tag:blogger.com,1999:blog-3832136017893749497.post1357702878356083920..comments2023-09-29T08:49:30.765-04:00Comments on Elliptic Composability: Florin Moldoveanuhttp://www.blogger.com/profile/01087655914212705768noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-3832136017893749497.post-5027746816835688402015-08-29T08:49:14.939-04:002015-08-29T08:49:14.939-04:00Lubos, the basic idea is sound, but it can be impr...Lubos, the basic idea is sound, but it can be improved on. For example to improve the signal to noise ratio, the threshold should be correlated with the fear and greed index. In the current situation a good threshold is 3 times, not 2 times the average, otherwise you get a false positive from the mass panic. Statistically, the crowd is known to bet incorrectly most of the time. You will not win every time using this method, no method works 100% but your will come out ahead.<br /><br />After a major crises you get excellent expert analysis of what, how, and why it happened, but not when the situation is hot. The standard financial adviser is good only at one thing: recommend the right mix if stocks, bonds, and stable investments according to your tolerance for risk, time until retirement, and your personal investment goal, but they are useless otherwise (if they were they would be higher in the food chain of investing). <br /><br />On thing amused me at your blog: you said something like the rich people invest 50% in stocks. What a nice cargo cult thing to do. But hey, if that makes you feel rich even if your are not, I will not argue with what makes your boat float. Show me your million dollar home you own and I'll start taking you seriously in financial matters.<br /><br />Off topic, there was this Czech company Zelezarny Veseli who bought a large company in Romania in 1998, and the new management decided to lay off 1000 workers. When the union leader organized protests, Franmtisek Priplata (a director at another Czech company in Romania), the local director of the company where the union leader worked, and a head of a bodyguard and security company plotted to kill the union leader. The union leader was killed, Franmtisek Priplata along with all others were convicted of the murder, but Franmtisek fled Romania back to the Czech republic with a forged Hungarian passport. To this day the Czech republic refuses the extradition of Franmtisek Priplata.Florin Moldoveanuhttps://www.blogger.com/profile/01087655914212705768noreply@blogger.comtag:blogger.com,1999:blog-3832136017893749497.post-49452554311170690282015-08-29T04:00:51.425-04:002015-08-29T04:00:51.425-04:00Everyone is trying to do the cleverest, most profi...Everyone is trying to do the cleverest, most profitable thing - which is effectively picking the right experts. But your pick, as the blog post makes explicit, is a lame one. Your experts are the panic sellers during panic selling and euphoria mass guyers during euphoria buying. They are your experts but they are my mindless sheep.Luboš Motlhttps://www.blogger.com/profile/17487263983247488359noreply@blogger.comtag:blogger.com,1999:blog-3832136017893749497.post-61275586224708281262015-08-27T10:42:51.697-04:002015-08-27T10:42:51.697-04:00All my savings are in stocks. I lost big time duri...All my savings are in stocks. I lost big time during the dot com bust and learned my lessons the hard way then. Using those lessons I sold just before Lehman crashed and bought back just before the market started to recover. However this was for the bulk of the money but I continued to buy stocks every month and took advantage of the great price opportunity while protecting the main amount. <br /><br />I don't know how this China turmoil is going to develop, but I learned to trust the judgment of experts. There is one important question: if those experts are correct most of the time, why then the mutual funds cannot avoid losses? The answer is that mutual funds are constrained by regulations to diversify and cannot put the bulk of their money in safe bets, but this does not apply to individuals.Florin Moldoveanuhttps://www.blogger.com/profile/01087655914212705768noreply@blogger.comtag:blogger.com,1999:blog-3832136017893749497.post-40462951206838209312015-08-27T10:14:18.541-04:002015-08-27T10:14:18.541-04:00Hi, I have 1/2 of my savings in stocks. The saving...Hi, I have 1/2 of my savings in stocks. The savings are supposed for me not to depend on daily work for the next 50 years if needed.Luboš Motlhttps://www.blogger.com/profile/17487263983247488359noreply@blogger.comtag:blogger.com,1999:blog-3832136017893749497.post-56564118586578699102015-08-27T08:00:32.553-04:002015-08-27T08:00:32.553-04:00Lubos, talk is cheap. Exactly how much skin do you...Lubos, talk is cheap. Exactly how much skin do you have in the game? If you have an amount you don't mind losing, buying now can be a great idea, but this kind of market timing usually doesn't work in the long run. Besides, the system is stacked against you because the transactions for the average Joe investors are executed at the price at the end of the trading day.<br /><br />I am not telling anyone to sell or buy now. I am explaining what worked for me in the past and everyone should use this according with their tolerance for risk. I am laughing all way to the bank about the fog of ideological BS you are pumping. Florin Moldoveanuhttps://www.blogger.com/profile/01087655914212705768noreply@blogger.comtag:blogger.com,1999:blog-3832136017893749497.post-778493026790925392015-08-27T05:12:04.619-04:002015-08-27T05:12:04.619-04:00Your ideas about the markets are even more dumb th...Your ideas about the markets are even more dumb than those about quantum mechanics.<br /><br />The fact that stocks are the best investment isn't a nonsense fairy-tale. It's an important fact about the market.<br /><br />There is nothing wrong happening in China. And there is no correlation between someone's being a big institution and his having right opinions about the future. Big volumes during drops may mean and usually do mean just a big panic.<br /><br />The current drop - created by mindless thinking and mass hysteria that your "follow experts defined by big volumes" represents - created a great opportunity to buy stocks - and especially lots of particular stocks - at a nice discount.<br /><br />The economy is doing fine. Sensible companies doing business in China report that they don't observe any slowdown over there at all.And if there's some slowdown, like by a percentage point, it is being fought against by tons of policies and interventions by the Chinese central bank or other authorities.<br /><br />They intervened in the stock market today. Yesterday, they lowered the mandatory reserves of banks, and pumped some extra cash to the financial system, and lowered the interest rates by 0.25% etc. It's obvious that they want their 7% or higher growth rate back and with some pumping, it's always possible to get the money there.<br /><br />The drops have been nervous and I don't claim that I have kept all my stocks (or stock funds). I've sold a small part. It's because I just didn't expect this event - it emerged without any sensible reason whatsoever. My plans were that I could stomach a 20% decrease but the irrationality of the recent hysteria made bigger decreases possible and I just wanted to insure a bigger portion of what I have.<br /><br />But it's obvious that those who benefit are those who continu to hold stocks and use similar periods to increase the percentage of their holdings in stocks.<br /><br />Even those who bought stocks before the 2008 drop - the 2nd worst period to buy stocks in the last 100 years - saw their going to the plus a few years ago (in the U.S.) and about now (elsewhere). The average investors did a lot of investment in 2009 or 2010, however, and they saw amazing returns.<br /><br />I think that to advise people to sell stocks now is very likely to be one of the worst advises you may give.Luboš Motlhttps://www.blogger.com/profile/17487263983247488359noreply@blogger.com