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The Crash of ’87, from the Wall Street Players Who Lived It

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Re: The Crash of ’87, from the Wall Street Players Who Lived It

#101

Post by Meegul »

rwmj wrote: post #93
Meegul wrote: post #92

Earlier quoted context omitted.

This is only partially true. It ignores the job losses that result from the fall in capital available to firms. Additionally, anyone owning equities, which should be most of the middle class although I'm aware this isn't the case, will see their wealth decrease. I'd argue that the only people who benefit from crashes are those with large amounts of cash assets, which is generally not how you should be holding your we…

> Holding cash, after all, is just withholding wealth from being productive. Unless you're literally storing notes under your bed, your bank is lending out your money to someone.

True in the larger economic sense. But on an individual level, even the best savings accounts which typically get a bit above 1% interest will not keep up with the 2-3% inflation that we see (and the fed targets).

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#102

Post by nradov »

rwmj wrote: post #93
Meegul wrote: post #92

Earlier quoted context omitted.

This is only partially true. It ignores the job losses that result from the fall in capital available to firms. Additionally, anyone owning equities, which should be most of the middle class although I'm aware this isn't the case, will see their wealth decrease. I'd argue that the only people who benefit from crashes are those with large amounts of cash assets, which is generally not how you should be holding your we…

> Holding cash, after all, is just withholding wealth from being productive. Unless you're literally storing notes under your bed, your bank is lending out your money to someone.

That might have been true long ago but with fractional reserve lending this linkage is effectively severed. The bank usually isn't lending out your money. The total amount a bank can lend out is constrained more by regulatory requirements and its invested capital than by the balance of customer savings/checking/CD accounts.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#103

Post by justin66 »

netsharc wrote: post #56
technofire wrote: post #45

Does anyone else find it surprising and remarkable that Paul Tudor Jones' monospaced letter is perfectly flush on the left and right margins with apparently no hyphenation nor additional inserted spaces within the lines? Surely this did not happen by coincidence (?).

Presumably done by an electronic typewriter? AFAIK they would buffer a line (or more?) of whatever you're writing, and when you hit enter, everything will be printed/punched out. I'm guessing it has a setting to justify, and it does that by adjusting the gaps between letters.

Indeed. With a font that's monospaced (or close) that kind of justification isn't hard. I had a typewriter that could do that. (I don't remember how it handled hyphenation)

Those typewriters were an odd generation, technology between PCs and the older but more expensive IBM Selectric typewriters. I cannot remember if mine was called a "word processor" (I don't think so) but it certainly had a little 8-bit computer in there.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#104

Post by Retric »

Retric wrote: post #68
dagw wrote: post #50

Earlier quoted context omitted.

How many people own 60% of a publicly traded company?

Worldwide probability less than 20. But again that's just the extreme that demonstrates what's gong on. If you ever watch a stock ticker and calculate the volume of sales needed to change the price it's less than most people assume. +/- a few cents might not seem like much but drops can spiral with relatively small initial sales.

PS: While this topic seems to annoy people I suggest you look up 'off-board' trading before dismissing the idea. EX: https://www.wsj.com/articles/SB860538568435594500

The reality is the current ticker price is only meaningful up to mid sized transactions.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#105

Post by PatientTrader »

Meegul wrote: post #92
PatientTrader wrote: post #87

Crashes are actually great for the middle class. The value of the dollar increases as prices come down. Homes, land, property, etc all become cheaper during crashes. This "bull market" is the actual "crash." All its doing is depleting the value of your money

This is only partially true. It ignores the job losses that result from the fall in capital available to firms. Additionally, anyone owning equities, which should be most of the middle class although I'm aware this isn't the case, will see their wealth decrease. I'd argue that the only people who benefit from crashes are those with large amounts of cash assets, which is generally not how you should be holding your we…

> Holding cash, after all, is just withholding wealth from being productive.

Not true. Cash in hand or cash in the bank is actually an asset not a liability. Every diversified portfolio should have cash in it. Some say as much as 30% of your wealth should be in cash or in assets that can be quickly converted into cash. If all of your wealth is tied to real estate or illiquid assets than that is a problem.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#106

Post by yan »

justherefortart wrote: post #75

My fake portfolio as a kid was heavily IBM weighted. I think it was 120 or 126/share before the crash. This is one of the reasons I got a degree in finance (and economics). I wanted to know what to do with my money if I ever had any.

Did your degree help you with that decision?

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#107

Post by DINKDINK »

"The nascent equity options market saw assumptions based on the Black-Scholes model overturned and replaced by a more complex world of volatility skews"

Black-Scholes is based on an assumption that stock moves are normal/Gaussian distributed. If have a background in statistics, that should make you revolt.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#108

Post by madengr »

yan wrote: post #106
justherefortart wrote: post #75

My fake portfolio as a kid was heavily IBM weighted. I think it was 120 or 126/share before the crash. This is one of the reasons I got a degree in finance (and economics). I wanted to know what to do with my money if I ever had any.

Did your degree help you with that decision?

Yeah, inquiring minds want to know.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#109

Post by forapurpose »

PatientTrader wrote: post #87

Crashes are actually great for the middle class. The value of the dollar increases as prices come down. Homes, land, property, etc all become cheaper during crashes. This "bull market" is the actual "crash." All its doing is depleting the value of your money

> Crashes are actually great for the middle class

In perhaps one narrow sense. The middle class people who lose their jobs and savings, or whose welfare depends on economic activity (i.e., almost everyone) such as others buying, selling and investing in things don't do so well.

Perhaps there is some data on how well the middle class did in 1929, 1988, 2008, etc.

Re: The Crash of ’87, from the Wall Street Players Who Lived It

#110

Post by technofire »

zzzzzzzza wrote: post #98
drcode wrote: post #82

Earlier quoted context omitted.

I've been wondering the same thing- The best I can come up with is a ratio (depending on risk tolerance) of treasury bonds, an index fund, and non-fiat currency substitutes (gold and/or crypotocurrency) Complain about Bitcoin and their ilk, but they could (in theory at least) offer some protections against stock market crashes and/or high USD inflation.

"but they could (in theory at least)", uhm, what theory is this? No seriously I would like to hear the theoretical basis for this assertion (though I think you are totally wrong as well).

Well, one theory is that the valuation of bitcoin is largely unrelated to the systematic overvaluation of companies that ostensibly would be the reason behind a crash. Thus when the market start revisiting its value of stocks, this doesn't affect the value of cryptocurrencies.
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