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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

#91

Post by boxy310 »

drcode wrote: post #85
marak830 wrote: post #7

A side note, and I'm really hoping someone can explain this. What benefit does the stock market provide to us? I understand investing in companies, but for me, and I'll admit a completely naive person to this whole system, it seems to have taken an 'inbest in company with money to help them succeed', to a 'who cares let's just cut and run to make the best profit'. I'm perfectly willing to take a link to a great expla…

I short, an asset (whether a stock, a house, or a bar of gold) only has any meaningful economic value if you can actually sell it in exchange for traditional currency. Stock markets make it easy to sell your stocks- If you can't sell a stock it's just a useless piece of paper.

Further: before stock markets had a relatively clear bid-ask price range, everyday people would treat stocks as the same as paper currency (which was also relatively new at the time). This led to inflationary bubbles and crashes. The John Law Mississippi Company bubble in early 18th century France caused a significant economic crash, which exacerbated the economic situation leading up to the French Revolution a good 70 years later.

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

#92

Post by Meegul »

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

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

#93

Post by rwmj »

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.

Unless you're literally storing notes under your bed, your bank is lending out your money to someone.

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

#94

Post by lostboys67 »

lbotos wrote: post #89
lostboys67 wrote: post #19

Earlier quoted context omitted.

I am not sure what you mean by "gambling" in relation to stockmarkets. Third parties offer services like spreads CDO's and binary bets (which actually are gambling). Stock markets act as a market i.e. introducing investors to companies that need capital for example my latest buy was an American Investment trust Tetragon with out a stock market how would I be able to invest in them ?

I think it's the layman's "gambling": If I buy APPL today at X, I hope in 3 days it will be Y so I can sell. That's a gamble. You can use all forms of analysis and assessment to give you more confidence in the gamble, but it's absolutely a gamble.

Gambling implies a truly random outcome which is why Poker is a game of skill as is arguably horse racing :-)

If you can identify an temporary overhang on a particular share you can make money as the discount narrows as I have done with Witan I also made a lot on Electra private equity as it was targeted by an activist investor and they realised some of their PE investments

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

#95

Post by akgerber »

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

The middle class just needs to draw on its sizable reserves of capital to purchase homes at a fire-sale prices.

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

#96

Post by cm2187 »

wbl wrote: post #80
matwood wrote: post #40

Earlier quoted context omitted.

I hope one to one day have enough wealth that it takes months to liquidate my stocks. The number that can’t be liquidated almost instantly is very large. Additionally, IPOs are almost priced incorrrectly, and show the problems with the informal market.

IPO pricing is deliberate on the part of investment banks to reward some customers.

Actually probably more to ensure that the IPO doesn't fail, i.e. that there is sufficient demand.

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

#97

Post by lmm »

danvoell wrote: post #77

Let's say there is a big crash coming, where would you put your money for a safe bet and for a speculative bet (and please don't say bitcoin) ? During the crash of 87, it seems like you could still get a good fixed income yield. Parking it today for 1.5% just doesn't seem that valuable.

There are more people looking to invest more money today, so supply/demand means you won't get as good a return. In '87 access to capital was more valuable, so you could get paid more for it.

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

#98

Post by zzzzzzzza »

drcode wrote: post #82
danvoell wrote: post #77

Let's say there is a big crash coming, where would you put your money for a safe bet and for a speculative bet (and please don't say bitcoin) ? During the crash of 87, it seems like you could still get a good fixed income yield. Parking it today for 1.5% just doesn't seem that valuable.

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).

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

#99

Post by cstejerean »

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.

Sure, the bank benefits, but with near zero interest rates on saving accounts (in the US at least) the wealth isn’t productive for you. You are actually losing money to inflationso it’s not a good idea to keep all of your wealth in cash.

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

#100

Post by saltcured »

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 (?).

I assume you are surprised because it's the 80s?

I was typing up right and left justified essays for school using Wordstar on my CP/M machine in the early 80s and printing them out on a daisy-wheel printer. I could choose a monospace or proportional font or different font size by loading a different font wheel. I am sure Wall Street players had access to fancier tech.

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