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Old 01-24-2016, 08:58 PM   #21
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Not really on point, but I just had to share this headline from CNBC today.

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The recent market slide may have made stocks less expensive than they have been recently.
Ya don't say.
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Old 01-26-2016, 07:37 AM   #22
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Here is an article I think gives a good perspective on how to look at markets. It is a far more nuanced view than that pushed by the traditional panting finance media, and IMO far more accurate.
What Does the Market Know? by Howard Marks of Oaktree
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Old 01-26-2016, 10:10 AM   #23
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Originally Posted by audreyh1 View Post
Here is an article I think gives a good perspective on how to look at markets. It is a far more nuanced view than that pushed by the traditional panting finance media, and IMO far more accurate.
What Does the Market Know? by Howard Marks of Oaktree
I wanted to like this article and agree that we shouldn't allow ourselves to invest emotionally, but it seems his premise is empirically incorrect. Markets do not represent the "the average IQ of the participants." If they did, professional money managers would routinely trounce the indexes. We know that they don't. We also know that betting markets across industries and disciplines have proven to be better forecasters than highly trained specialists. So there is some wisdom in crowds.

I also disagree with his peculiar history of the 2008 banking crisis and insinuation that the panic was broken by a mere ban on shortselling. The panic was broken by an unprecedented government intervention that included guarantees of commercial paper, money market funds and other instruments through multiple Fed programs; bailouts of the weakest large players (AIG, etc) and the forced recapitalization of other large banks with direct injections of taxpayer dollars.

Had that all not happened, and it wasn't clear at the time that it would or that even if it did it would work, selling JP Morgan at $10 would have been a very good trade.
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Old 01-26-2016, 11:09 PM   #24
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That article is too long and complex for me. I think the buying and selling which produces the resulting market price boils down to predicting what others are predicting you are predicting what they are predicting you will do. And and then of course you must anticipate his action and do it just before he does. Simple as that.

Edit: Well, of course unless he has already predicted you are doing just that.
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Old 01-26-2016, 11:51 PM   #25
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I wanted to like this article and agree that we shouldn't allow ourselves to invest emotionally, but it seems his premise is empirically incorrect. Markets do not represent the "the average IQ of the participants." If they did, professional money managers would routinely trounce the indexes. We know that they don't.
I don't agree, because I don't accept the premise that the professional money managers have a higher IQ than the average investor. I suspect that the average buy and holder has at least as high an IQ as a person who convinces himself he/she can beat the market regularly.
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What Does the Market Know?
Old 01-27-2016, 12:46 AM   #26
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What Does the Market Know?

IMO... this quote sums it up best:

"Even in the best of times, when investors are driven by fundamentals rather than psychology, markets show what the participants think value is, rather than what value really is."
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Old 01-27-2016, 03:48 AM   #27
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IMO... this quote sums it up best:

"Even in the best of times, when investors are driven by fundamentals rather than psychology, markets show what the participants think value is, rather than what value really is."
In addition, value is a relative concept that differs between individuals, even in stock markets. Not to mention policies (e.g. don't buy evil companies, have to rebalance) and events (e.g. death of family member or oneself).

And prices are set at the margin: the most pessimistic owner sells to the most optimistic buyer.

Whoever dreamt up that EMH must have been on serious mind-altering substances.
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Old 01-27-2016, 08:19 AM   #28
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I don't agree, because I don't accept the premise that the professional money managers have a higher IQ than the average investor. I suspect that the average buy and holder has at least as high an IQ as a person who convinces himself he/she can beat the market regularly.
I'm not sure we disagree as the author is clearly making the argument that smarter than average people (presumably him and, of course, you dear reader) can beat the market if they avoid becoming emotional.
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Old 01-27-2016, 09:11 AM   #29
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I don't agree, because I don't accept the premise that the professional money managers have a higher IQ than the average investor. I suspect that the average buy and holder has at least as high an IQ as a person who convinces himself he/she can beat the market regularly.
The pro money managers don't need to convince themselves they can beat the market, they only need to convince their potential customers!

-ERD50
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Old 02-14-2016, 05:15 PM   #30
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I have been watching the markets minute by minute lately. I can't help feeling like a huge crash is coming very soon, maybe next week. Why? Unexplained European bank weakness, China is collapsing, non-oil junk bonds VERY weak, gold exploding, NIRP end game for central banks shows no more bullets in the chamber, markets moving in ways not explained by the current news. When Fisher made his four hikes statement this was a signal that the Fed will collapse it.
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Old 02-14-2016, 06:35 PM   #31
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I hope you are right, I just started shorting the S&P late Friday.
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Old 02-14-2016, 06:49 PM   #32
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I have been watching the markets minute by minute lately. I can't help feeling like a huge crash is coming very soon, maybe next week.
It's going to happen some day. And when it does, we really aren't going to know it's coming (especially since the doom'n'gloomers have been predicting it consistently and incorrectly for so long).

But it will happen. It will slam us hard.

And then, if we are smart enough to not sell low, when it recovers we will too, and we'll be better off than ever.
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Old 02-14-2016, 07:06 PM   #33
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Originally Posted by jim584672 View Post
I have been watching the markets minute by minute lately. I can't help feeling like a huge crash is coming very soon, maybe next week. Why? Unexplained European bank weakness, China is collapsing, non-oil junk bonds VERY weak, gold exploding, NIRP end game for central banks shows no more bullets in the chamber, markets moving in ways not explained by the current news. When Fisher made his four hikes statement this was a signal that the Fed will collapse it.
You can't explain short-term market movements - and certainly not from the news. Expecting markets to be "logical" is an exercise in total frustration.
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Old 02-14-2016, 07:10 PM   #34
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I really don't go by news, but price only. The price movements alone are what is worrisome.
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Old 02-14-2016, 07:11 PM   #35
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I have been through 1987, 2000, and 2008 without any panic or really worrying much; for some reason, the news of the death of Justice Scalia yesterday sent financial shivers through my spine. For the first time, I actually fear that 35 years of living smartly and saving for retirement could be for naught if the government runs amok.

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Old 02-14-2016, 07:21 PM   #36
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On a grand scale, Scalia wouldn't have much impact on containing a government run amok.
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Old 02-14-2016, 07:49 PM   #37
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On a grand scale, Scalia wouldn't have much impact on containing a government run amok.
Not on his own, but an unfettered federal government can make life real bad.
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Old 02-14-2016, 08:06 PM   #38
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Let's just worry about the markets here, and avoid the whole what-if fantasy world of worrying about what might or might not have happened, or will happen, in the event certain judicial or political concepts are reified.

We all like bacon, but perhaps not here.


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Old 02-14-2016, 09:59 PM   #39
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Originally Posted by jim584672 View Post
I have been watching the markets minute by minute lately. I can't help feeling like a huge crash is coming very soon, maybe next week. Why? Unexplained European bank weakness, China is collapsing, non-oil junk bonds VERY weak, gold exploding, NIRP end game for central banks shows no more bullets in the chamber, markets moving in ways not explained by the current news. When Fisher made his four hikes statement this was a signal that the Fed will collapse it.

I may not feel quite the angst you do, Jim, but with 6% of my money in Total Stock Index I am not far behind. Outside of decent side bet on a beaten down still profitable ag company that has dropped 50% already, most of my money is in illiquid utility preferreds. History has shown them to be considerably more immune to the overall stock market. They don't even mirror the movement of their common stock sister issues.


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Old 02-14-2016, 11:14 PM   #40
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Good heavens. And we are supposed to be the sane ones at this board? Don't just stand there. Panic! Lets see, Tokyo is up over 6% - Run for the hills!
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