331–338 of 338 posts
One thing that might be helpful is to have a separate (informational) page that indicates what the diamond looked like at other period of economic failure--in fact, what it looked like leading up to the period of failure/crash would be really interesting.
I'm curious: How quickly can some of these variables changes? For example, it seems the VIX is at it's low end--how quickly can it spike to say, 30? How fast can the other vars change?
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Can anybody explain the fundamental reason behind "resistance/support lines" in technical analysis? I'm guessing it is a self-fulfilling prophecy (everybody believes in it, so it becomes true), but perhaps there is a logical explanation that I'm totally missing.
Quoting from Bruce Kamich's How Technical Analysis Works : Support and resistance areas form because market participants remember price levels, and they tend to react as a group when a stock returns to those prices. A simple example will make the concept easy to understand. Let's imagine that you and other investors bought a stock at its initial public offering price of $20. People who did not buy the stock at the of…
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In the same blog as your reference [1] you can find one of the more thought provoking essays I have read in the last little while. It's a discussion about how easier stock market diversification should lead to permanently higher multiples on earnings. http://www.philosophicaleconomics.com/2017/04/diversificatio... Highly recommended.
"Unfortunately, when we flip the point around, and say that the universe of risk assets should grow more expensive in response to improvements, people get concerned, even though the exact same thing is being said." Discredited the article to me.. Improvements of a market reduce its friction and make it more efficient: transaction costs disappear for instance. Cost and price aren't the same thing. The latter includes…
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> aggregate market cap will only increase by $50B If you list 5% of a $1 trillion company on a stock exchange, the aggregate market capitalisation goes up by $1 trillion. (Float goes up by $50bn.) Market capitalisation is price per share times shares outstanding [1]. Float is price per share times publicly-trading shares [2]. [1] https://www.fool.com/investing/small-cap/2005/04/29/quotouts... [2] http://www.investope…
You sound knowledgable about these matters, and I am not. In my ignorance, "agg. market cap" sounds like an easily gamed number. For example, I could start an exchange and ask every company in the world to list 10^-10 of their shares, and so become the largest exchange in the world by agg. market cap. (Perhaps this doesn't come up in practice because most firms list in only one market, and so agg. market cap becomes…
When only a small fraction of shares are on the market, it's quite easy to manipulate the price higher... buying pressure goes a relatively long way.
If you can get 1% of your shares to be worth $100k, it now appears as though you are a $10 million company. This makes you appear reputable.
Drive hype about your "valuable" company, and once the stock is sufficiently pumped, dump your shares for profit.
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I wouldn't worry about student loan debt being a problem. It's very likely that they're going to get a bailout before a bubble bursts. Where on earth did I come up with this, you ask? Easy - I just paid my student loans off last week. It's only natural that everyone else will now get bailed out! Seriously, though, this is a real problem and we need to do something. Even if it doesn't have a direct effect any time soo…
> Seriously, though, this is a real problem and we need to do something the thing we have to do is not borrow money we can't repay. capitalism is a distributed system. borrowing money you can't repay is a broken local protocol. don't try to fix that with anything but fixing it locally.
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Gold having intrinsic value is a straw man argument for it being different than Fiat currencies. Consider this thought experiment. You are going to live by yourself in the forest for a month. Would you rather have A) a weeks worth of food or B) 1 oz of gold. I think this highlights there is no intrinsic value or at least much lower than what people claim. Obviously, there is place for gold in electronics and circuitr…
Gold's price is not supported by its instrinsic value, I'll give you that. But the "forest" test is absurd. By that definition computers, chemotherapy and candy have no instrinsic value. Gold's value comes from its (a) millennia-long history of stably holding value across cultures and technological domains and (b) its tangibility and physically-enforced scarcity. Its intrinsic value is a fraction of its market value,…
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But point a and b in you're assessment of gold's value are two of the most common arguments for crypto, specifically bitcoin, as well. a) crypto holders believe that the value will hold because as more individuals use it to store their net worth, the harder it will become to manipulate. ie. a history of price growth/eventual stabilization will occur in time. b) its algorithmically-enforced scarcity, which many people…
I think there's potential for cryptocurrencies to find homes in the modern financial landscape. But your counterpoint (a) is based on network effects. Distinguishing between short-term bubble behavior and long-term resilience can only be done after knocking the system with crises. Is there hope? Sure. Is it demonstrated? Absolutely not. There is one feature gold has over Bitcoin that cryptocurrencies cannot replicate…
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"Unfortunately, when we flip the point around, and say that the universe of risk assets should grow more expensive in response to improvements, people get concerned, even though the exact same thing is being said." Discredited the article to me.. Improvements of a market reduce its friction and make it more efficient: transaction costs disappear for instance. Cost and price aren't the same thing. The latter includes…
Nothing he says is contradictory to the point you are making here. As markets grow more efficient it become easier for buyers to enter the market which increases demand which causes asset prices to rise.
Basically you say that the decrease in friction in a market drives the demand up: as markets grow efficient it become easier for buyers to enter. However I see that it become easier for seller to enter as well! So it is not necessarily a driver of demand..
This argument can be correct in an asymmetrical market like the ones for bonds, equities, real estate, commodities but it doesn't hold in FX markets for instance (perhaps the money market as well) or other derivative markets where there is not so much bias in being a buyer rather than a seller.
Although, I might say this argument can be available in a world were investors are in majority of the 'buy and hold' type. Which is the world we live in actually! So I can agree with him that new market opportunities and improvements in market efficiency can be an explanation for the flow of cash, and thus inflated prices... even bubble genesis! The venture capital markets or the crypto-currency ones are perfect examples.
To conclude you made me think twice about that and I kind of agree with him but I still don't think it is a universal argument.