Risk based opportunities are not "good investment", they are at best speculation and gambling.
You do realize there is no such thing as no-risk investment vehicles, right? Every investment has an element of risk to it. Even US savings bonds, despite what you've been told, has an element of risk to it. There is nothing to say that Uncle Sam won't default on it's debt.
Seebert, please pick up a copy of the Black Swan, or When Genius Failed, or Against the Gods. Trust me, my good man, there is NO such thing as NO risk. Even insurance companies establishing policies for what they deem as "safe" clients, their actuaries know there is still a chance.
As for the other things, seebert, frankly you need to take a corporate finance class. And if you have, re-take it. What you propose is simply impractable. Your dividend model would lead to diminishing returns and eventually insolvency. How? If, as you say, the company should reward shareholders through only dividends, then if a company needs more capital it will have to issue more stock.
Increasing the supply dilutes the existin shareholder base, this is also one of the fears of the banks currently under TARP. Now if you have to distribute dividends, then you are taking money away from other capital investments. Secondly, as you increase the float, the yield decreases. Do the math. If there are only one-hundred shares on a stock with a par at $10, and it pays out $1 in dividends, your yield is 10%. Now what do you think happens when they issue another 100 shares? Remember now, they set aside a certain amount for dividend payments. The new shareholders aren't going to get $1/share, and neither will the original holders of the first 100 shares. Eventually you get to a point where they will not be able to attract investors to meet the firm's capital needs.
If you aren't allowed to be a populist and create an economic system based on POPULISM, then what's the point?
What has a real time open market gotten us other than an open market for fraud, as you've pointed out time and time again?
What has foreign trade gotten us, other than a load of debt we'll never be able to repay, as other articles here have shown time and time again?
What has a fiat currency gotten us, other than an opening for a true communist military spy to promote a fake model?
If we're not willing to expand the idea of what is economics into something that works for the entire population instead of just a small percentage, what exactly is the point?
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Moral hazards would not exist in a system designed to eliminate fraud.
Seebert, yesterday I warned, strongly on writing economic fiction. Trying to create options out of money, which we patiently explained why using batteries or power as a unit of monetary exchange is illogical...yet here is this nonsensical "idea" being brought up again as some sort of valid concept. Things like a real time open market, such as the stock market should magically be turned into a private venture capital system....which is defeating the entire concept of market economies and what the stock market actually is.
These comments are not in economic reality. Either is trying to compare a 10 year old census to current unemployment rates as we also patiently noted.
Either start getting an education and learn from others but writing these continual posts that are nonsensical is simply not ok.
I've warned and warned and warned you and I'm getting really tired of chasing this down. Do you understand?
Only if you're actually rich enough to need a store of value. Myself, and most people in the United States if you apply governmental and trade debt on a per capita basis, are too poor to need money as a store of value; we can't even live on what we earn to begin with, so who has the extra money to save?
I'm all for the Kw/H as a standard international currency if we ever get globalism to actually work at all. It's a unit of account (E=MC^2 after all), so it's universally applicable. It's consumable, so even if you can't trade you can still use it. As a store of value it falls down currently though- but perhaps someday we'll have good enough, light enough, battery tech to use it that way as well.
Oh, and nature has no "whims", just laws that you can count on a heck of a lot more than you can count on the value of gold in trading or the made-up value of stocks and fiat currencies. I'd rather put my trust in physics than in economics.
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Moral hazards would not exist in a system designed to eliminate fraud.
India has a trade imbalance with the United States of $10 billion in India's favor. I say, let them stop importing from us, and in return, let's ban trade with them. It will stop a $10 billion/year loss to the United States.
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Moral hazards would not exist in a system designed to eliminate fraud.
What I don't understand about the love of short bans (with possible uptick rules) is that the market can still adjust and perform the same action. If I short a call and buy a put, I've in effect created a short on the stock, and yet it is legal. Unless that market is entirely regulated to stop people from selling/buying at will, this seems impossible to stop. Thoughts?
Don't get me wrong ... barter is great.
But just as our ancestors figured out long ago it has its limitations for use as money. Remember, money has its own laws that it needs to comply with in order to be useful.
