictions.
> My gut response is that, yes, if you’re buying risk-free treasuries, why should you get a return above inflation at all? Rewards and risks should be commensurate.
The parent has some sort of ad hoc economic theory ("gut response"), and I am asking them to expand on what the theory entails. "Supposed to happen" means it would be predicted by this theory of theirs.
This fundamental issue with the economy is driven by a couple of factors. Increases in inequality and wealth concentration means there is more money to loan, and an aging population means there are less young people to borrow the wealthy's money.
We have a couple of levers to increase the interest rate. We could reduce inequality to reduce the supply of loan-able funds, we could allow large amounts of immigration to drive up the demand for loan-able funds, or we could keep interest rates high enough that we have a permanently high unemployment.
However I do have a strong worry that natural interest rates are too low for our current inflation. This gives the fed very little room to deal with the next crises. They should probably be targeting an inflation rate closer to 3-4% so we don't run into zero lower bound problems.
Living in Japan, I feel like they've naturally developed the culture of changing the color of the sky. I mean to say they always find ways of getting the people to blow cash to keep money circulating. Most companies here have like 3x more staff helping me or standing around than in Canada. Consumerism and state marketing is big too.
I'm not any kind of economist, but to me this seems like asking whether the sky really ought to be blue. Reducing the impact of debt (and by extension interest rates) on the economy is every bit as simple as undertaking a massive transforming project to change the color of the sky.
Yes, anything that requires government action is very hard in practice. But rhetorically, we discount that when talking about whether some government action would be a good idea or not.
Who's "we"? I think it's completely reasonable to consider how practical something of this magnitude is. You're not passing a single law; you're talking about fundamentally changing the entire nature of the (US? world?) economy in ways that I find difficult to even comprehend. I'm not even sure any amount of government action would be sufficient to bring it about.
Sorry, I must have given the wrong impression. To be clearer, I was hinting at either more government spending, universal basic income, or "helicopter money," as alternatives to attempting to stimulate the economy by encouraging more loans. These have precedents and it's not particularly difficult for a government to be efficient at giving people money.
This is why you have to do it every year. Which is exactly what a progressive taxation system does (or would do if it was a little more progressive than current systems)
I imagine you would have to "do it" every week to have the claimed effect...
With online banking, etc perhaps once a day.
EDIT:
Actually, if the funds are transferred electronically it would take as long as an ACH transfer takes to get to the new account. The funds are tied up during that but then immediately available to the banking system again.
Value lives outside, but the money represented by the value lives on accounts, in databases.
Even cash is just something tracked by central banks as liability (negative account value - because when someone deposits cash they increase one account, and if the bank then deposits that electronic money at the central bank the total money supply must not change, hence cash is tracked separately).
Wouldn't it be better to have interest rates match the natural interest rate? People paying for loans can't afford the rate payment, so these payments should be lowered to reflect the ability to pay back the loan (including into negative territory). If you're the U.S. Government, you're essentially telling capital surplus holders, "You can keep you large hordes of money here, but it'll cost you 1% a year."
And if you want to take out a loan, it'll still be a risk, since you'll need to make the principle payments, but you'd get a tailwind on the interest paid to you.
I'd be happy to learn where I'm wrong if you have any insight.
Yeah it's always great to have the interest rates match the natural interest rate.
Btw the definition of the natural interest rate is "The natural rate of interest, sometimes called the neutral rate of interest[1], is the interest rate that supports the economy at full employment/maximum output while keeping inflation constant"
> When the next crisis hits, people will talk about how negative rates forced people to reach for junk companies and questionable securitization paper.
> negative rates forced people to reach for junk companies
Negative rates don’t force junky investment decisions. Inflation does.
Inflation is low. Investors choosing junk yielding 4% are not being forced to do so by negative yields (or, in America, low yields). They’re choosing to reach for yield.
Interesting, thanks. Can you expand on the link between government-issued bond interest rates going negative and the tendency for profits to decrease over time in a capitalist system?
Also, the ratio of theoretical to empirical content on that page is ridiculous given the topic is supposedly an empirical phenomenon requiring explanation. What is there is extremely weak as well. Is there better evidence this phenomenon exists?
I once saw a graph of oil production/consumption over the last 100-150 years. Interestingly the curve is a smooth exponential right up until the late 1960's and then it gets ugly jaggy linear.
Say what you will but I think that's really significant.
And it possibly still can. There is mentioned in that link of the theory being controversial due to automation, where there ends up being less workers and more production.
napkin math. Say we start with economy size A and a year later we have A+P. The profit rate is P/A. Whole economy-wise the P comes from people doing/producing something. Next year same people doing the same would produce the same P. Thus profit rate fell - it is now P/(A+P). As a result we can see that the profit rate can be increased by increasing output - ie. P(next year) > P(this year) due to productivity increase (thus automation) and/or labor force growth (population growth).
