Why the stupid fund Mgr is buying now ?
- Thread starter galvinlee888
- Start date
Market reverse from deep red before close. This is really fantastic consider the bad news outside - Europe downgrade, Greek in the blink of collapse and etc.
The "buyers" (Fund Mgr with IQ=80?) really come in and buy the dip ?
Sit tight and prepare for the crazy rally next week.
Quote from galvinlee888:
Market reverse from deep red before close. This is really fantastic consider the bad news outside - Europe downgrade, Greek in the blink of collapse and etc.
The "buyers" (Fund Mgr with IQ=80?) really come in and buy the dip ?
Sit tight and prepare for the crazy rally next week.
Maybe their IQ's aren't 80 then.
All right, this sounds idiotic. There is no other reason to trade. Are you saying talking heads don't have that motive?
Fund managers generally do not have IQ's of 80, but more than 120+ or if you prefer standard deviations at least two positive deviations away for the mean for the average accountant and a fund manager is substantially similar.
You can read Hernstein's and Murray's book <u>The Bell Curve</u> to learn about the stratification of our society according to bell curves and percentiles.
Then you can write a 20 page paper called IQ and Income using SAS and confirm the linear regressions yourself. Intelligence as measured by ASVAB percentiles are the most significant predictor of annual income.
There is no fund manager that stupid, and just because you have a different opinion doesn't mean their IQ's are that low. Most fund managers prefer low turnover to high because it may be their mandate and whenever they get inflows to their fund they figure that they must have read all of their prospectuses and, thus, are ready to let them "manage money" even if that means buying at inopportune times.
In <u>The Bell Curve</u> Lawyers and Accountants typically had statistics from no less than 2 standard deviations up.
How intelligent would you have to be to be a single black mother with three kids and what effect would that have on your annual income? The statistics are controversial but what IQ 80 would imply is someone who is slightly better than competent enough to write their own name and do basic math. There is no retarded investment professional managing a fund, and that much I can guarantee.
In all seriousness, I know the op is just trying to rationalize.
I'm not stupid, and I say short this market, but I do it with stops, and quantitative mathematics not relevant to any buyers popping money in the market at the beginning of the year and beginning of the month just so you don't have to worry about the hassel of handling a dollar cost averaging approach after getting paid bonuses and that's the only reason we're up these past two weeks.
The commentators are saying we are "decoupling", when that isn't possible. It's just we got so many incompetent investment professionals wanting to get paid their fees and their clients just gave them more money than usual and that will be reflected in net domestic inflows to mutual funds next month, but it is really just that there is greedy buying in the market and while it is impossible to decouple, the fact that Eurosis hasn't dropped our market more is more a reflection of that time of the year than it is as a sign of a bull market starting.
Lower high.
They're not allowed to hold cash or go short, so they move into whatever they think that will fare better. The low volume indicates weakness. Also, the Europe's problems and downgrade are like an American upgrade.Quote from galvinlee888:
Market is going up gradually since 1/10, every sell order is meet by a buy order, obviously someone is buying. ...
It isn't possible to decouple. They (CNBC) had a talking head at the end of today talk about "disconnecting", rather than decoupling.
Decoupling has been the argument for pre-empting exponential US stock market growth most managers use to get their investors to ignore foreign problems.
It is not possible to decouple, because world markets are interconnected, and my opinion is that the supposed "decoupling" you're seeing is just seasonality and new money entering the market after being on the sidelines ready to invest at the beginning of the year and also at the beginning of the month. The combination of these two has been the impetus for stock market gains, but will not last because the European debt crisis are sovereign credit problems that the EFSF is not financed large enough to ever save all of the countries it will supposedly help. Now that Germany is the only AAA credit backing the fund, it is doubtful that the increased borrowing costs of nearly every Euro Zone country will ever decrease, making the EFSF a sham p-shooter compared to the US Bazooka, but our bazooka helped private companies, not finance political, fiscal malfeasance and socialism.
The analysis is easier if you realize that in terms of market timing, there was a wave of buying before the official open of 2012, and there have been stocks making new 52 week lows in all this, so it's not like the rally is that broad based, and since I don't get much credit for my analysis anyway I'm just going to say that after the first day of 2012 I immediately faded but obviously that hasn't worked out very well. The decoupling is not possible because it is not possible and won't ever be possible. It's the adage that macroeconomy is not affected by exogenous foreign difficulties when we know that we have to export to grow our economy. The argument that we don't need Europe is an especially stupid argument and since they are a large percentage of global GDP, never mind that Greece is just 3% of their National GDP, it isn't possible to avoid the effects of contagion because as the Euro crashes to parity with the dollar, this will strengthen our currency and decrease net profits from foreign translations that are most likely already hedged. We haven't seen the market price that in, but when we see the earnings from the financials I'd be interested to know what they're doing to hedge their interest rate and currency risk. Just because they are a financial institution does not mean that they can perfectly arbitrage every fluctuation in the forex markets, so with that, the multinational corporations will see their balance sheets hit by foreign currency loss translations due to a weakening Euro and strengthening dollar. If you want proof, you should notice that the Euro crashes at the same time our market declines, and this is due to that translational accounting effect on balance sheets of Foreign and Domestic Multinational Corporations doing business in the Eurozone.
The effect, or, result, I should say, will be both hyperinflation and deflation, with deflation primarily ocurring as soon as interest rates rise, the stock market collapses, Euro approaches parity, and the EFSF is inevitably almost completely used up defending sub A- credits like Greece, Italy, Spain, and Portugal, which leaves another waft of deflation in the wake sending European markets crashing out of a combined hyperinflationary deflation disaster globally.