•Unit of Account- a unit in which goods and services can be related to one another. •Medium of Exchange- money facilitates the exchange of goods and services and makes the economy efficient. •Store of Value- joeshwingdings personal favorite. Money needs to retain its value. Money saved and spent later will still buy the same amount of goods and services at a later date. Said another way, it will not depreciate.
While food and energy are necessities .... tying a currency to the whims of nature is not wise. Same as tying energy resource to food was about as dumb a thing I think our government has done in recent memory.
I find food and energy to be better commodities for trade than precious metals. For one thing, even if you can't find anybody to trade with, do it right and you'll consume the item yourself eventually. Secondly, we've got God-given resources that anybody on the planet can access to make more Food and Energy, you can't own your own printing press and while you can own your own gold mine, most people aren't able to.
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Moral hazards would not exist in a system designed to eliminate fraud.
Wait, why when the stock would represent a good investment opportunity?
Risk based opportunities are not "good investment", they are at best speculation and gambling.
Also, why punish someone who wants to make a profit, that seems rediculous. You're eliminating the whole reasoning to buy the stock to begin with! .
The reason to buy stock *should* be INVESTMENT. In other words, you believe in a company so much that you want to own a piece of it and get a portion of the profits. If that is your reason for buying stock, then you want to hold on to it as long as possible.
Seebert, you also contradicted yourself with that. You claim to that it should be manded essentially, to have it long-term in focus, for the investment. Ok, so assuming they keep it "long-term", they eventually have to unload the stock to someone else. Guess what, seebert, that's called selling a stock!
If you've got a true long term focus- then no, you don't want to "unload it on somebody else". You want the company to pay you dividends, and that's how you get a return on your investment.
Oh, sure, someday your heirs may wish to sell it, because they no longer believe in the company. But then, somebody else might believe in the company enough to buy it.
In regards to liquidity, stocks are VERY liquid compared to many assets. One can get out of a bad position in an equity faster than say one can sell a piece of real estate.
Which is against the common good of having a stock market to begin with.
Who, I would like to know, should ban people from their investment decisions? Frankly, what is needed is proper financial education, be it in our schools or what have you. If the investment product seems dodgy, then don't invest in it. If you do, and lose money, well it's your own damn fault.....unless you can sell it! But wait, they wouldn't be able to under your rules.
All "investment products" are dodgy. All contain risk, and are not stores of value. As the old logger once told me- if you buy something from a man in a suit, you can be sure than most of your money is going to pay for the suit.
They can plan for what they want, but the intelligent investor also reacts to a changing enviroment. Half a decade ago that Blue Chip superstar, General Electric, was considered a great investment; the stock traded in the mid-30s through late 20s (about $28/share). Today GE trades at a fraction of that, about the equivalent to a Domino's pizza. Investors who were due dillegent started to move out of GE at a desginated stop loss price of their choosing. Many, sadly did not. Yet, under seebert's rules, well you should've planned out for that, want to sell as it starts to go down? Nyet to that, comrad!
Under my rules, GE would not have gone "up" or "down" to begin with- the stock would still be trading for what it did at IPO. The money would be made off of dividends in that stock. That's REAL capitalism- puting capital where it can make money, not gambling on some made-up market price of a stock that has no reality behind it from day to day.
Two things here. First, if the seebert no-can-sell rule is imposed, that IPO is going to go over like a lead balloon. What investor in their right mind is going to take a chance on a company popping their stock market cherry when they know they won't be able to sell that stock?
The type of investor that every company really wants- the type that will stick with the company through thick and thin, and will do their damndest to help that company be a success. Why would a company want an investor whose sole purpose is to sell off at the first bump in the road?
Also, IPO sales are already regulated, those who got equity stakes prior to the date have to wait about 18 months until they can start to sell.
And I'm saying that should be longer- that we need to return to the real SOCIAL purpose of investing to begin with. If you don't believe in or understand *everything* about what a company is doing, you shouldn't be investing at all.
Secondly, what if the company doesn't want to dilute the shareholders? You know, the company may decide to go the corporate debt route instead of issuing new shares.
Then that is that company's decision to forgo new investment. They don't want you playing in their garden, so why do you want to force your way in?
