Posts filed under “Investing”

Please Stop Talking About Inflation Adjusted Nasdaq

The last refuge of scoundrels is their blind insistence that all data points must be adjusted for inflation.

I was reminded of this earlier in the week when Nasdaq, after 15 long years, closed above the 5,000 mark. The immediate response from parts of the bearish contingency was to demand that the numbers take into account the rise in prices.

There are many, many reasons why this is irrelevant to investors.  Let’s focus on just three:

The first is technicals. When practitioners of this form of analysis look at support and resistance lines in a graph of a stock or index, they are actually delving into the world of psychology. Traders recall that when they bought stocks at a specific price, they were rewarded. That muscle memory keeps them coming back for more at those prices. This is true for stocks, exchange-traded funds and even indexes.

Similarly, they remember being punished when they paid too much at specific prices. Who among hasn’t thought to ourselves, “Dear Lord, let me just get back to break-even”? That is why share supply often appears at specific prices. It is a sign of investors recalling an earlier purchase that has been painful.

Continues here

 

Category: Inflation, Investing

Macro Hedge Funds ‘Stinking Up the Joint’

Ritholtz Wealth Management Chairman Barry Ritholtz discusses the markets and his investment ideas on “In The Loop


Bloomberg, March 3 2015

Category: Investing, Media, Really, really bad calls, Video

Be Like Warren Buffett? No . . . Be Like You

Much of the financial world is all abuzz over the 50th annual letter to shareholders of Berkshire Hathaway, released this past weekend.Financial journalists, amateur Buffett sleuths, Graham & Dodd aficionados and just about everyone I know spent some quality time this weekend with this letter. They are all trying to identify that one pearl of wisdom that…Read More

Category: Apprenticed Investor, Investing

Momentum vs. Mean Reversion

Salil Mehta is a statistician and risk strategist. He served for two years as Director of Analytics in the U.S. Department of the Treasury for the Administration’s $700 billion TARP program. He is the former Director of the Policy, Research, and Analysis Department in the Pension Benefit Guaranty Corporation. Salil is on the Editorial Board for the…Read More

Category: Investing, Mathematics, Research

Don’t Make the Trading Gods Laugh

Today’s discussion is aimed at the individual investor, though certainly the professionals might take something from our philosophical musings this morning. The bull market that dates to March 2009 is now entering one of its more interesting — and perhaps dangerous — phases. Not hazardous, mind you, from a market perspective, but from a behavioral…Read More

Category: Cognitive Foibles, Investing, Psychology, Really, really bad calls

Dilbert: Beating the Average

Source: Dilbert

Category: Bad Math, Cognitive Foibles, Humor, Investing

I wanted to spend a bit of time on the Labor Department’s proposal to place a fiduciary obligation on those who manage or provide investment advice on retirement plans. These include individual retirement accounts and 401(k)s (including 403(b)s). The new rules require the broker or adviser to “operate in the best interest of the client.” I don’t…Read More

Category: Index/ETFs, Investing, Mutual Funds, Really, really bad calls

Nasdaq 5000 and Beyond?

Barron’s looks at Nasdaq’s momentum and the zombie apps no one talks about.

 

 


2/20/2015 4:13PM

Category: Investing, Technology, Valuation, Video

10 Insane Things We Believe On Wall Street

To outsiders, Wall Street is a manic, dangerous and ridiculous republic unto itself – a sort of bizarro world where nothing adds up and common sense is virtually inapplicable. Consider the following insane things that we believe on Wall Street, that make no sense whatsoever in the real world: 1. Falling gas and home heating…Read More

Category: Corporate Management, Investing, Philosophy, Really, really bad calls

No, EVERYTHING Is NOT A Forecast

As one of those folks who has spent a lot of time bashing economic and stock-market forecasters (see this, this, and this), I have no choice but to take issue with an argument made by former hedge-fund manager Jesse Felder, who asserts “that everything is a forecast.” To quote Felder: Can we please stop bashing forecasters already? There is a…Read More

Category: Asset Allocation, Bad Math, Investing, Mathematics