You speak as if there is something that can done about it.
There is no way for the government to push rates, especially on exotic collateralized products like you describe. The Fed can play around at the low end and set an overnight rate, but not much else. Historically, the Fed has tried and failed over and over to affect the long end. And it certainly doesn't have the stock to dump long bonds to drive yields up.
Right now, the yield curve is inverted showing how little they actually effect rates. Long run rates are set in the global market.
Unilaterally pushing up nominal interest rates is trivially achieved by rising inflation by devaluing currency by printing lots of it and spending it on pretty much anything. It would pretty much instantly hike up the nominal yields on pretty much everything USD-denominated to match the (now) higher inflation.
It doesn't mean that it's a good thing to do as it has all kinds of other effects, but in general the governments have the ability to do this should they choose to, it's just that they keep pinky-swearing that they won't do it, making legislation that makes it tricky to do without consensus (but they can repeal that if both parties agree that it's the way to go) etc.
They don't really have a mechanism, and rates are set in the global market - return on capital is mostly a global issue now and something the fed has no control over.
They can target the overnight rate and buy and sell short term funds because they are the majority player there, but even then the actual Fed Funds rate doesn't always equal the target they are trying to set (and not by a few points either).
On the long end they are more constrained. They can print a ton of money to cause inflation, but going the other way just isn't as easy. They aren't the major player there either. Long term treasuries compete with every other debt instrument out there government and private. Those rates are global for the most part
Just look at the late 90s when the Fed tried to push long term rates up and failed horribly. All they did is invert the curve. It is a repeating scenario.
This same conversation comes up about once a decade it seems.
They can, they just don't have a direct tool for doing it. Long term rates are just an aggregation of short term rates over a given time span. So they can adjust long term rates via promises and hints that they will keep short term rates low for a long time.
There is a ton of interesting monetary theory about how the Fed can do this and issues they run into.
long term rates are more than short term rates added together. while related, short term rates are much more driven by central bank reserve and regulatory policy, and long term rates much more driven bvy return and inflation expectations.
In a real dollar sense, the fed has zero ways to affect long term rates.
Sure there are other factors that affect long term rates. But if the Fed came out tomorrow and said "We promise to keep interest rates at 0 for the next 10 years" long term rates would drop considerably wouldn't you agree?
Not at all. Inflation expectations would soar. A few years ago and there talk was that keeping the overnight rate would lead to huge inflation issues. Now a strange narrative is appearing that nominal interest rates are simultaneously too and inflation going higher.
And there is no way they would be to keep that rate. They can say whatever they want, but that doesn't mean the overnight rate has to oblige them either. They only set a target, the actual rate is still determined in the bank to bank market and historically it does diverge, sometimes strongly.
I'm curious, why can't they manipulate it directly? It seems like if a central bank bought enough long-term bonds, supply would drop enough to raise the price?
The opposite. If they buy every long term bond that means that companies (and the Treasury too), can put them up for any price, let's say zero coupon payment, that's a zero yield bond.
No, to drive up rates would mean to restrict the buyers from buying (either via restricting the money supply - that means a combination of raising the overnight repo rate [FFR - Federal Funds Rate], raising reserve requirements, decreasing interest payment on reserves).
But such a move means slowing down regular lending, VISA/MasterCard and the banks would have to increase consumer facing prices of credit, etc. It would slow down wage growth.
And we are not seeing wage growth, we're not seeing inflation.
To stimulate spending/consumption all the Fed can do is absorb more and more risk (buy bonds/assets - quantitative easing, keepr rates low, encourage lending, encourage the starting of new projects).
Why people are not starting new projects?
Well, for example look at NIMBYs, look at how Congress doesn't want to force mandate better EPA regulations, look at how municipal fiber plans were stopped thanks to Comcast lobbying, etc.
Basically a lot of money goes into "rent" instead of innovation. (Asset bubbles.)
> Right now, the yield curve is inverted showing how little they actually effect rates. Long run rates are set in the global market.
The fed causes the inversions every time by pushing up the short term rates until they are near or above long term... It is ridiculously obvious if you just look at a plot of this.
I think its driving people into riskier investments that still look like a traditional cash instrument from a bank - instead of looking at say equity / income funds.
The whole world economy makes no sense. The finance and tech industries in particular are a mess; there seems to be no correlation between value creation and profit.