That is why you have a secondary market like the NYSE and Nasdaq, amongst others. Markets provide an important service for those looking to invest their money. In order to facilitate what you want, you will move the action from the exchange to the investment banker.
Not neccessarily. What I want to move the action to is the company itself- who should have a say in who can invest and who can't. In fact, ideally, I'd like to see all stock sales be private, with no anonymity in the market at all.
Someone like Goldman Sachs would immediatly become both the folks financing the sale and product introduction, but also the exchange, and quite possibly the broker as well. Frankly, I don't want to give them THAT much power.
Why would any company pay Goldman Sachs to do that, when they could do it themselves for less?
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Moral hazards would not exist in a system designed to eliminate fraud.
So, this is the base formula for many other models..
which is why they are going after this particular one.
I noticed they also said testing systems were black box.
Black box means no one has any idea of what is in side.
So, you could have inside accurate mathematical modeling...
or you could have a little gnome in there flipping a coin and spitting out a number.
That is seriously not good in terms of accuracy.
So, it's like so many did not understand the mathematics and models, did not bother to try to understand the mathematics or models and it sure appears like....
they did not get other mathematicians (this is mathematics, not physics...in the press they even get the expertise area wrong!) to review and validate these concepts.
It's like there is no peer review or something going on and when a new concept comes out, it should be peer reviewed and if they have any scientific integrity, well challenged.
I'll find out more but it sure seems like this guy wrote up this paper and a bunch of other guys who should have known better said "hell yeah" and took this and came up with a host of new "structured financial products".
I'm getting the impression there are trillions out there invested in fictional mathematical formulas that are not valid....
But this post are more like thoughts out loud. I have to go study much more for I do NOT have a PHD in structured financial, risk assessment, actuarial science, etc.
But upon first read, some of the assumptions just appear to be pure absolute caca. I mean basing a probability distribution on the pricing of another vehicle that is only 10 years old instead of actual historical data...
ok, that's from 1997 until now. What was happening in 1997? The housing bubble was assuredly seeded.
I figure if we can see the assumption flaws in a first pass...
There is a real problem with quality of currencies when they can be printed without any limit. Tying them together, by extension, doesn't make them any more stable.
That being said, no I don't see a return to a gold standard because banks like to lend without limit because of their insatiable greed, and governments like to spend money they don't have (how else can you wage endless wars).
Which leaves commodities ... what better commodity than precious metals?
I watched Jim Cramer yesterday and Sheila Bair (God, she is just so much more impressive than Geithner! what can I say!)
Cramer has been pounding the drum to reinstate the uptick rule and I've heard there are "issues" with the technical, automatic trades and resolutions.
I don't believe that actually because one can make algorithms with time stamps in the nanoseconds and I'm sure those exist in the automatic trading desk...
in other words whatever technical issues there are with billions of trades and implementing a raising floor requirement, that should be doable in algorithms in the trade execution software so I don't get this technical issue argument.
But Cramer is pounding on derivatives ETFs like Proshares SKF which isn't tracking perfect to what they claim which is 2x the financial sector Dow Jones....but is also a place where shorts can load up way past what they can actually afford.
It's fairly clear that rumor and a few other things are ganging up on certain stocks but on the other hand...
who here thinks Citigroup, AIG, Bear Sterns, Lehman Brothers, BoA, JPMorgan Chase, etc. were solvent at the time?
I hope you write more into volatility and timing for that is one of the things I noticed in these meltdowns...
things happen so quickly have now amazingly fast slope due to the electronic trading systems....
a disaster can happen before a government administration can even get on the phone to do something or walk across his desk.
Sure volatility is good but is delta epsilon volatility good when we're dealing with human real world response times?
But still, this is NOT what we expected. Is the increase in M0 beginning to hit? Is it time to pull the firing pin on durable goods purchases before inflation can push their cost up?
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Moral hazards would not exist in a system designed to eliminate fraud.
Then they shouldn't have purchased stock to begin with, they should have kept it in a more liquid form.
