Posts filed under “Investing”

Folly of Forecasters: NFP/Lehman/Goldman Edition

As I sat down to write this early this morning, no one knew what the jobs numbers would be. But I did know three related things:

1. The median forecast in a Bloomberg survey of economists is that 230,000 workers were added in August;

2. Almost all of the individual forecasters will be wrong. (Actually, every single forecaster was wrong, since the number came in at 142,000, way below the lowest estimate);

3. Many investors (and other finance and business professionals) hang on these forecasts as if they were Morpheus receiving word from the Oracle that “Neo is the One.”

Longtime readers of mine know my views on the folly of forecasts. I have spilled plenty of pixels here explaining just why that is (see this, this and this).

Every now and again, it is worth reminding ourselves just how terrible humans are at predicting what will happen in markets and/or the economy.

Today’s nonfarm payroll is a perfect example: That was a big miss. Of course, I have argued in the past that the NFP is the most overrated data point in investing (see this, this and this), but it does make the point of showing just how terrible everyone is at making predictions.

Continues here

 

 

 

Category: Economy, Employment, Investing, Really, really bad calls

The Value of a College Degree

The Value of a College Degree Jaison R. Abel and Richard Deitz Liberty Street Economics, September 02, 2014     This post is the first in a series of four Liberty Street Economics posts examining the value of a college degree. Not so long ago, people rarely questioned the value of a college degree. A…Read More

Category: Investing, Think Tank

How Much Business Investment Is the Right Amount?

  Andrew Lapthorne, a quantitative strategist at Societe Generale SA, recently looked at the correlation between business investment and individual stock prices, in a report titled “How does too much or too little investment affect a company’s stock price?”. Some of their results were surprising: Stocks of companies that over- or underinvest get punished in…Read More

Category: Corporate Management, Investing

How to Win the Loser’s Game

Most of what we see and hear about how to invest comes from either the fund industry or the financial media – both of which have their own agendas. This landmark documentary is an attempt to redress the balance.

Nine months in the making, How to Win the Loser’s Game aims to provide ordinary investors with the information they need to achieve their investment goals. It includes contributions from some of the biggest names and brightest minds in the investing world.

It’s being released in ten weekly, stand-alone parts, followed by the full-length, 80-minute film. Please share these videos with family, friends and colleagues, and help us to build a better, fairer and more transparent investment industry for all.

Via Sensible Investing

Transcript here

Category: Investing, Markets, Video

Morgan Stanley’s Adam Parker Capitulates

Until, not so long ago, Morgan Stanley’s Adam Parker was one of the most bearish analysts on the street. He had consistently violated one of the first rules of the market: Never mix politics with investing. Following last year’s 30% S&P 500 rally, he has had a change of heart. He now has a 3000…Read More

Category: Analysts, Investing

Household Rotation from Fixed Income to Equities

  Today’s chart comes to us from Torsten Slok, the chief international economist at Deutsche Bank AG. While rumors of an institutional rotation — selling equities and buying fixed income — swirl, we see the opposite behavior from households. Continues here    

Category: Investing, Sentiment

Worlds Greatest (and Worst) Market Timer ®

Time, not timing, is key to investing success Barry Ritholtz Washington Post, August 24, 2014     Over the past month, we looked at how you would have fared if you were an uncanny stock picker who consistently beat the market by 30 percent or so (What if You Were the World’s Greatest Trader® ?…Read More

Category: Apprenticed Investor, Investing

MiB: James O’Shaugnessy

This week’s Masters in Business Radio show at 10:00 am and 6:00 pm on Bloomberg Radio 1130AM and Siriux XM 119 (it also repeats all weekend). Our guest this week is James O’Shaugnessy of O’Shaugnessy Asset Management, author of What Works On Wall Street. You can listen to live here or stream it below or…Read More

Category: Investing, Media, Podcast, Quantitative

Ponzi Scheme Tracker

Cool data collection

Category: Investing, Legal, Psychology, Really, really bad calls

Time — Not Timing — is Key to Investing Success

> My Sunday Washington Post Business Section column is out. As a follow up to our previous discussion of the World’s Greatest Trader®, this  morning, we look at the Worlds Greatest (and Worst) Market Timer®. As we did last time out, we assumed magical powers for our theoretical trader, giving him the ability to bottom…Read More

Category: Apprenticed Investor, Asset Allocation, Investing