Whenever I hear successful entrepreneurs bash cryptocurrencies, I wonder how they can simultaneously hold the following 3 thoughts inside their heads:
- My company became successful in the last 10 years because it added value to the economy.
- Cryptocurrencies became successful in the last 10 years in spite of subtracting value from the economy; they are the exception to an otherwise efficient market.
- Capitalism works.
If cryptocurrencies were an exception to an otherwise highly efficient and meritocratic economy, could we say the same about bonds which have negative yields?
Maybe the following thoughts are more logically consistent:
- My company became successful in the last 10 years because I exploited a vulnerability in the economy.
- Cryptocurrencies became successful in the last 10 years because they exploited a vulnerability in the economy.
- Capitalism doesn't work because it's vulnerable to hacks.
Also, to explain the current bonds situation:
- Bonds can have positive value in spite of negative yields because some investors believe that the vulnerabilities in the economy can be patched (e.g. it's possible to increase interest rates) and that bonds will eventually return to positive yields.
Cryptocurrencies add value to the economy. At the very least, it is a way for people to hold value into the future and plays a similar role to gold. Other cryptocurrencies can be used to buy/sell stuff.
> In September 2018, the Company completed its acquisition of all issued and outstanding shares of Astro Technology Inc. (“Astro”), a pre-revenue start-up company that provides artificial-intelligence (AI) enhanced communications solutions, for a total purchase price of $43.3 million in cash.
Anyone care to explain how a pre-revenue company can be valued at $43mm? I know the argument can be made Google paid much more for Deepmind, but Google's market cap is 51x more than Slack's on the secondary market right now.
Long time swimmer and runner here - the biggest difference between the two IMO is the focus on lung capacity for swimming.
A common swimming training set most competitive swimmers will be familiar with are "lung busters". You do a 200y free that's 50y breathing every 3 strokes, 50 every 5, 50 every 7, 25 every 9 and then a 25y butterfly without breathing. I had a coach who would have us do 6 of these on 2:45 (meaning about 15-30s of rest for strong distance swimmers). Everyone would be audibly gasping for air by the end of these.
In races, how often you breathe is a critical part of race strategy. In a 50y/m free you generally shouldn't breathe at all; in a 500+ race, there are big debates about whether to breathe every 2 or 3 strokes. Additionally, how much to kick is a key part of strategy since kicking's contribution to speed is not great compared to how much oxygen it depletes.
I really don't think running compares in terms of how stressful the sport is on the lungs. That said, running 400m sprints with small rest intervals is extremely hard on every part of the body and I found the muscle stress from running far greater than from swimming.
I swam competitively for 15 years, including 4 years of D1 swimming, but I come from a family of rowers.
The effect of limited breathing in swimming forced the body to adapt. One Thanksgiving, my father (a former international-level rower), my brother (a currently international-level rower), and I found our way into a pack of balloons. We wanted to see who could inflate the largest balloon off of a single breath. Once we had breathed our hardest, got out the measuring tape, and argued about the best way to measure it at length, we found that I had won.
My brother and my dad are both around 8 inches taller and 50 pounds more than myself — much bigger people. But they didn’t have to hold their breath for hours every day :)
Obviously this is a poor man’s proxy to a VO2MAX assessment, which I’m sure they would win. But lung volume is certainly one of a swimmer’s greatest assets.
Lung capacity can only be improved a little bit with training (we're talking 5-10% range) and it's a poor indicator of your fitness level. Either you have a genetically larger lung capacity than your brother and dad, or you are simply better at filling your lungs to their full capacity.
VO2MAX has nothing to do with lung capacity (if you're healthy)
> Lung capacity can only be improved a little bit with training (we're talking 5-10% range)
Do you have a source for this, because it doesn't sound right to me. For one, the packing technique has been shown to add an extra 10-15%. So right off the bat, there's a training technique that can increase lung capacity by more than your figure. Also, my anecdote matches GPs...since I started training freediving, exercising my diaphragm on a regular basis and practicing three-zone breathing with the corresponding stretches, the amount I can exhale into a balloon has increased significantly.
(you can find more by searching PubMed).
Granted I have mostly done research on cyclists. What we tend to see is an increase in the strength of respiratory musculature which leads to an increase in functional lung capacity and this capacity would not vary much between individuals (even between pro cyclists and high-level amateurs). More important than lung capacity for performance is your diffusing capacity (how fast you can move oxygen from lungs to your red blood cells). In sports other than swimming, it's always possible to breathe faster, which benefits from a strong respiratory musculature.
when it comes to freedivers, it's slightly different. They are forcefully stretching their lungs (which doesn't happen with normal aerobic training or breath holding to the same extent)
Unless I’m reading it wrong, it looks like the paragraph above the one that lists 800ml is the more interesting. The 2004 reading was 2.4L above expected, or 192% of expected.