Wait, why when the stock would represent a good investment opportunity? Also, why punish someone who wants to make a profit, that seems rediculous. You're eliminating the whole reasoning to buy the stock to begin with! Seebert, you also contradicted yourself with that. You claim to that it should be manded essentially, to have it long-term in focus, for the investment. Ok, so assuming they keep it "long-term", they eventually have to unload the stock to someone else. Guess what, seebert, that's called selling a stock!
In regards to liquidity, stocks are VERY liquid compared to many assets. One can get out of a bad position in an equity faster than say one can sell a piece of real estate. Who, I would like to know, should ban people from their investment decisions? Frankly, what is needed is proper financial education, be it in our schools or what have you. If the investment product seems dodgy, then don't invest in it. If you do, and lose money, well it's your own damn fault.....unless you can sell it! But wait, they wouldn't be able to under your rules.
These are things people plan a half decade in advance- they're forseen expenditures.
They can plan for what they want, but the intelligent investor also reacts to a changing enviroment. Half a decade ago that Blue Chip superstar, General Electric, was considered a great investment; the stock traded in the mid-30s through late 20s (about $28/share). Today GE trades at a fraction of that, about the equivalent to a Domino's pizza. Investors who were due dillegent started to move out of GE at a desginated stop loss price of their choosing. Many, sadly did not. Yet, under seebert's rules, well you should've planned out for that, want to sell as it starts to go down? Nyet to that, comrad!
That's what Initial Public Offerings are for. What this means is you plan long term instead of short term, that's all. It isn't a total "forbid people to sell", it's "you can't sell until you've held the stock for five years or more".
Two things here. First, if the seebert no-can-sell rule is imposed, that IPO is going to go over like a lead balloon. What investor in their right mind is going to take a chance on a company popping their stock market cherry when they know they won't be able to sell that stock? Also, IPO sales are already regulated, those who got equity stakes prior to the date have to wait about 18 months until they can start to sell.
Secondly, what if the company doesn't want to dilute the shareholders? You know, the company may decide to go the corporate debt route instead of issuing new shares. That is why you have a secondary market like the NYSE and Nasdaq, amongst others. Markets provide an important service for those looking to invest their money. In order to facilitate what you want, you will move the action from the exchange to the investment banker. Someone like Goldman Sachs would immediatly become both the folks financing the sale and product introduction, but also the exchange, and quite possibly the broker as well. Frankly, I don't want to give them THAT much power.
The problem isn't whether the speculators win or lose. It's that as a society, we've lost the effort that the speculators put into the stock market that could be better used on other things. Take David Li, the quant who gave us this horrid piece of fraud to begin with. What if his genius had been used in bioscience instead of the relatively useless financial market?
Even worse than that- while the stock market *does* have a single useful function in our system of matching investors to companies that need capital, the volatility of speculative trading is highly inefficient and drains capital that could be better used on R&D out of the balance sheets of companies on the market. I've personally had 12 very useful projects killed by IPO, because once on the market, R&D is viewed by investors who KNOW NOTHING about the industry as just a cost, not as an investment in future production.
So while I agree with you that the uptick rule isn't necessarily a solution to volatility, buying and selling without ownership (short selling) and other forms of speculation are wasted human effort and capital that could be put to MUCH better uses.
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Moral hazards would not exist in a system designed to eliminate fraud.
Much of the volatility of the stock market is driven by trading programs, not a few speculators. Automated trading programs cause huge swings by measuring the technicals of a stock or stock index and make decisions based on that.
The old idea of one person controlling a huge percentage of a large company and being able to manipulate the stock is, in most cases, obsolete.
There is very little rhyme or reason to the market any more. Informed decisions based on good fundamental data will be rendered worthless if an automated program decides that the technicals warrant a move opposite of what you have chosen. The so-called 'reasons' espoused by reporters for why a stock moved a certain way are always after-the-fact guesses with no basis in reality.
Unfortunately I can't even offer a solution to this problem. The government gives incentives to invest in the stock market (via 401(k) and similar programs), and mutual funds control too much money. The market has been grossly overvalued for a long time because funds have to have a certain amount of money invested. This is like forcing water into a balloon.
