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.

[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

[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).

[Shoe]

[ QUOTE ]
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.

[/ QUOTE ]

Tell your prof that those who can't do, teach.

[DesertCat]

[ QUOTE ]
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.

[/ QUOTE ]

Ask him to explain warren buffets "Superinvestors of Graham-Doddsville" lecture. Then ask him how Buffett has crushed the market for over fifty years believing that volatility isn't risk.

[ahnuld]

[ QUOTE ]
[ QUOTE ]
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.

[/ QUOTE ]

Ask him to explain warren buffets "Superinvestors of Graham-Doddsville" lecture. Then ask him how Buffett has crushed the market for over fifty years believing that volatility isn't risk.

[/ QUOTE ]

I pulled out that speech on my laptop but then deicded I actualy want an A in this class so I just left when the lecture was done.