Also, the freediving exercises are not just about stretching the lungs, they’re also about opening up the rib cage, since it constrains lung volume, and exercising the diaphragm, since the further down it can flex, the more air is pulled into the lungs. Freedivers also train the ability to stretch the diaphragm up since lung volume decreases significantly under pressure.
Anyway, it’s an interesting topic. And since you mentioned cycling, there’s one other area where apnea training intersects with the world of professional cyclists. You mentioned that the speed at which you can perform gas exchange in the lungs was the most important, and to a certain extent that’s true, but also important is the blood’s ability to hold oxygen and deliver it to organs/muscles. And, as I understand it, increasing the blood’s ability to hold oxygen is the primary effect of the banned substance EPO that cyclists frequently use to cheat. Now what’s interesting is that apnea training has a similar effect to EPO as well as increasing the body’s ability to reduce haemoglobin oxygen affinity. What I gather that to mean is that repeated exposure to hypoxic conditions triggers adaptations that allow freedivers to store more oxygen in the blood and, once reserves are running low, deliver more of that oxygen to the organs where it’s needed. The original study where I read this has since gone paywalled, so I’m not sure I’ve still got the correct link to give you, but one of the conclusions was that the effects of apnea training could likely be beneficial to the performance of endurance athletes like distance runners and cyclists.
Also, my understanding is that the body position in rowing -- squat-like at the catch, with arms reaching far forward -- impacts breathing to the point that most (all?) rowers breathe twice per stroke at higher stroke rates, such as race pace. Your dad and brother might be optimized for faster, relatively shallower breaths.
I rowed crew in college and swam on a swim team as a kid, IMO the big difference is that in swimming strategically holding your breath allows you to swim faster. With rowing there are brief parts of the stroke when breathing is physically impossible(right at the catch, as you mentioned) and you have to inhale/exhale around that. Outside of that rowers aren't deliberately holding their breath while rowing, ever.
I'm an advocate of breathing every 2 strokes. Watching phelps 200 free in beijing was the time I switched from 3 to 2, and i think many swimmers followed suit, even biedderman who still currently holds the world record.
Sun Yang however mixes it up in the 800-1500, he'll do 2 for the majority of the swim, but there are times where he'll put in 3.
I've been doing every 2/4 for so long that it feels awkward trying to breathe to my strong side. I feel that muscle memory is actually a key component in why swimmers who generally breathe every 2 are faster. It's kind of like that bruce lee quote where you practice 1 thing 1000x is a lot more effective than practicing 2 things 500x each
My experience was that 2 stroke breathing was good if you can put power into the full motion (like Phelps and others) but in high school I was pretty lanky and found 3 to be more balanced and streamlined— 200 has always been the border between short and long distance too which makes it the most gray area imo
I did an olympic triathlon a few years back, and while I consider myself a decent runner and a strong cyclist, the swimming absolutely kicked my ass to the point that I'm not sure I'll ever do another triathlon to avoid it. Seems to take another level of strength to be great at it.
Technique buys you so much more speed and/or efficiency in swimming compared to cycling or running. Those that lack good technique will thrash themselves into a tired mess in order to keep up with the others on the swim.
Some swim coaching, and subsequent drills in your usual training, would soon get you on your way to enjoying the swim part of a triathlon and stop it being horrendous.
The cheap and less effective method is simply watching/studying this video every time before you go to the pool: https://www.youtube.com/watch?v=s3HhNlysFDs and then watching it afterwards and thinking about your own stroke.
One thing I noticed in the video you included: when the shot is following him from behind I noticed that Van Hazel's head is completely stationary, no lateral or up-down movement. Amazing!
Thats been a big thing for me to learn - if you want to be able to breath without taking long pauses, your whole torso needs to move, and it creates a very natural motion to pop your head left or right to breathe a pocket of air
Another bonus to rolling -- it is initiated with your core, so it uses large powerful muscles. Once the roll is initiated you can feed your kick and your pull with that momentum. You end up using more powerful muscles to feed your stroke, so you can pull harder without wearing out your arms.
A few years ago, I did a swim workshop taught by Dan Bullock from Swim for Tri (https://www.swimfortri.co.uk). His technique is optimized for long distance open-water swimming and emphasizes smooth, energy efficient motion.
Watching him swim with literally no splash on arm entry was amazing. And torso rotation far further than
Most of my previous swimming was for water polo: short, sharp sprints, mostly head-up freestyle, focus on power and claiming space, often jostling with your opponent. Exactly the opposite of Van Hazel and Dan Bullock's focus on perfect technique.