Back to the uptick rule, people gamble on many things. Buying and selling are just terms when it comes to speculators. There is very little 'ownership'. All that matters is that the amount bought and the amount sold are equal in the end. Why not let the speculators do their thing? I know far more people who have lost money by trying to 'beat the market' than I do who have gotten rich off of it.
You cannot forbid a sale of a stock. What if someone needs to sell their stock to raise money?
Then they shouldn't have purchased stock to begin with, they should have kept it in a more liquid form.
Say someone who is retiring soon or someone who needs to use that money to pay for college?
These are things people plan a half decade in advance- they're forseen expenditures.
Also, in order to buy stock, someone needs to sell you that stock.
That's what Initial Public Offerings are for. What this means is you plan long term instead of short term, that's all. It isn't a total "forbid people to sell", it's "you can't sell until you've held the stock for five years or more".
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Moral hazards would not exist in a system designed to eliminate fraud.
You cannot forbid a sale of a stock. What if someone needs to sell their stock to raise money? Say someone who is retiring soon or someone who needs to use that money to pay for college? Also, in order to buy stock, someone needs to sell you that stock.
You do realize there is no such thing as no-risk investment vehicles, right? Every investment has an element of risk to it. Even US savings bonds, despite what you've been told, has an element of risk to it. There is nothing to say that Uncle Sam won't default on it's debt.
Seebert, please pick up a copy of the Black Swan, or When Genius Failed, or Against the Gods. Trust me, my good man, there is NO such thing as NO risk. Even insurance companies establishing policies for what they deem as "safe" clients, their actuaries know there is still a chance.
As for the other things, seebert, frankly you need to take a corporate finance class. And if you have, re-take it. What you propose is simply impractable. Your dividend model would lead to diminishing returns and eventually insolvency. How? If, as you say, the company should reward shareholders through only dividends, then if a company needs more capital it will have to issue more stock.
Increasing the supply dilutes the existin shareholder base, this is also one of the fears of the banks currently under TARP. Now if you have to distribute dividends, then you are taking money away from other capital investments. Secondly, as you increase the float, the yield decreases. Do the math. If there are only one-hundred shares on a stock with a par at $10, and it pays out $1 in dividends, your yield is 10%. Now what do you think happens when they issue another 100 shares? Remember now, they set aside a certain amount for dividend payments. The new shareholders aren't going to get $1/share, and neither will the original holders of the first 100 shares. Eventually you get to a point where they will not be able to attract investors to meet the firm's capital needs.
Where this is getting us.
If you aren't allowed to be a populist and create an economic system based on POPULISM, then what's the point?
What has a real time open market gotten us other than an open market for fraud, as you've pointed out time and time again?
What has foreign trade gotten us, other than a load of debt we'll never be able to repay, as other articles here have shown time and time again?
What has a fiat currency gotten us, other than an opening for a true communist military spy to promote a fake model?
If we're not willing to expand the idea of what is economics into something that works for the entire population instead of just a small percentage, what exactly is the point?
-------------------------------------
Moral hazards would not exist in a system designed to eliminate fraud.
Seebert, yesterday I warned, strongly on writing economic fiction. Trying to create options out of money, which we patiently explained why using batteries or power as a unit of monetary exchange is illogical...yet here is this nonsensical "idea" being brought up again as some sort of valid concept. Things like a real time open market, such as the stock market should magically be turned into a private venture capital system....which is defeating the entire concept of market economies and what the stock market actually is.
These comments are not in economic reality. Either is trying to compare a 10 year old census to current unemployment rates as we also patiently noted.
Either start getting an education and learn from others but writing these continual posts that are nonsensical is simply not ok.
I've warned and warned and warned you and I'm getting really tired of chasing this down. Do you understand?
Only if you're actually rich enough to need a store of value. Myself, and most people in the United States if you apply governmental and trade debt on a per capita basis, are too poor to need money as a store of value; we can't even live on what we earn to begin with, so who has the extra money to save?
I'm all for the Kw/H as a standard international currency if we ever get globalism to actually work at all. It's a unit of account (E=MC^2 after all), so it's universally applicable. It's consumable, so even if you can't trade you can still use it. As a store of value it falls down currently though- but perhaps someday we'll have good enough, light enough, battery tech to use it that way as well.
