Posts tagged as:

stocks

Puzzling the Dow

August 14, 2011

What is the probability that the sum of the digits of the Dow's change would add up to the 26 on three consecutive days?

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A funny thing happened on the way to the downgrade

August 9, 2011

The most interesting thing about yesterday's market action was the behavior of the Treasury market: It rose. If the market collapse was really about investors reacting negatively to the United States' new, lower credit rating, why on earth would replace their stocks with a direct investment in that very same government? We can only know [...]

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Demand Media, indeed

July 28, 2011

Jason Calacanis writes: Sad to see Demand Media getting crushed in the market. Demand Media is a content farm (in every negative sense of the word) which (by some accounts) was crushed by Google's most recent "Panda" update that was aimed at removing junk spam Demand Media from search results. So to put this tragedy [...]

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Words to live by

July 2, 2011

"Hope" is not an investment strategy.

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Irrational exuberance, indeed

June 23, 2010

Here's an amusing chart showing the percent of stocks that sell-side analysts have rated "sells", on average: There's a million junk-chart bloggers who will tell you how much is wrong with this graph (myself included) - starting with the left hand scale, which should go up to 10% rather than 100%. But in a rare [...]

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On fat fingers

May 7, 2010

I don't believe that a trader error kicked off yesterday's crash. I do believe that computers exacerbated it. I also believe that there were transactional errors following the initial collapse. I would like to point out that when I say "computers exacerbated it," I include both HFT, algorithmic trading, and every retail investor's trailing stop-loss. [...]

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Molehills out of mountains

December 21, 2009

The WSJ has crunched the numbers and concluded that: In nearly 200 years of recorded stock-market history, no calendar decade has seen such a dismal performance as the 2000s. Investors would have been better off investing in pretty much anything else, from bonds to gold or even just stuffing money under a mattress. Since the [...]

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Things you should know before you invest

November 2, 2009

The WSJ's top story this morning was one titled "The Cruel Math of Big Losses" - an article written as if it were an eye-opening expose into a little-known piece of financial wisdom rather than a blatantly obvious restatement of basic math: when you lose X%, it takes a gain of more than X% to [...]

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Recovering from false news

July 17, 2009

Via Alea, a very interesting econometric study on the impact of false news on stock prices. In September 2008, an article on United Airlines' 2002 bankruptcy resurfaced and was distributed as if it were new information. The company's stock plummeted immediately, but bounced back and by the end of the day was off only 11% [...]

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Stocks are a zero-sum game

July 15, 2009

I firmly hold that all financial contracts are zero-sum games. Recently, however, I have heard many arguments premised on the idea that the stock market is positive sum because economic growth creates wealth, which is reflected in universally rising stock prices. But in this scenario, you purchase $1 of stock on Day 1. On Day [...]

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Irrational markets: V-shaped edition

June 8, 2009

The market shot up late this afternoon because Paul Krugman stated: “I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some [...]

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The Inviolate Principle...?

May 29, 2009

Those naive financial journalists at The Atlantic are back! Andrew Gelman pointed me toward this misguided look at the latest auto bankruptcy (you know the one I mean). Key quote: Purists -- and virtually every academic economist one happens to encounter -- wonder what happened to the once inviolate principle of rewarding risk-takers. You'll have [...]

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Shades of bullishness

May 29, 2009

FT Alphaville has a post up regarding new research from Citi on how analysts make recommendations. It is accompnaied by this graph: The graph shows the average recommendation across all analyst-covered stocks, for the last 15 years. A stock gets a 1 if every analyst recommends buying it; a 5 is given to a universal [...]

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Finding the bottom

May 7, 2009

Russell Napier wrote the book on identifying bear market bottoms (really) and Alphaville provides selections from an interview he recently gave to the FT. Fascinating stuff, if you like reading your news through Roubini-tinted glasses. The concept of identifying any sort of local minimum without the benefit of hindsight is inherently questionable, but the use [...]

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How to lose your money without really trying

April 27, 2009

An author describes a lose-lose strategy.

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From the "future knowledge" file

April 25, 2009

Just overheard on Charles Schwab radio (a story for another time): Astute investors know the stock market typically bottoms before the economy. If only an investor could identify a bottom without the benefit of hindsight, such knowledge would actually be useful.

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The mysterious case of the SPX spike

April 23, 2009

Get out your tin foil hats, there's something sinister afoot! Zero Hedge, a blog which has been getting an astounding amount of press lately (in particular because of this rumor) posted the following picture this afternoon "without commentary" (please note I recreated their image to use EST times): This is called a volume-at-price chart, or [...]

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Solve a mystery or rewrite history

April 21, 2009

Uh-oh, the naive journalist has even more naive readers: In response to my article on the financial mess, Goldblog reader Dan Simon writes in to explain the market's recent follies. I am not going to print the explanation here lest someone read it, but basically it claims that the pre-1980 stock market was a beacon of efficiency [...]

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A casualty of chance

April 20, 2009

I discovered this Atlantic article ("Why I Fired My Broker") on MB's blog.  I came to enjoy it in the end, but while I was reading it I was struck by how representative it is of contemporary financial journalism.  This is the new cookie cutter article: naive reporter is encouraged by rich capitalists to invest, [...]

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On revisions

April 3, 2009

A lot of headlines this morning are noting that the jobs report is "in line with expectations", with a change of 663,000 vs the survey median of 660,000. What gets ignored is the revised number. For 13 straight months, the prior month's number has been revised lower by a significant amount after the fact - [...]

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The graph is half full

March 31, 2009

The Big Picture has a post which borrows two graphs from Credit Suisse that are meant to illustrate the performance of the S&P 500 in the 100 days following a "major trough."  I re-borrow them here: It looks like the top graph represents a collection of bear market bottoms, which are easily identifiable by the [...]

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The most irresponsible thing Obama has said

March 3, 2009

The headlines today said it all: Obama: Buy stocks now. The full statement is this: What you’re seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long-term perspective on it. Is he out of his mind? This is perhaps [...]

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