>>Technique buys you so much more speed and/or efficiency in swimming compared to cycling or running.
I know this isn’t the topic, but the exact same thing applies to rock-climbing. After a certain point, sheer strength won’t help you if you don’t have sufficiently good technique.
I recently started doing triathlons and had kind of a bad experience on the swim portion of my first race. Made it through but had to stop and tread water a couple times just to get my heart rate under control. But after training more I really enjoy swimming in triathlons. It's quite different from lap swimming in a pool. Most likely your problems can be easily fixed.
Here are a few random tips that might help, in no particular order. Sign up for an open water swimming clinic to learn from the experts; race organizers and local triathlon clubs put those on in some areas. Triathlon swimming is a contact sport so if you're uncomfortable with others bumping you then start near the back of your wave and stay towards the outside of the course (you won't lose much time). If the water is cold then buy a dedicated swimming wetsuit; suits meant for diving or surfing restrict arm motion too much. When you first enter the water that will cause your heart rate to jump up so get in the water early before your wave start time to acclimate. Practice lifting your head every few strokes to sight on a fixed landmark and stay on course. Practice bilateral breathing so that if the water is choppy you can always turn your head away from the waves to breathe. Buy tinted goggles in case the sun is in your eyes. Use your arms mostly and save your legs for the rest of the race.
I have been following swimming on and off since 2004. I very vividly remember A Bernard (French) breathing heavily after a 100m relay split in 2008 Beijing (J Lezak produced an inhuman performance to take Gold for the US) and thinking... Those must be some really really really huge lungs: https://youtu.be/chwxaUtnfUk?t=7m45s
Sub-competitive freediver here, so I thought I’d comment a bit on how my sport stresses the lungs and how the body adapts to that stress.
First a comment about the debates over how often you should breathe...almost certainly, those who advise breathing less often are right. People who haven’t trained in apnea and haven’t learned to tolerate high levels of CO2 in the blood always assume the urge to breathe has to do with not getting enough oxygen. But in those sessions where you were “audibly gasping for air,” you were mainly satisfying your urge to expel the CO2 that had built up in your body and, after 1-2 breaths, your oxygen levels were mostly back to a point where you could’ve started breathing normally again. Even after 5 minute breath holds, I try to only take 2-3 recovery breaths before I return to my normal breathing cadence. Breathing less often, since it sounds like breathing slows you down to some extent, should just be a matter of dealing with the discomfort of a higher build-up of CO2. If you were to specifically train for CO2 tolerance, that wouldn’t be that big of a deal. I’m actually somewhat surprised that apnea training hasn’t become an important part of training to be a competitive swimmer.
Secondly, there have been a few studies that have looked at the physiological changes that happen to extreme breath hold athletes, so those may be of interest to swimmers because they may experience some of the same changes. One study showed increased basal metabolic rate and ability for the blood to hold oxygen. It seems like the training makes the body want to store more oxygen and use less of it to convert stored energy reserves. It wouldn’t surprise me if swimmers saw some degree of those changes as well.
Lastly, one important difference between freediving and swimming is the effect on the heart. Freedivers are specifically focused on not putting stress on the heart. We try to relax and lower our heart rate to use oxygen as slowly as possible. Even in dynamic disciplines, the focus is on slow, relaxed strokes, even if that results in more time spent underwater. A freediver swimming 200m on a single breath (whether horizontally or vertically) will likely have fewer heartbeats during that swim than that 50m swimmer you described. But what’s interesting about that is that freedivers still experience some of the beneficial changes to the heart that swimmers and runners do. For instance, when I first took up the sport, my resting heart rate dropped to about the level mentioned in the article (below 60 bpm) and my blood pressure dropped to the point where my doctor was somewhat worried (90/56 at one point). I think there’s something to what you mentioned about putting pressure on the lungs. The heart and lungs are really one interconnected system and you can affect one by affecting the other.
> "in a 500+ race, there are big debates about whether to breathe every 2 or 3 strokes."
It seems to me that debate is less about lung capacity and more about breathing on one side or two (e.g. bilateral breathing.) For me it's always seemed obvious that bilateral swimming should be the desired ideal. Most of my peers favored one side or the other, because in the beginning they had a very slight preference and over time as they used that side only, that preference was reinforced to the point where it became downright awkward to breath on the "wrong" side. If you train against this from the beginning, it seems to me that your times will improve (if only because every three strokes is less breathing, which of course is faster, all else being equal) and you won't have to worry about any physiological asymmetries.