Oh, and nature has no "whims", just laws that you can count on a heck of a lot more than you can count on the value of gold in trading or the made-up value of stocks and fiat currencies. I'd rather put my trust in physics than in economics.
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Moral hazards would not exist in a system designed to eliminate fraud.
India has a trade imbalance with the United States of $10 billion in India's favor. I say, let them stop importing from us, and in return, let's ban trade with them. It will stop a $10 billion/year loss to the United States.
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Moral hazards would not exist in a system designed to eliminate fraud.
What I don't understand about the love of short bans (with possible uptick rules) is that the market can still adjust and perform the same action. If I short a call and buy a put, I've in effect created a short on the stock, and yet it is legal. Unless that market is entirely regulated to stop people from selling/buying at will, this seems impossible to stop. Thoughts?
Don't get me wrong ... barter is great.
But just as our ancestors figured out long ago it has its limitations for use as money. Remember, money has its own laws that it needs to comply with in order to be useful.
•Unit of Account- a unit in which goods and services can be related to one another.
•Medium of Exchange- money facilitates the exchange of goods and services and makes the economy efficient.
•Store of Value- joeshwingdings personal favorite. Money needs to retain its value. Money saved and spent later will still buy the same amount of goods and services at a later date. Said another way, it will not depreciate.
While food and energy are necessities .... tying a currency to the whims of nature is not wise. Same as tying energy resource to food was about as dumb a thing I think our government has done in recent memory.
It has always been about class warfare.
I find food and energy to be better commodities for trade than precious metals. For one thing, even if you can't find anybody to trade with, do it right and you'll consume the item yourself eventually. Secondly, we've got God-given resources that anybody on the planet can access to make more Food and Energy, you can't own your own printing press and while you can own your own gold mine, most people aren't able to.
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Moral hazards would not exist in a system designed to eliminate fraud.
Risk based opportunities are not "good investment", they are at best speculation and gambling.
The reason to buy stock *should* be INVESTMENT. In other words, you believe in a company so much that you want to own a piece of it and get a portion of the profits. If that is your reason for buying stock, then you want to hold on to it as long as possible.
If you've got a true long term focus- then no, you don't want to "unload it on somebody else". You want the company to pay you dividends, and that's how you get a return on your investment.
Oh, sure, someday your heirs may wish to sell it, because they no longer believe in the company. But then, somebody else might believe in the company enough to buy it.
Which is against the common good of having a stock market to begin with.
All "investment products" are dodgy. All contain risk, and are not stores of value. As the old logger once told me- if you buy something from a man in a suit, you can be sure than most of your money is going to pay for the suit.
Under my rules, GE would not have gone "up" or "down" to begin with- the stock would still be trading for what it did at IPO. The money would be made off of dividends in that stock. That's REAL capitalism- puting capital where it can make money, not gambling on some made-up market price of a stock that has no reality behind it from day to day.
The type of investor that every company really wants- the type that will stick with the company through thick and thin, and will do their damndest to help that company be a success. Why would a company want an investor whose sole purpose is to sell off at the first bump in the road?
And I'm saying that should be longer- that we need to return to the real SOCIAL purpose of investing to begin with. If you don't believe in or understand *everything* about what a company is doing, you shouldn't be investing at all.
Then that is that company's decision to forgo new investment. They don't want you playing in their garden, so why do you want to force your way in?
Not neccessarily. What I want to move the action to is the company itself- who should have a say in who can invest and who can't. In fact, ideally, I'd like to see all stock sales be private, with no anonymity in the market at all.
Why would any company pay Goldman Sachs to do that, when they could do it themselves for less?
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Moral hazards would not exist in a system designed to eliminate fraud.
So, this is the base formula for many other models..
which is why they are going after this particular one.
I noticed they also said testing systems were black box.
Black box means no one has any idea of what is in side.
So, you could have inside accurate mathematical modeling...
or you could have a little gnome in there flipping a coin and spitting out a number.
That is seriously not good in terms of accuracy.
So, it's like so many did not understand the mathematics and models, did not bother to try to understand the mathematics or models and it sure appears like....
they did not get other mathematicians (this is mathematics, not physics...in the press they even get the expertise area wrong!) to review and validate these concepts.
