Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Ten Insane Things We Believe On Wall Street
Old 11-18-2014, 03:33 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Ten Insane Things We Believe On Wall Street

See if you can guess which (if any) are tongue-in-cheek...
Quote:
To outsiders, Wall Street is a manic, dangerous and ridiculous republic unto itself – a sort of bizarro world where nothing adds up and common sense is virtually inapplicable.

Consider the following insane things that we believe on Wall Street, that make no sense whatsoever in the real world:

1. Falling gas and home heating prices are a bad thing
2. Layoffs are great news, the more the better
3. Billionaires from Greenwich, CT can understand the customers of JC Penney, Olive Garden, K-Mart and Sears
4. A company is plagued by the fact that it holds over $100 billion in cash
5. Some companies have to earn a specific profit – to the penny – every quarter but others shouldn’t dare even think about profits
6. Wars, weather, fashion trends and elections can be reliably predicted
7. It’s reasonable for the value of a business to fluctuate by 5 to 10 percent within every eight hour period
8. It’s possible to guess the amount of people who will get or lose a job each month in a nation of 300 million
9. The person who leads a company is worth 400 times more than the average person who works there
10. A company selling 10 million cars a year is worth $50 billion, but another company selling 40,000 cars a year is worth $30 billion because its growing faster

Away from Wall Street, no one believes in any of this stuff. It’s inconceivable. On Wall Street, these are core tenets of our collective philosophy.
Ten Insane Things We Believe On Wall Street

http://www.hulu.com/watch/715275 (more discussion at 27:10 remaining)
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-18-2014, 03:41 PM   #2
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
That looks like a perfectly cromulent list for those of us working hard to embiggen our portfolios.
__________________

__________________
M Paquette is offline   Reply With Quote
Old 11-18-2014, 04:14 PM   #3
Recycles dryer sheets
 
Join Date: Jan 2014
Posts: 79
It's a bizzaro world out there.
__________________
Palmtree is offline   Reply With Quote
Old 11-18-2014, 04:28 PM   #4
Thinks s/he gets paid by the post
robnplunder's Avatar
 
Join Date: Nov 2013
Location: Bay Area
Posts: 2,124
How about ....

- The same CEO who makes 400 times than an average employee can screw up the company, resign (or terminated), and get $50M golden parachute.
- On a same day, one analyst predicts that stock market will crash and lose 70% of its current value, and another predicts it will go up by 20% by end of the year.
- Everyone downgrades a company after a bad earning's report and the stock price already plunged by 40%. The same ones upgrades a company after a good earning's report and the stock price already went up by 40%.
__________________
Pura Vida
robnplunder is offline   Reply With Quote
Old 11-18-2014, 07:05 PM   #5
Thinks s/he gets paid by the post
mpeirce's Avatar
 
Join Date: Feb 2012
Location: Columbus area
Posts: 1,591
It's because the market isn't a "thing", it's really just people.

I have a few engineering oriented friends who are driven batty by the stock market. They keep thinking it should work on logic. Wrong. Wrong. Wrong.

Over the long term it generally does follow the numbers, but in the short term it behaves like a group of fairly looney, flawed human beings. Which it is.
__________________
mpeirce is offline   Reply With Quote
Old 11-18-2014, 07:29 PM   #6
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 16,544
Quote:
Originally Posted by mpeirce View Post
It's because the market isn't a "thing", it's really just people.

I have a few engineering oriented friends who are driven batty by the stock market. They keep thinking it should work on logic. Wrong. Wrong. Wrong.

Over the long term it generally does follow the numbers, but in the short term it behaves like a group of fairly looney, flawed human beings. Which it is.
The best analogy that I have heard, the one that made the light bulb come on for me, was (I think) in The Millionaire Teacher.

Think of stock market prices as a 10-month-old Labrador retriever on a very long leash wandering in a field. Company profits, which are the real long-term driver of stock prices, are the dog's owner walking at a steady pace, the end of the leash firmly in hand.

The dog will periodically sprint ahead far in front of the dog's owner, but will then find something interesting and lag far behind. Those are stock prices.

But eventually and inevitably over time the (dog) stock prices will move at the average pace of the person firmly holding the end of the leash, those company profits.

Simplistic, yes. But it works for me.
__________________
I heard the call to do nothing. So I answered it.
Walt34 is offline   Reply With Quote
Old 11-18-2014, 08:06 PM   #7
Full time employment: Posting here.
 
Join Date: Aug 2013
Location: North
Posts: 714
Three steps forward, two back and repeat. Those with the most shares, have the most shares. You are investing in american companies and there capabilities to profit.

That said, as humans, we act strangely in large groups. Never really quite understood that one. We also act strangely without consequence...meaning those who would not do harm...likely would do so without consequence.
__________________

__________________
AA (Stock/Bond/Cash ): 99/0/1% MIX (Small/Mid/Large): 50/25/25% BLEND(US/Foreign): 100/0%, (Value/Growth/Blend): X/X/X% REIT (Real Estate Equity): 50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
kgtest is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Interesting reading from The Wall Street Digest wstu32 FIRE and Money 11 01-06-2006 08:21 PM
Wall Street Journalhttp://online.wsj.com/public/us Martha Other topics 3 11-08-2005 09:29 PM
Real Scoop on Wall Street otako Other topics 2 07-13-2004 08:49 PM
The Truth on Wall-Street? otako Young Dreamers 2 07-13-2004 08:47 PM
Wall Street Journal-how to get it freeeeee. mickeyd Other topics 5 07-13-2004 06:36 PM

 

 
All times are GMT -6. The time now is 03:32 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.