prosa
Posts: 5389
Joined: Sat Oct 27, 2001 3:24 am

Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 12:26 am

We just can't win. U.S. retail sales for March came in very strong in today's report, which along with nascent evidence of an improving jobs market and better-than-expected corporate earnings reports show that the economy may finally be moving forward at a strong pace. Good for stock prices, right? Think again. From cbsmarketwatch.com:

NEW YORK (CBS.MW) - U.S. stocks moved lower Tuesday on concern the Federal Reserve may be tempted to raise interest rates sooner rather than later after the first batch of strong earnings and better-than-expected retail sales suggested the U.S. economy was in robust form.
"It's interest rates, interest rates, interest rates," said Peter Boockvar, equity strategist at Miller Tabak.


Let me try to get this straight. Economic reports and earnings look good, and stocks fall. It also goes without saying that poor economic reports and earnings also will cause stocks to fall, by stoking recession fears. It sounds like stocks are destined to fall no matter what. How absurd!
"Let me think about it" = the coward's way of saying "no"
 
Andreas
Posts: 5880
Joined: Tue Oct 09, 2001 7:56 pm

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 12:35 am

Yes, and sometimes they get up, no matter what!

I've seen a very good commercial on German TV a year ago: there's a CEo of one of those online-lowcost-banks talking to the audience. He says " if the guys at your bank are as good as they say (talking about stock market performance)...*munchesafewpeanuts*...how come they still have to work?

What I'm trying to say is: No matter what you do, there will always be someone who believes that it is the other way round!

There are just so many aspects one has to take into consideration:

Self-fulfilling prophecies, differing expectations, less-than-efficient capital markets, non-rational behaviour, chart technology...the only thing that soubnds plausible is:

You can't beat the market systematicallyand at will by chosing a strategy...that's a fact...the only one when talking stock markets!
I know it's only VfB but I like it!
 
N6376M
Posts: 2310
Joined: Tue Aug 12, 2003 12:54 am

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 1:05 am

I used to subscribe to the "efficient market" hypothesis of stock valuation however, the internet bubble basically put the nail in that coffins. I've been reading a book by George Soros called the AlChemy of Finance that I think does a great job describing the stock market.

[Full disclosure DISCLAIMER - For those of you who may not know Soros is the multibillionaire who made a ton of money on currency speculation. He's spent a lot of his money on the developing world and is currently a major funding source for the MoveOn.org organization. He's said that he'll do whatever he can to make sure GWB doesn't win re-election. I do not support his political tendencies but I can recognize where he seems to have a point].

As I understand it, Soros' premise is that markets are fundamentally inefficient at all moments other than what he terms "inflection points". These inflection points are either at the top of a bubble or the bottom of a trough. He argues that if the market were efficient, stock bubbles couldn't exist. Only at the inflection point does the market realize its inefficiency and correct the error.

-76M
 
Andreas
Posts: 5880
Joined: Tue Oct 09, 2001 7:56 pm

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 1:14 am

That's another way of putting it! I used to buy market efficiency hypothesis at the very beginning when I started my doctor's thesis...then I read some material on the assumptions, since then I strongly believe in the Random Walk theories  Big grin Big grin
I know it's only VfB but I like it!
 
prosa
Posts: 5389
Joined: Sat Oct 27, 2001 3:24 am

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 5:39 am

&*%$@#&#!!!!! Today was a bad day, but tomorrow's likely to be a total bloodbath. Intel just reported its quarterly results, and both revenues and earnings missed analysts' expectations. It's like we're destined to lose, no matter what  Sad
"Let me think about it" = the coward's way of saying "no"
 
Qb001
Posts: 1923
Joined: Fri Apr 28, 2000 12:42 am

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 5:59 am

Don't believe anything stock market gurus will tell you. Fourth graders or chimps can do better than the best stock market analyst 50% of the time.

And it's not even a joke...
Never let the facts get in the way of a good theory.
 
MaverickM11
Posts: 15267
Joined: Thu Apr 06, 2000 1:59 pm

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 7:24 am

The weather is more predictable than the stock market. As much as the gurus and CNBC and CNNfn would like you to believe otherwise, they are 90% chance and 10% luck.
E pur si muove -Galileo
 
JAL777
Posts: 2453
Joined: Wed Jun 04, 2003 10:13 pm

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 7:52 am

The weather is more predictable than the stock market. As much as the gurus and CNBC and CNNfn would like you to believe otherwise, they are 90% chance and 10% luck.

In the short term... that's the problem... way to many investors think in the short term.
 
IMissPiedmont
Posts: 6200
Joined: Wed May 23, 2001 12:58 pm

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 1:18 pm

I guess the fact that I've earned an average 11% return on my investments over the past 18 years makes me an "Ignorant Schmuck." I'll choose to ignore the $22,000 loss in 1979 though.
The day you stop learning is the day you should die.
 
MD-90
Posts: 7835
Joined: Mon Jan 17, 2000 12:45 pm

RE: Stock Market Investors Are Ignorant Schmucks

Wed Apr 14, 2004 8:02 pm

Imisspiedmont illustrates a valuable point. In a very, very good book I once read, the author (a financial advisor for the genuinely rich) stated that it is human nature to think of losses in financial, real numbers, and gains as percentages.

I lost $51,000 in Pan Am stock in 199whatever!

But my Southwest stock has been going up around 12% a year since I bought it.
 
Kay
Posts: 1797
Joined: Fri Mar 01, 2002 3:41 pm

RE: Stock Market Investors Are Ignorant Schmucks

Thu Apr 15, 2004 4:52 pm

I started investing in euro futures recently. Exchange rates are much more volatile than stocks.

But the Euro is volcanic volatile. You might enter the market and one second later make a 2500$ unrealized loss. I protect all my positions with stop losses, but these, in turn, leave very little room for miracles. You're bound to lose 75% of the time. The few times you win should compensate.

It really is gambling, basically, which is why, in this flavor of trading, the house always wins. Just like in Vegas.

In the last three weeks, I made 16% gains over 9 transactions, but with an unrealized loss, at one point, of 65%. Had that one reached 100% I would have been out of the market, ie lost all my investment.

Never seen trading made so risky.

kay

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