It's like there is no peer review or something going on and when a new concept comes out, it should be peer reviewed and if they have any scientific integrity, well challenged.
I'll find out more but it sure seems like this guy wrote up this paper and a bunch of other guys who should have known better said "hell yeah" and took this and came up with a host of new "structured financial products".
I'm getting the impression there are trillions out there invested in fictional mathematical formulas that are not valid....
But this post are more like thoughts out loud. I have to go study much more for I do NOT have a PHD in structured financial, risk assessment, actuarial science, etc.
But upon first read, some of the assumptions just appear to be pure absolute caca. I mean basing a probability distribution on the pricing of another vehicle that is only 10 years old instead of actual historical data...
ok, that's from 1997 until now. What was happening in 1997? The housing bubble was assuredly seeded.
I figure if we can see the assumption flaws in a first pass...
There is a real problem with quality of currencies when they can be printed without any limit. Tying them together, by extension, doesn't make them any more stable.
That being said, no I don't see a return to a gold standard because banks like to lend without limit because of their insatiable greed, and governments like to spend money they don't have (how else can you wage endless wars).
Which leaves commodities ... what better commodity than precious metals?
It has always been about class warfare.
I watched Jim Cramer yesterday and Sheila Bair (God, she is just so much more impressive than Geithner! what can I say!)
Cramer has been pounding the drum to reinstate the uptick rule and I've heard there are "issues" with the technical, automatic trades and resolutions.
I don't believe that actually because one can make algorithms with time stamps in the nanoseconds and I'm sure those exist in the automatic trading desk...
in other words whatever technical issues there are with billions of trades and implementing a raising floor requirement, that should be doable in algorithms in the trade execution software so I don't get this technical issue argument.
But Cramer is pounding on derivatives ETFs like Proshares SKF which isn't tracking perfect to what they claim which is 2x the financial sector Dow Jones....but is also a place where shorts can load up way past what they can actually afford.
It's fairly clear that rumor and a few other things are ganging up on certain stocks but on the other hand...
who here thinks Citigroup, AIG, Bear Sterns, Lehman Brothers, BoA, JPMorgan Chase, etc. were solvent at the time?
I hope you write more into volatility and timing for that is one of the things I noticed in these meltdowns...
things happen so quickly have now amazingly fast slope due to the electronic trading systems....
a disaster can happen before a government administration can even get on the phone to do something or walk across his desk.
Sure volatility is good but is delta epsilon volatility good when we're dealing with human real world response times?
I hope he gets it. He's a strong ally on a lot of our issues.
the report I'm referring to is here
This report puzzles me greatly. It actually shows .3% increase in inflation for January 2009, instead of our expected deflation. Now I know to take government numbers worth a grain of salt, and from what I see I have great reason to doubt the change in housing (0%, even using rental equivalence, have they taken into account the 1-3 months free many apartment houses are now offering in an attempt to get occupancy rates up?!?!?) or the "All items less food and energy" .2% inflation rate.
But still, this is NOT what we expected. Is the increase in M0 beginning to hit? Is it time to pull the firing pin on durable goods purchases before inflation can push their cost up?
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Moral hazards would not exist in a system designed to eliminate fraud.
Wait, why when the stock would represent a good investment opportunity? Also, why punish someone who wants to make a profit, that seems rediculous. You're eliminating the whole reasoning to buy the stock to begin with! Seebert, you also contradicted yourself with that. You claim to that it should be manded essentially, to have it long-term in focus, for the investment. Ok, so assuming they keep it "long-term", they eventually have to unload the stock to someone else. Guess what, seebert, that's called selling a stock!
In regards to liquidity, stocks are VERY liquid compared to many assets. One can get out of a bad position in an equity faster than say one can sell a piece of real estate. Who, I would like to know, should ban people from their investment decisions? Frankly, what is needed is proper financial education, be it in our schools or what have you. If the investment product seems dodgy, then don't invest in it. If you do, and lose money, well it's your own damn fault.....unless you can sell it! But wait, they wouldn't be able to under your rules.
