Kudos to MMs
- Thread starter nitro
- Start date
I am a mathematician and I am stickler for definitions. What you said is not this. It is what you may have meant, but not what you stated. However, I understand what you mean.
So basically you believe the market goes up on value (earnings, velocity of earnings, etc) and I think that has almost nothing to do with anything.
It is simply money chasing an asset class, and too few "sellers" meeting them at the given price. The myriad of reasons why this can be is guessing. In fact, there could be no reason. Index funds, pension funds, etc have $x to put into different asset classes, and in it goes. In other words, it is almost all beta. No reason other than that these institutions have money inflowed into them have to put to use. Value velocity etc? Irrelevant.
I dont agree with this theory if you are talking about longer time frames. You can see the market reacting to economic data. GDP growth rates in the first year of recovery translates into 6x corp profit growth rates in the national income accounts(source: Barrons), therefore unless you are arguing that earnings dont matter in the long-run, its very resonable for people to use equities as casino to bet on where the economy is going
And value does matter, John Mauldin has plenty of data on stock returns being depending on the starting PE ratio of the market when you bought. HOWEVER if you are referring to short-term I do agree, anything can go and the fundamentals can be distorted by whatever speculative mindset that is going on. People will chase trends, rationalize,etc
Well, no question markets move in response to news. I think it is all a mirage. You know what my theory of markets is? The only time the value of a company's shares should rise or go lower is when a company raises or lowers its dividend. Everything else that people usually quote (earnings, margins, blah blah) in theory leads to this rising or lowering of the dividend for the shareholder, but it doesn't always, or even mostly. All the other reasons spouted on Economics books and trading books are greater fool theory maskeraded.
http://en.wikipedia.org/wiki/Greater_fool_theory
For example, people have always stated how amazing GE was to magically for ever make its earnings target. What most don't know is that GE did this by finagling with the dividend on the back end. You know why they did this? Because the earnings number is deemed more important than the money that they pay you with those earnings as a shareholder. LMAO!!!! Companies lie all the time, and some of those lies are legal, and some are not. The only thing that is real is the dividend they pay you. Try buying a can of tuna with shares of GE.
However, that what you are saying is correct. It is only correct though because every one else has bought into the beauty contest.
http://en.wikipedia.org/wiki/Greater_fool_theory
For example, people have always stated how amazing GE was to magically for ever make its earnings target. What most don't know is that GE did this by finagling with the dividend on the back end. You know why they did this? Because the earnings number is deemed more important than the money that they pay you with those earnings as a shareholder. LMAO!!!! Companies lie all the time, and some of those lies are legal, and some are not. The only thing that is real is the dividend they pay you. Try buying a can of tuna with shares of GE.
However, that what you are saying is correct. It is only correct though because every one else has bought into the beauty contest.
Nitro has a major flaw, well more than one.
#1 He says he is a math person and is not flexible. He is fixated on assuming the mkts are pure "SCIENCE" and requires no "ART". That explains why he refuses to recognize some traders have more skills than others and also explains his lack of recognizing that trading is a game of chance. He refuses to allow room to "play the odds" on what the mkt action is showing him on the screen. He allows no room for a traders "INTUITION" based on past experience.
All the above explains why he has a horrible habit of refusing to use a STOP LOSS.
:eek:
#1 He says he is a math person and is not flexible. He is fixated on assuming the mkts are pure "SCIENCE" and requires no "ART". That explains why he refuses to recognize some traders have more skills than others and also explains his lack of recognizing that trading is a game of chance. He refuses to allow room to "play the odds" on what the mkt action is showing him on the screen. He allows no room for a traders "INTUITION" based on past experience.
All the above explains why he has a horrible habit of refusing to use a STOP LOSS.
:eek:
I have a bad feeling about 1050.
It looks like Index Options MMs at the CBOE are going to pin 1050 on quadruple witching (that's their short strike). If so, I am in trouble of taking a somewhat stinging loss because I am 85 delta to be out by the latest Sunday night open and probably Friday's close.
I thought the odds of 1000 over 1050 were substantial. Looks bad...
It looks like Index Options MMs at the CBOE are going to pin 1050 on quadruple witching (that's their short strike). If so, I am in trouble of taking a somewhat stinging loss because I am 85 delta to be out by the latest Sunday night open and probably Friday's close.
I thought the odds of 1000 over 1050 were substantial. Looks bad...