I think it's a tradeoff between resources and efficiency. The longer the race, the more you need to manage your air. Breathing more means a bit more drag, but also more energy to finish the race. Which option is better for you depends on your strength, endurance, distance, and probably many other factors.
Of course in training, ideally you would breathe to both sides—Michel Phelps alternates every 50.
I disagree. breathing to one side usually every 2 strokes has been the ideal ever since 2008 200 free beijing. I switched then and now you're right in the sense that breathing to my strong side is awkward as hell, but I dont think i'll ever look back to every 3
I think switching once you're an established swimmer is going to be virtually impossible, at least if you want to be competitive. I think it's something that should be trained as early as possible. If any established Olympic swimmer tries to make the change, my guess is they won't be swimming at an Olympic level any longer, because breathing on a single side is a pretty good local maxima (only marginally worse than bilateral) but getting out of that local maxima would involve degrading your performance for however long it takes for bilateral swimming to feel just as natural, which might take years for all I know. I don't know if there are any top-tier swimmers who've ever made the switch and remained competitive, I've not looked into it that far, but I suspect there aren't.
I also belief (with no scientific evidence) that training bilateral from the beginning is even more advantageous for mediocre to poor swimmers, since the symmetry in breathing will make their form in general more symmetric and consequently more efficient. Obviously bilateral breathing is not necessary to achieve excellent form, as demonstrated by the vast majority of Olympic swimmers, but I believe it should make it easier for the common swimmer.
I switched from strong-side to alternating late in my training (17, had been swimming for 10 years). It was awkward for a few weeks, but became comfortable. My times improved through this period.
A kind of off topic question: in that video you can see that not only is Katie breathing every 2 strokes, but her stroke timing is "staggered" - 2 strokes, pause, 2 strokes, pause - like a heartbeat. I think Phelps does the same thing. Is this just a style thing or is it actually faster?
This is called galloping (might have other names too). In general, freestyle has two extremes: shoulder driven and hip-driven. Shoulder driven freestyle is faster but less efficient, and hip-driven is slower but more efficient. Galloping alternates between hip- and shoulder-driven strokes, which is why it seems uneven. This also allows the swimmer to take advantage of the motion of breathing to build more momentum. I don't know if it is truly faster or not though.
Thanks! They definitely didn't teach us to do it that way when I was a kid, but that was back in the dark ages. I'll have to try it to see if it works for me.
I dont think this is settled -- I've seen world class swimmers do it both ways. Personally I find taking a long stroke after each breath more effective.
Fascinating to know that swimmers (professional) employ breathing techniques, as well as being selective on which body part they choose to use during swimming events - given the ratio of how much oxygen is utilized when using a part of the body against not using it.
Does the size of the diaphragm also takes into factor on this scenario? I guess it might be because that would be the muscle that helps compresses the lungs to be able to take in the most amount of air possible.
I've run lots of trail marathons and halves and have pretty good aerobic function, but I've always had a big problem with breathing while swimming. Does anyone have any good links or thoughts on getting into a good breathing rhythm that doesn't involve running out of steam and ingesting water? My running breathing is very disciplined but it all seems to fall apart when I swim
Have you tried just using nose plugs/clips? There seems to be some variation in how well people can close off their nasal passage while underwater and often people who have more trouble with it sound exactly like this.
Personally I have to be blowing air out my nose at a pretty unsustainable rate to prevent water from coming in, so if I'm doing serious swimming I use clips. Not exploring this option when I was a kid made me resent and hate swim classes even though I loved being in the water.
Hi! You typically want to breath out through your noise, then inhale through the mouth when you go for air.
Another tip that comes immediately to mind is try using a swimmer’s snorkel. At first, it’ll be really difficult to keep from water going into your nose but after a few practices, your nose and it’s canals will block out water as a reflex, enabling you to breath through your mouth the entire swim. Hope this helps and sorry for English!
>I really don't think running compares in terms of how stressful the sport is on the lungs.
Sounds like words spoken by a person who's never run a competitive 800m race. Maybe if you said swimming just barely edges out running in lung stress... sorry, but this claim is simply comical.
Yeah... Except that if you run at your maximum capacity every day, you will get injured fast.
In swimming, everyday training (actually twice daily) is extremely hard because the length to which you can go without injury is further. Same as for say, cycling.
> That said, running 400m sprints with small rest intervals is extremely hard on every part of the body and I found the muscle stress from running far greater than from swimming.
This surprises me greatly. If you look at the body of a professional runner vs. a professional swimmer the swimmer is much, much more built.
If you look at sprinters compared to swimmers, I would say the sprinters are much more built. If you compare marathon runners to swimmers, it is the swimmer that is more built.
