Shoeprint #1: Six Flags (SIX)

[CrushinFelt]

This thread is awesome

[Leaky Eye]

Tubbs posted my exact thoughts when I first saw that ridiculous amazon post. Though he explained it far better than I would have.

[jws43yale]

I am really glad Shoe recommended SIX. I did not buy it, but then it dropped nearly 50% so I picked it up at $3.36 last Thursday and sold it at $4.08 today. Nice little 20% gain for me. But as thankful as I am stock will probably shoot up another 15% tomorrow as it did today and I will be kicking myself.

[prohornblower]

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I am really glad Shoe recommended SIX. I did not buy it, but then it dropped nearly 50% so I picked it up at $3.36 last Thursday and sold it at $4.08 today. Nice little 20% gain for me. But as thankful as I am stock will probably shoot up another 15% tomorrow as it did today and I will be kicking myself.

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Yeah, short-term, variance-driven results mean nothing, but thanks for the tidbit.

[spino1i]

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I am really glad Shoe recommended SIX. I did not buy it, but then it dropped nearly 50% so I picked it up at $3.36 last Thursday and sold it at $4.08 today. Nice little 20% gain for me. But as thankful as I am stock will probably shoot up another 15% tomorrow as it did today and I will be kicking myself.

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Yeah, short-term, variance-driven results mean nothing, but thanks for the tidbit.

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OK to be fair short-term fluctuation in stocks is not just random variance, there is a science to predicting short-term trends. It just rarely takes into account the actual value of the company, and more takes into account what investors think of the company and how they will react to potential events that affect the company. As well as how investors to react the recent increase or decrease in share price.

[The Rain King]

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It just rarely takes into account the actual value of the company, and more takes into account what investors think of the company and how they will react to potential events that affect the company.

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Wouldn't part of this science, then, have to be a prediction of what future news will be? How can you account for the huge disadvantage you place yourself at by relying so much on uncertain future events? Not that any other type of analysis doesn't implicitly rely on the future, but for the most part it would be a less variable future prediction. In other words, it's going to be easier to predict future earnings or revenue than news announcements. One has demonstratable and quantifiable history, while the other is essentially what people go to palm readers for.

Even if you can successfully determine what people's reactions to news might be, it seems unreasonably risky to attempt to use that knowledge in the first place. This ignored the fact that one man's ability to gauge the emotions and reactions of millions is a hard-to-swallow claim in the first place.

[Jimbo]

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Even if you can successfully determine what people's reactions to news might be, it seems unreasonably risky to attempt to use that knowledge in the first place. This ignored the fact that one man's ability to gauge the emotions and reactions of millions is a hard-to-swallow claim in the first place.


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It is a great deal easier, simple in fact, to predict the emotions and reactions of a large group of people compared to predicting the reactions to the same stimuli of a very small group. Did you sleep through Sociology 101?

Jimbo

[The Rain King]

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Even if you can successfully determine what people's reactions to news might be, it seems unreasonably risky to attempt to use that knowledge in the first place. This ignored the fact that one man's ability to gauge the emotions and reactions of millions is a hard-to-swallow claim in the first place.


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It is a great deal easier, simple in fact, to predict the emotions and reactions of a large group of people compared to predicting the reactions to the same stimuli of a very small group. Did you sleep through Sociology 101?

Jimbo

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Haha, I never took sociology, but perhaps I wasn't clear. Inherent in making those prediction worth the time to describe them is that they're notably more accurate than the average person's predictions. So given that predicting an individual's reaction is virtually impossible, but predicting a group's reaction is much more likely, how can you set yourself apart? Because it is so much easier to gauge a reaction among the masses, all of the other investors are going to have a much easier time guessing right as well. This means it will be harder for your guess to be much different. So even if your guess is perfect, you're at a natural disadvantage because other people's guesses will at least be pretty good.

This is hard to quantify, so perhaps I'm not being clear, but I hope my point comes across. Your accuracy is not really what's important. What matters is how much MORE accurate you are than your competitors (other investors).

[Jimbo]

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Haha, I never took sociology, but perhaps I wasn't clear. Inherent in making those prediction worth the time to describe them is that they're notably more accurate than the average person's predictions. So given that predicting an individual's reaction is virtually impossible, but predicting a group's reaction is much more likely, how can you set yourself apart? Because it is so much easier to gauge a reaction among the masses, all of the other investors are going to have a much easier time guessing right as well. This means it will be harder for your guess to be much different. So even if your guess is perfect, you're at a natural disadvantage because other people's guesses will at least be pretty good.

This is hard to quantify, so perhaps I'm not being clear, but I hope my point comes across. Your accuracy is not really what's important. What matters is how much MORE accurate you are than your competitors (other investors).


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I see what you are saying and in the China Stock Market this might very well be true. But in the US market simply knowing what others will likely do allows you to make money even if every other single investor had the same accuracy as you. Does this make sense to you? And do you see why?

Jimbo

[The Rain King]

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Haha, I never took sociology, but perhaps I wasn't clear. Inherent in making those prediction worth the time to describe them is that they're notably more accurate than the average person's predictions. So given that predicting an individual's reaction is virtually impossible, but predicting a group's reaction is much more likely, how can you set yourself apart? Because it is so much easier to gauge a reaction among the masses, all of the other investors are going to have a much easier time guessing right as well. This means it will be harder for your guess to be much different. So even if your guess is perfect, you're at a natural disadvantage because other people's guesses will at least be pretty good.

This is hard to quantify, so perhaps I'm not being clear, but I hope my point comes across. Your accuracy is not really what's important. What matters is how much MORE accurate you are than your competitors (other investors).


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I see what you are saying and in the China Stock Market this might very well be true. But in the US market simply knowing what others will likely do allows you to make money even if every other single investor had the same accuracy as you. Does this make sense to you? And do you see why?

Jimbo

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Are we talking about making money in the sense that you earn some return >0 or are we talking about making excess returns (and therefore justifying some sort of active management)? If it's the former, then sure I understand, but who cares? If it's the latter, I'm not sure you're right. So I guess no, I don't see why.