Down goes the Dow

Pointing Out the Obvious wrote:

That's pretty funny coming from the guy who's been waiting 2.5 years for the Dow to go below 13,000.

Further confirmation of my earlier observation.

lol Igy, if it goes to 8900 I am all in.

It still amazes me how people react to daily moves as though they were individually significant. 800 points sure, but 100? 200? Not really, IMO.

Like you said, all sorts of reasons are proferred. They are just so much noise. All that crap is like chaff, or a smokescreen, preventing one from keeping one's sense of perspective, and preventing a view of the big picture.

The MORE one pays attention to the daily blather, the LESS one is aware of what's actually happening IMO. Yes I follow it some, but I stick to the big picture, and to personal experience with people and businesses who are affected by goings-on.

[quote]Maserati wrote:

lol Igy, if it goes to 8900 I am all in.

It still amazes me how people react to daily moves as though they were individually significant. 800 points sure, but 100? 200? Not really, IMO.

It amazes me that people took the ride down from over 14,000 to less than 7,000 in 2008-09 without reacting at all. Still.

Maserati,

I liked the way you described your background, I feel a bit of kinship and philosophical similarity (although you seem much more pessimistic, or at least more risk averse, than me).

I did my undergrad in engineering physics, and grad studies in applied sciences fields. My work is very technical, but in an area involving almost as much “art” as science. Several years ago I took an interest in fractal geometry. I imagine most familiar with either fractals or financial markets will be aware that one of Mandelbrot’s first applications of his “new” field of mathematics was toward financial markets.

Anyway, a few years ago I gave a talk in my field of expertise to the local professional chapter, discussing a specific natural phenomenon (in my field of expertise obviously) where important input parameters have fractal characteristics, at least over some reasonable spatial and temporal scales. The main thrust of my talk, which I attempted to defend with live examples, was that the more we know about a specific problem (i.e. the more data we gather), the less we understand. Or more precisely, the less confident we become in our interpretations, because obtaining more data has the unexpected result of leading to greater uncertainty. This is a particular result for specific power law phenomena with very heavy tails; such phenomena may not have a calculable mean value, or rather the calculated mean (and other statistical measures) may be scale-dependent. Or in this case, dependent on (and growing with) the volume of available data.

This is an odd little paradox associated with some chaotic phenomena. Completely counterintuitive, but nonetheless (often) real.

I wonder to what degree the same can be said for investors’ performance in the markets. Is the purported trend (mentioned by somebody earlier) for investors to do worse with greater knowledge simply a natural mathematical outcome? I suspect this may be a real and important factor, but I have no way of knowing (or proving!) it.

Anyway, thanks for the discussion, my bets are set again for another year. I’ll check back in again next year probably. Cheers all!

long time,

You have a valid points, but experience is the determining factor along with knowledge that provides the basis for investment success.

I find more interesting how individuals place value in metrics that are unreliable. And how herd mentality functions on the upside and the downside. Or how methods and customs akin to fables become accepted methods of investing. Lastly, the savings component to investing is often discounted, yet it is the driver of wealth.

Igy

Ghost of Igloi wrote:

long time,

You have a valid points, but experience is the determining factor along with knowledge that provides the basis for investment success.

I find more interesting how individuals place value in metrics that are unreliable. And how herd mentality functions on the upside and the downside. Or how methods and customs akin to fables become accepted methods of investing. Lastly, the savings component to investing is often discounted, yet it is the driver of wealth.

Igy

and, um, despite how predicting the performance of the stock market has been proven to be impossible... people still do it.

That one's on my list, fer shure.

Ghost of Igloi wrote:...experience is the determining factor along with knowledge that provides the basis for investment success. ...

That seems like an obvious truism, but I wonder if actual experience provides a strong support for the hypothesis...?

signed,

avocat du diable :-)

agip,

I do believe stocks valuations gives one predictive value. Why, it is an investment, like any investment, you pay too much you should expect lower returns.

Igy

long time,

All I can add is the financial industry has done a poor job if you view it from two 50% equity drops in fifteen plus years, and little warning for either one. In fact the industry continued encouragement to buy the market in both instances. I see the same environment today.

I will go the other way and see if my experience and knowledge matters.

We can discuss our little experiment a year from now.

Igy

So far the markets are taking a real dump this year.

How 'bout them leveraged short ETF's Igy?!

My Canadian friend who has shorted commodities, CAD, and the TSX has done extremely well in the past 6 months.

I'm glad that my projects are wrapping up. If the big market event will be this year, no doubt there will be a significant amount of economic disruption, like there always seems to be during these events. I would prefer to sit it out and watch from the sidelines.

Here's to all of us who are watching, and waiting.

we first hit this level in the market in June or July of 2014

We will see what happens during the sell the bell reflex.

Maserati,

Total for leveraged fund up 7.14%, though the biotech up 14.02%. All were higher 15 minutes age. I well reduce if we approach the August/September lows or S&P 2,050.

Igy

coincidentally, on the third trading day of 2015 we were also down exactly 3% for the year.

Good for you Igy, that's enough to make up slippage!

Maserati,

Not including today, last twelve months my strategy is up 6.59% net of fees.

Igy

Ghost of Igloi wrote:

Maserati,

Not including today, last twelve months my strategy is up 6.59% net of fees.

Igy

nice work Igy - congrats

agip,

In the spirit of full disclosure, I am sure the performance has been down an equal percentage at times.

No gloating here.

Igy

Macy's cutting earnings outlook, layoffs, store closings. Of course there will be those that say it is online competition, perhaps some, but there are other dynamics at work.