This brings up the interesting topic of anaerobic vs. aerobic exercise which running can be either. Typically one would think of anaerobic exercise as lifting weight or strength training, but sprinting is also anaerobic, meaning you are building muscles.
When you run at a slower pace you are conditioning your lungs and not your muscles as much. This is aerobic exercise, and why marathon runners are so skinny because they are more focus on lung capacity than muscle building.
When you sprint your muscles are actually being broken down and then when you stop they get rebuilt as stronger and larger muscles. This is the reason no one can sprint a marathon.
What is curious to me is that elite marathon runners "jog" at what I would consider being a sprint for myself. So, I wonder if sprinting would be an anaerobic or aerobic exercise for myself?
> What is curious to me is that elite marathon runners "jog" at what I would consider being a sprint for myself. So, I wonder if sprinting would be an anaerobic or aerobic exercise for myself?
Everyone has an anaerobic threshold (the level of exertion at which the body transitions from aerobic to anaerobic systems).[0] But your AnT is much, much lower than an elite marathon runner's due to years of training designed to increase running economy.[1]
So what is a sprint to you (e.g. anaerobic exercise) would be a jog to Kipchoge or Bekele (e.g. aerobic exercise). If you are able to run fast enough to make yourself gasp for air, you've just done some aerobic exercise!
> What is curious to me is that elite marathon runners "jog" at what I would consider being a sprint for myself. So, I wonder if sprinting would be an anaerobic or aerobic exercise for myself?
As a rule of thumb, if you fail because specific muscles are burning and not working anymore it’s anaerobic (muscle limited), and if it’s because you’re out of breath and it’s more of a generalized pain it’s aerobic (cardio limited)
> If you look at sprinters compared to swimmers, I would say the sprinters are much more built. If you compare marathon runners to swimmers, it is the swimmer that is more built.
This comparison puts all swimmers in the same category, but there are sprint swims and distance swims too. Do you mean that most land sprinters are more built than all swimmers — both sprinters and distance?
Who are you looking at? Professional 400m runners tend to be quite muscular, although more in the legs whereas swimmers have stronger upper bodies. It's only the long distance runners who look scrawny.
Another strategy to help ditch the phone - try for a few days rating each day on a scale from -2 to 2 and recording a few notable things about each day. I learned about this technique from Jim Collins, who shared it on a podcast with Tim Ferriss[1]. Collins says sorting the spreadsheet is especially useful because you can see patterns and learn what separates good days from bad days.
I bring this up in relation to this article because after three days of doing this (for those interested, [-1, 0, 0]), I concluded distractions are the biggest reason I didn't go [2, 2, 2]. My phone for me at least is the #1 cause of distractions - simply looking at it and seeing a notification can derail my train of thought. Setting it on Do Not Disturb and only checking a set number of times I'm thinking will be helpful.
One more thing here - knowing that I need to rate myself at the end of each day absolutely is in the back of my mind during the day, which I think is a positive.
The concept of owning demand is explored really well in this blog post[1]. A good excerpt:
> In short, if somebody successfully inserts themselves between you and your customer, they can exercise tremendous control over you, including taking a big chunk of your profits or outright killing you.
Worth noting that Nassim Nicholas Taleb has some interesting explanations about why practitioners write better and more accurate books than journalists in "Skin in the Game". As you probably guessed from the title, practitioners have a lot to lose by writing a bad book about their practice because it impacts their livelihood. Journalists - while they do face some consequences for bad books - don't pay the same price, and are more likely appealing to a general audience when they write a non-fiction book.
"Free Will" by Sam Harris. A buddy told me to read this after we got in a long debate about free will at a bar. Basically, he told me I wasn't even grasping what free will is, and that the hour to read the book would totally change everything for me. Lo and behold, he was right and the next conversation we had about free will was much deeper and largely framed by the insights in this book. It convinced me that the real question isn't "Do we have free will?" but rather "What is free will?"
"The Beginning of Infinity" by David Deutsch. It's difficult to pinpoint this book as being about a thing or a set of things, but my best attempt is to say it's about attaining knowledge and the non-existent limits to human knowledge. I've never felt more inspired than when I finished reading this book and reflected on the infinite lengths humankind has to go on technological progress. Overall, it's an incredible argument for optimism about what is possible.
Top 3 for the year for me below. All of these are completable in 2 or so hours and non-fiction. For me at least, this is notable since so many non-fiction reads take 400 pages to make a point that could be summarized in 150:
- Free Will, Sam Harris - one of my buddies strongly recommended this book after debating me on the subject for an hour plus. While some of the question of free will is semantics, Harris deeply changed my position on to what extent we determine our own actions. When someone can present an argument to you for an hour and a half uninterrupted, it also makes a difference - perhaps the best way to influence someone is to recommend a book.
