September [censored] thread

[ahnuld]

Post any random thoughts, trades or ideas as they pop into your head in this thread.

[ahnuld]

im sitting im my investment portfolio management class and the prof. just got mad when I told him its irrational that volatility equates with risk. "..you cant beat the market" he answered me by saying.

Then he asked the class "if you had to describe a stock to a friend, what would you say?" Someone replies that you can look at the future growth prospects, and prof replies that we shouldnt look at that because its already priced into the market. Only thing to consider is risk and volatility.

[skindog]

I'm 22 and through my 3 years of investment experience I've already grown to hate academia and many of their philosophies about the market. It takes about 10 minutes of looking through financial history and the various ridiculous bubbles that have occurred to see that the masses can and often do mislead themselves into investing in obviously mispriced assets.

When people pay egregious amounts for tulip bulbs, or tech stocks, I don't see how you can make the claim that the markets are perfectly efficient. Academia confuse the markets' responsiveness to information (it is true, the markets respond to all assessments of information perfectly and quickly) and the ability of the markets and their participants to perfectly assess that information and make valid business/ev predictions with it. That is the part that isn't perfectly efficient, and that's where value can be made! Arrrrgh.

It's like drunk driving. The stock market is like the steering wheel and investors are the drunk driver. The perfect responsiveness of the steering wheel to the driver's actions doesn't prevent him from driving into a tree. Or from stumbling into a store to buy tulip bulbs for land and jewels.

[TheMetetron]

I think I just bought some Vanguard fund shares from the wrong checking account that doesn't have money in it. Vanguard just sent the EFT for processing today and I tried to EFT the money over into the right account myself today as well. Not sure who will get there first.

What happens if they try to take the money out and get denied? It's a relatively small portion of my portfolio (small $1k purchase) but I'm curious what they are going to do.

[gonebroke2]

-gold making a run towards 700USD
-oil making a run towards 80USD
-tensions in mid east heating up, syria claims some sort of attack by israel
-bernanke is [censored] on the 18th
going to be a fun month.

[KitCloudkicker]

vmware shares up 20% since i bought them. should be an interesting ride the next few months.

[Phone Booth]

[ QUOTE ]
I'm 22 and through my 3 years of investment experience I've already grown to hate academia and many of their philosophies about the market. It takes about 10 minutes of looking through financial history and the various ridiculous bubbles that have occurred to see that the masses can and often do mislead themselves into investing in obviously mispriced assets.

When people pay egregious amounts for tulip bulbs, or tech stocks, I don't see how you can make the claim that the markets are perfectly efficient. Academia confuse the markets' responsiveness to information (it is true, the markets respond to all assessments of information perfectly and quickly) and the ability of the markets and their participants to perfectly assess that information and make valid business/ev predictions with it. That is the part that isn't perfectly efficient, and that's where value can be made! Arrrrgh.

It's like drunk driving. The stock market is like the steering wheel and investors are the drunk driver. The perfect responsiveness of the steering wheel to the driver's actions doesn't prevent him from driving into a tree. Or from stumbling into a store to buy tulip bulbs for land and jewels.

[/ QUOTE ]

Don't confuse specific theories with this nonentity called "academia" - that sort of broad-brushed emotional thinking is exactly what gets people in trouble in financial markets.

Markets are inefficient because most people are stupid but are too stupid to realize their own stupidity.

For instance, the prior probability that you (or any other person or I for that matter) are stupid is fairly high. You've got to weigh that against evidence you have that tells you that you are indeed not stupid, fully understanding that many stupid people can come up with similar justifications. Most people aren't particularly good at this kind of reasoning and erroneously conclude that they can beat the market when in fact they can't, which is why the efficient market hypothesis is still a useful theory for them. The market isn't the smartest kid in town, but it's far smarter than most (this is nearly by definition).

[DcifrThs]

[ QUOTE ]
-gold making a run towards 700USD
-oil making a run towards 80USD
-tensions in mid east heating up, syria claims some sort of attack by israel
-bernanke is [censored] on the 18th
going to be a fun month.

[/ QUOTE ]

- US economic prodcutivity above expectations
- initial jobless claims below expectations
- manufacturing expanding (very slightly below expectations)
- non-manufacturing expanding (solidly above expectations)
- bernanke is fine, wall street shouldn't be pricing in 50bp rate cuts without data to back it up. the fed shouldn't be bailing out the street or others for making poor investments. only so much as it threatens the economy, which it likely will, but overreacting now isn't a good idea.
- tensions always high in middle east. i bet nothing major comes of this new development
- going to be a fun month

Barron

[mattnxtc]

I am confused as to why the fed should bail people out for putting money into a high risk situaton? As somebody pointed out, they did this for tulips and for the tech stocks. If people are to stupid to realize the risk of this then taht is their own fault and they deserve to be broke. If these stocks were soaring due to the high potential, would the Fed take away money from the people b/c they made so much?

[DcifrThs]

[ QUOTE ]
I am confused as to why the fed should bail people out for putting money into a high risk situaton? As somebody pointed out, they did this for tulips and for the tech stocks. If people are to stupid to realize the risk of this then taht is their own fault and they deserve to be broke. If these stocks were soaring due to the high potential, would the Fed take away money from the people b/c they made so much?

[/ QUOTE ]

who said the fed should bail people out?

maybe i glanced over that post...but i think it is pretty well known that the fed shouldnt' bail markets out at this point.

the main immediate issue right now is wtf is going on in the money markets. banks are just clamoring for cash and not willing to lend to others, NOT because they don't trust others, but because they don't know their own needs for cash.

a 100bp rate cut won't solve that problem.

after that, there is the economy wide concern of slowing down household demand for stuff...and things. less stuff and things purchased is bad. how bad remains to be seen. i'd expect a 25bp cut but anything more imo is overdone. if i was running the fed, i wouldn't even cut rates right now. you have to let the market know that you won't be there with hot chocolate and a warm fire when you come in from the cold without a jacket or booties.

Barron