OT - Dow plunges 1,175 - worst point decline in history

[oldpotatoe]

Originally Posted by Scuzzer

I only quoted this part since it seemed pointless to quote the whole mess. Any chance you can give it go in American English or am I just too stupid to understand contemporary academise even though I have a degree in Aero Engineering from Purdue.

Don’t think yer stupid, I had no idea what he said either...

[Mr. Pink]

Originally Posted by Scuzzer

I only quoted this part since it seemed pointless to quote the whole mess. Any chance you can give it go in American English or am I just too stupid to understand contemporary academise even though I have a degree in Aero Engineering from Purdue.

isn't some of that the most amazing stuff? Where do people learn how to talk like that? I encounter it a lot when reading about finance. Buisiness schools? Are they to blame? Certainly not humanities departments. I hope. My old English professors spin in their graves.

[Ozz]

Originally Posted by Scuzzer

I only quoted this part since it seemed pointless to quote the whole mess. Any chance you can give it go in American English or am I just too stupid to understand contemporary academise even though I have a degree in Aero Engineering from Purdue.

Doing my best Keegan-Michael Key translation....

There are fewer investors trading larger dollar amounts in the market. The causes are uncertain...

Possible reasons are more institutional investors, automated trading programs, fewer workers due to being displaced by machines, or are investment dollars just being thrown at companies without regard to financial performance. (my comment: everyone has an index fund in their 401(k) which means every payday dollars need to be invested in those 500+ companies regardless of their financial performance).


But I could have mistranslated as well.....

[1centaur]

Passive investing is like technical analysis; both rely on fundamental investors doing what they usually do, which is seek value and shun problems. Call that a parasitic approach to investing. But if the host were to have less mass than the parasites, the system (and rationale) would fail. I don't think we're at that point (no statistic I have read suggests we are) but on the margin the next bid or ask on a stock, for example, may be more passive parasite than thoughtful host. That can drive stocks up, as even fundamental investors won't get in front of a freight train, and it can drive stocks down. The implication is that volatility should be higher in an era of passive and momentum investing. Expect volatility in your portfolios and invest accordingly. Out-trading the thoughtless hordes (computers among them) is unlikely to be successful in the long run. No FOMO for overvalued stocks and rational appreciation of cash flows for undervalued stocks will work in the long run, I suspect, but it may take longer than usual for the truth to emerge. Most people will not be that rational because they'll think "the market knows," so be prepared to wait a while for your superior thought process to be rewarded.

[93KgBike]

Originally Posted by Scuzzer

seemed pointless to quote the whole mess.

Originally Posted by mr. pink

where do people learn how to talk like that?

I'm no expert; I read the newspaper like anybody else. I stated some facts that the WSJ has published this year, and asked some questions that occur to me.

You don't want bother with those question? Fine.

But don't insult me.

[choke]

Originally Posted by 54ny77

ask two economists a question on directional trends/predictions and you'll get at least 4 answers!

I can't resist....


"If all the economists were laid end to end, they would not reach a conclusion." - usually attributed to George Bernard Shaw but unverified

"The only function of economic forecasting is to make astrology look respectable." - Ezra Solomon

[cachagua]

Originally Posted by choke

"If all the economists were laid end to end, they would not reach a conclusion." - usually attributed to George Bernard Shaw but unverified

"The only function of economic forecasting is to make astrology look respectable." - Ezra Solomon

And,

"Islam is often called the youngest of the world's major religions, but in fact that distinction belongs to economics." - Ewan Housarmi

[MattTuck]

Originally Posted by 54ny77

that's all you got?

man, i could've gotten that from a cab driver.

Better to be approximately right than precisely wrong. If cab drivers are giving you investment tips, all the more reason to view this market with great skepticism.... what was that old adage about shoe shine boys?

[joosttx]

Originally Posted by choke

I can't resist....


"If all the economists were laid end to end, they would not reach a conclusion." - usually attributed to George Bernard Shaw but unverified

"The only function of economic forecasting is to make astrology look respectable." - Ezra Solomon

Its better to create the future than to predict it....

[Mikej]

Originally Posted by Scuzzer

I only quoted this part since it seemed pointless to quote the whole mess. Any chance you can give it go in American English or am I just too stupid to understand contemporary academise even though I have a degree in Aero Engineering from Purdue.

I think it means companies are keeping their money and not rehiring more people as others leave and as the workload increases. On top of bringing back their overseas cash and using it to buy back company stock. In other words, the regular person gets nothing as everything gets expensive and companies increase profits. Just my guess-

And remember, economists predicted 12 of the past 3 recessions.

[prototoast]

Originally Posted by cachagua

And,

"Islam is often called the youngest of the world's major religions, but in fact that distinction belongs to economics." - Ewan Housarmi

If I may speak in defense of economists (which I am), I this quote speaks more to what people project on economists than how economists actually think. Sure, there are a few "big name public intellectual" economists who preach like they are omniscient, but most economists I interact with professionally understand that economics and economies are complicated and must be approached with a great deal of nuance and respect for the uncertain. But such nuanced understanding is not what cable news wants, it's not what politicians want, and it's not what most people want to hear.

A lot of questions economists are posed by non-experts often come across like "what's the best bike to buy?" You can either give an unqualified answer and maybe you'll get lucky, or you can get into more detail than the questioner is ready to hear. It's often a no-win proposition, but since myself and many fellow economists like to educate people, we'll often go for the latter no matter how well it's received.

[CunegoFan]

Originally Posted by MattTuck

Better to be approximately right than precisely wrong. If cab drivers are giving you investment tips, all the more reason to view this market with great skepticism.... what was that old adage about shoe shine boys?

Forget cab drivers and shoe shine boys. Head over to Reddit and it is filled with posts like, "I'm 16 and have $500. How can start trading?"

[verticaldoug]

Originally Posted by 1centaur

Passive investing is like technical analysis; both rely on fundamental investors doing what they usually do, which is seek value and shun problems. Call that a parasitic approach to investing. But if the host were to have less mass than the parasites, the system (and rationale) would fail. I don't think we're at that point (no statistic I have read suggests we are) but on the margin the next bid or ask on a stock, for example, may be more passive parasite than thoughtful host. That can drive stocks up, as even fundamental investors won't get in front of a freight train, and it can drive stocks down. The implication is that volatility should be higher in an era of passive and momentum investing. Expect volatility in your portfolios and invest accordingly. Out-trading the thoughtless hordes (computers among them) is unlikely to be successful in the long run. No FOMO for overvalued stocks and rational appreciation of cash flows for undervalued stocks will work in the long run, I suspect, but it may take longer than usual for the truth to emerge. Most people will not be that rational because they'll think "the market knows," so be prepared to wait a while for your superior thought process to be rewarded.

Low volatility and raising market values was a specific target of Fed QE. If credit default is the ultimate volatility event for a company, then the FED's plan to crush rates has lowered volatility. Bernanke said as much when his purpose was to make risk assets more attractive.

Now with a normalizing economy, if Powell has to try to unwind the QE Bubble, all the FED needs is a policy mistake and volatility will come back with a vengeance.

[Tony T]

No one posts on a good day.
DOW up 400, Nazdaq 155, S&P 43

[Big Dan]

Originally Posted by Tony T

No one posts on a good day.
DOW up 400, Nazdaq 155, S&P 43

Tony, please tell us when the "trickle down" is supposed to hit.