They can plan for what they want, but the intelligent investor also reacts to a changing enviroment. Half a decade ago that Blue Chip superstar, General Electric, was considered a great investment; the stock traded in the mid-30s through late 20s (about $28/share). Today GE trades at a fraction of that, about the equivalent to a Domino's pizza. Investors who were due dillegent started to move out of GE at a desginated stop loss price of their choosing. Many, sadly did not. Yet, under seebert's rules, well you should've planned out for that, want to sell as it starts to go down? Nyet to that, comrad!
Two things here. First, if the seebert no-can-sell rule is imposed, that IPO is going to go over like a lead balloon. What investor in their right mind is going to take a chance on a company popping their stock market cherry when they know they won't be able to sell that stock? Also, IPO sales are already regulated, those who got equity stakes prior to the date have to wait about 18 months until they can start to sell.
Secondly, what if the company doesn't want to dilute the shareholders? You know, the company may decide to go the corporate debt route instead of issuing new shares. That is why you have a secondary market like the NYSE and Nasdaq, amongst others. Markets provide an important service for those looking to invest their money. In order to facilitate what you want, you will move the action from the exchange to the investment banker. Someone like Goldman Sachs would immediatly become both the folks financing the sale and product introduction, but also the exchange, and quite possibly the broker as well. Frankly, I don't want to give them THAT much power.
The problem isn't whether the speculators win or lose. It's that as a society, we've lost the effort that the speculators put into the stock market that could be better used on other things. Take David Li, the quant who gave us this horrid piece of fraud to begin with. What if his genius had been used in bioscience instead of the relatively useless financial market?
Even worse than that- while the stock market *does* have a single useful function in our system of matching investors to companies that need capital, the volatility of speculative trading is highly inefficient and drains capital that could be better used on R&D out of the balance sheets of companies on the market. I've personally had 12 very useful projects killed by IPO, because once on the market, R&D is viewed by investors who KNOW NOTHING about the industry as just a cost, not as an investment in future production.
So while I agree with you that the uptick rule isn't necessarily a solution to volatility, buying and selling without ownership (short selling) and other forms of speculation are wasted human effort and capital that could be put to MUCH better uses.
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Moral hazards would not exist in a system designed to eliminate fraud.
Much of the volatility of the stock market is driven by trading programs, not a few speculators. Automated trading programs cause huge swings by measuring the technicals of a stock or stock index and make decisions based on that.
The old idea of one person controlling a huge percentage of a large company and being able to manipulate the stock is, in most cases, obsolete.
There is very little rhyme or reason to the market any more. Informed decisions based on good fundamental data will be rendered worthless if an automated program decides that the technicals warrant a move opposite of what you have chosen. The so-called 'reasons' espoused by reporters for why a stock moved a certain way are always after-the-fact guesses with no basis in reality.
Unfortunately I can't even offer a solution to this problem. The government gives incentives to invest in the stock market (via 401(k) and similar programs), and mutual funds control too much money. The market has been grossly overvalued for a long time because funds have to have a certain amount of money invested. This is like forcing water into a balloon.
Back to the uptick rule, people gamble on many things. Buying and selling are just terms when it comes to speculators. There is very little 'ownership'. All that matters is that the amount bought and the amount sold are equal in the end. Why not let the speculators do their thing? I know far more people who have lost money by trying to 'beat the market' than I do who have gotten rich off of it.
Then they shouldn't have purchased stock to begin with, they should have kept it in a more liquid form.
These are things people plan a half decade in advance- they're forseen expenditures.
That's what Initial Public Offerings are for. What this means is you plan long term instead of short term, that's all. It isn't a total "forbid people to sell", it's "you can't sell until you've held the stock for five years or more".
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Moral hazards would not exist in a system designed to eliminate fraud.
I'm beginning to suspect that China has succeeded where Japan failed- in weaponizing trade to the point of being able to take down an entire country.
Are we sure David Li isn't a foreign spy meant to inject instability into western markets?
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Moral hazards would not exist in a system designed to eliminate fraud.
You cannot forbid a sale of a stock. What if someone needs to sell their stock to raise money? Say someone who is retiring soon or someone who needs to use that money to pay for college? Also, in order to buy stock, someone needs to sell you that stock.
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