- It Doesn't Have to Be Crazy At Work, DHH and Jason Fried - made me rethink the tradeoff between working harder and working smarter. This book strongly debates how most companies structure PTO, the work week, meetings and so much more and offers opinionated alternatives. Basecamp is clearly thinking independently from first principles here, and I really admire that.
- The Way to Love, Anthony de Mello - meditations on freeing yourself from attachment and your own programming. This book pairs really well with Free Will (I read them around the same time) because both offer unique perspectives on why we are the way we are and why change is possible (Free Will actually optimistically concludes change is possible without us being in control of our actions).
Shameless plugs - I blog on my favorite reads of the month at theconsider.com , which also is available as a monthly e-mail (https://theconsider.com/subscribe/).
I'm baffled that this company as of October is targeting a $120B IPO valuation [1]. I'm assuming there are institutional buyers out there at this price as the article says banks advised them on this number. It would be one thing if the prospects for Uber converting revenue to its bottom line were great, but margins are shrinking. The CEO admits "we're in a big battle" with Lyft and more competitors are coming. Waymo will be all over the news next month [2]. IPOing in this environment - at least at a valuation 1.6x its last round [3] - seems difficult.
An IPO, no matter the climate, is the only way anyone gets their money even half back. If they wait, they will simply burn even more money and likely face an even worse climate as their business model is exposed more and more as unviable. Not that I would go near Uber with a 10 foot pole, but if I had money in this and didn't care about anything else, IPO ASAP would be my call.
How does Uber burn so much money? Isn't it a fundamentally profitable enterprise? Aren't they just skimming off contractors' wear-and-tear?
Won't they eventually hit a point where they promote their product less aggressively and generate significant revenue off the massive ride-sharing network that they've established?
They burn money to expand on markets where they still have competition from conventional cab companies or local competitors who come to market earlier. And they also tend to buy or sell into partnership in case they lost battle for said market like in middle-east Asia or Russia.
As for large network effect this is my layman talking, but it's only important on markets with highly mobile population like US or EU. Problem of Uber is that high percentage of population in many countries rarely travel outside of their city, region or country. While you travel a lot Uber is great: you arrive and it's working almost everywhere, but if you stay within borders of your home city 95% of time you can as well use some NotUber app instead if you like it more of it cheaper.
Just curious. I don't have TV so I don't have commercials, but are they like, advertising on TV or something, or is it more like, they fly into whatever city isn't using them, order up a bunch of cab rides, and tell the driver to work for them?
When they initially arrived to Russia they paid for quite a lot of offline ads space all around the city and I suppose their ads was there for at least a year. I don't watch TV for last 12 years so have no clue if there was any ads there.
And since back then we already had multiple taxi services (mostly without mobile apps though) with quite low price they likely spend a lot on underbidding them.
I know this comment risks coming off as snarky, but I mean it genuinely: Do you honestly believe the only advertising channels that exist are TV and in person? Is it possible someone on a tech-oriented site is this unaware of the advertising arena?
Lol, I honestly have never seen an ad for Uber in any website I have ever visited. They are, however talked about and recommended by everyone. So I am seriously curious where they are actually advertising.
As adjkant pointed out - it's 'better now than later' in many scenarios.
Also - Uber might be doing some big write-offs and dumping the ugliness of their spreadsheets now rather than later.
Basically they get rid of as much toxicity as early as possible, so the road to the IPO is more roses.
New CEO's often do that, dump the crap right away the first quarter they are there, so it can be written off as 'restructuring' by analysts. Uber does in fact have a new-ish CEO, maybe it's a little late for this, but not too late maybe.
It's quite simple really. You haven't seen the numbers the investors have seen. I used to work in the private capital markets and it was awesome to be privvy to information that gave you more insight than can be gleaned from the outside.
Like the numbers investors saw for Snap before it’s IPO and it’s not doing so well right now. This 120B valuation doesn’t make sense regardless of the numbers. Especially considering they just did a bond sale with an 8% coupon. What company worth 120B sales bonds with an 8% coupon? Absurd tech bubble with ridiculously valued “unicorns”
8% on an 8 year coupon for $1.5B sounds like a heck of a deal for a growth company relative to raising another round. That's just around $2.8B paid back 8 years from now. If the company modestly triples from their current value over 8 years, that's a $1.7B savings.
There are public investors that want a piece of Uber at basically any price. When the upside is ownership of a worldwide ride hailing network, there will be no shortage of interest.
