T
TheGreatBear
Guest
Just like Homer Simpson in "Simpson's: The movie"
Ok, one of my friends is Filipino, currently living in the Philippines. Tech gadgets are sort of like status symbols in most of Asia so the Filipinos are supposed to be tech savvy.
He was going around looking for a Canon digital camera. He found some seller on Ebay or something, that was selling for half the official retail price in stores.(Only thing lacking was a warranty)
I suppose the same thing happens in the markets. People talk about how they love stocks and etc but very few do their research(Even I've been lax at times). The common explanation that "the information is public, everyone knows it" is wrong. I remember reading that private individual speculators accounting for 95% of the volume onthe Shanghai stock exchange a year or two back in the "boom" (or as I prefer, "bubble") times. Did all these people do their homework? Obviously not. They jumped into China National Petroleum. The offering price was 35 yuan/share, the opening price was FOURTY EIGHT a share. That gave the company over a trillion dollar market capitalization even though its profits were HALF that of Exxon Mobil. (It's at 15 now.)
And puts that were 100% out of the money were trading at high prices in Shanghai, falling only a few weeks before expiration. Some institutions/brokerages were even given the right to issue unlimited amounts of put warrants on some stocks, and people kept buying, even though the stock would need a 50% crash in a few months just to be in the money.
Most people don't do their research. So some would say, how about institutions? Great, the average foreign investment fund in China(their investment benchmark or something) lost 42% in the first half of this year. Everyone saw that Chinese stocks had a 75 PE or whatever with shady earnings. But oh no, everyone *expected* them to keep rocketing ahead. Getting caught up in this mentality, every dip was a good buy.
One explanation is that people who make the right decisions keep getting richer and so the one making poor decisions will go extinct. The parable works in business, but I don't think it fits in the securities markets. Buffett can make $50 billion in a lifetime, but there's a lot more dumb money out there.
So, do your research and ignore the academics that tell you "everything is discounted". Do you think that every person, heck every fund manager buying IBM actually did a full scale analysis of the stock? Or are they just adding it cuz it's a blue chip? Like 80% of trading volume on the exchanges now are from institutions right?(Or was that hedge funds) Is every one of them delving deep before they buy or sell CSCO? Then why would there be so much trading/volume if they were. I mean, they would literally just buy and hold.
Ok, one of my friends is Filipino, currently living in the Philippines. Tech gadgets are sort of like status symbols in most of Asia so the Filipinos are supposed to be tech savvy.
He was going around looking for a Canon digital camera. He found some seller on Ebay or something, that was selling for half the official retail price in stores.(Only thing lacking was a warranty)
I suppose the same thing happens in the markets. People talk about how they love stocks and etc but very few do their research(Even I've been lax at times). The common explanation that "the information is public, everyone knows it" is wrong. I remember reading that private individual speculators accounting for 95% of the volume onthe Shanghai stock exchange a year or two back in the "boom" (or as I prefer, "bubble") times. Did all these people do their homework? Obviously not. They jumped into China National Petroleum. The offering price was 35 yuan/share, the opening price was FOURTY EIGHT a share. That gave the company over a trillion dollar market capitalization even though its profits were HALF that of Exxon Mobil. (It's at 15 now.)
And puts that were 100% out of the money were trading at high prices in Shanghai, falling only a few weeks before expiration. Some institutions/brokerages were even given the right to issue unlimited amounts of put warrants on some stocks, and people kept buying, even though the stock would need a 50% crash in a few months just to be in the money.
Most people don't do their research. So some would say, how about institutions? Great, the average foreign investment fund in China(their investment benchmark or something) lost 42% in the first half of this year. Everyone saw that Chinese stocks had a 75 PE or whatever with shady earnings. But oh no, everyone *expected* them to keep rocketing ahead. Getting caught up in this mentality, every dip was a good buy.
One explanation is that people who make the right decisions keep getting richer and so the one making poor decisions will go extinct. The parable works in business, but I don't think it fits in the securities markets. Buffett can make $50 billion in a lifetime, but there's a lot more dumb money out there.
So, do your research and ignore the academics that tell you "everything is discounted". Do you think that every person, heck every fund manager buying IBM actually did a full scale analysis of the stock? Or are they just adding it cuz it's a blue chip? Like 80% of trading volume on the exchanges now are from institutions right?(Or was that hedge funds) Is every one of them delving deep before they buy or sell CSCO? Then why would there be so much trading/volume if they were. I mean, they would literally just buy and hold.
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