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Old 01-28-2020, 07:01 AM
 
7,024 posts, read 5,216,396 times
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Quote:
Originally Posted by ohio_peasant View Post
Investment managers are selling not because they fear a reduction in corporate profits... that is, a deterioration in fundamentals. They're selling because they think that other investment managers might be selling, who in turn aren't selling from any personal conviction about the fundamentals, but because they too are fearing that others are selling... and so forth, to infinite regression.
.......
You have a very nice way of describing this behavior. I see it more like idiots who exhibit irrational herd behavior.
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Old 01-28-2020, 07:07 AM
 
7,024 posts, read 5,216,396 times
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Quote:
Originally Posted by mathjak107 View Post
this is true ...

the name of the game for funds is to beat other funds or your index . you can beat them on the way up or on the way down and even at a loss these guys win if they lose less then the competitor does .

for a fund manager losing less then your benchmark is winning even if the fund loses money by selling . that fund manager selling and losing 5% while the index fell 15% is a win for them . it is simply a numbers game and has no basis on fear or perception when things look nasty .
Whether the volatility is 5% or 15%, one of the fund managers is buying and another selling. Overall no one wins and no one beats the index. In theory I suppose some fund managers could be better than the others and win more often. When that happens the difference tends to be small and not consistently reproducible.
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Old 01-28-2020, 07:09 AM
 
76,279 posts, read 75,645,150 times
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Quote:
Originally Posted by jrkliny View Post
Whether the volatility is 5% or 15%, one of the fund managers is buying and another selling. Overall no one wins and no one beats the index. In theory I suppose some fund managers could be better than the others and win more often. When that happens the difference tends to be small and not consistently reproducible.
many funds all use the same kind of propriety software .. they get the same trigger points , watch the same moving averages and stats to do what they do ...that is why selling breeds more selling until it stops . .. it gets worse with the big margin users too as they need to sell with the volatility to regulate their internal leverage to avoid margin calls. no way around it when you are a firm that uses lots of margin . there are always buyers for every seller but the price they buy at is lower and lower .

many equity funds can usually hold a certain percentage in cash as long as 80 or 90% is invested ..

Last edited by mathjak107; 01-28-2020 at 07:20 AM..
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Old 01-28-2020, 09:17 AM
 
Location: Guadalajara, MX
6,849 posts, read 3,319,292 times
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Quote:
Originally Posted by redguard57 View Post
I suppose the fear is that it could turn into some kind 1918 flu pandemic, since it's respiratory and spreads pretty much like flu.
Spanish Flu of 1918 happened in an time frame with malnourishment, poor hygiene, and what are now relatively basic medical treatments and infection avoidance practices. Same virus wouldn't be anything like that in 2020.
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Old 01-28-2020, 01:09 PM
 
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Quote:
Originally Posted by jrkliny View Post
You have a very nice way of describing this behavior. I see it more like idiots who exhibit irrational herd behavior.
While we might regard herd-behavior contemptuously and with disdain, it really is basic human nature. It is its negation, that would be so weird and exotic.

But it goes deeper than that. Stocks rise not because earnings are good, but because buyers are more eager than sellers. A house in some neighborhood gains in value, not because it becomes costlier to build comparable houses, but because buyers are more eager than sellers. And so no. The value that we place on material things, be they stocks or gold or acreage, is the market's value; it is not intrinsic! And what the market decides is a matter of convention and perception. It is not objective reality.

So, if I think of what stocks to buy, I am really not thinking of the management-effectiveness or the profitability or whatnot. Instead I am thinking of what other people like about the stock. And those other people in turn are thinking of what other people like about it, and so forth.

The best analogy is one first made by Keynes, or some other eminent economist; i forget which. He said that the stock-market is a peculiar sort of beauty contest. We select not the young lady whose photo in the newspaper is the most beautiful according to our own taste, but rather, the one whose photo we think that the largest number of people would like. It's a popularity contest, with a twist: the most popular isn't the one who's liked by the most people, but the one for whom most people think most other people will like.

So, it's less about herd-mentality per se, than in trying to be clever and anticipating what the herd will do... except that many people are thus clever. We end up with a meta-herd of clever people. The herd forms, precisely because so many enterprising people are trying to beat the herd.
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Old 01-28-2020, 01:28 PM
 
550 posts, read 158,321 times
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I ordered a check to roll over my 401k to Fidelity but have lost $400 so far in just this week


Does anyone know what stock I can trade my S&P inside my 401k to keep it from being affected?
I want to maintain the balance in the 401k before the check paychex will mail to fidelity. It could be credited within 3-4 days+. The only reason S&P is doing good today is due to apple stock which likely won't repeat itself the rest of the wk.
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Old 01-28-2020, 09:03 PM
 
3,989 posts, read 1,117,331 times
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"The Economics of Pandemics and Quarantines." Short article:
https://www.aier.org/article/the-eco...d-quarantines/
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Old 01-28-2020, 10:16 PM
 
4,582 posts, read 4,120,729 times
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Quote:
Originally Posted by lieqiang View Post
Spanish Flu of 1918 happened in an time frame with malnourishment, poor hygiene, and what are now relatively basic medical treatments and infection avoidance practices. Same virus wouldn't be anything like that in 2020.
Not true. Apparently, Spanish flu was killing the young, healthy people because they rapidly died of an overwhelming immune response. Some died within 24 hrs. They weren't dying of bacterial pneumonia after flu - they were dying of their own immune response.

The same thing would happen today.
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Old 01-29-2020, 12:21 AM
 
2,184 posts, read 892,453 times
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Anyone selling surgical masks is making a fortune.
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Old 01-29-2020, 07:14 AM
 
4,303 posts, read 3,472,374 times
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Quote:
Originally Posted by sas318 View Post
Anyone selling surgical masks is making a fortune.
Depends on the markup.
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