Showing posts with label Financial Markets. Show all posts
Showing posts with label Financial Markets. Show all posts
Friday, 9 June 2017
Thursday, 31 March 2016
QOTD
"I was worth over one million after the close of business that day. But my biggest winnings were not in dollars but in the intangibles: I had been right, I had looked ahead and followed a clear-cut plan. I had learned what a man must do in order to make big money; I was permanently out of the gambler class; I had at last learned to trade intelligently in a big way." - Jesse Livermore
The Unsurprising Financial Markets
By Larry Smith, Professor of Economics, University of Waterloo:
There is no doubt that the world’s financial markets play an indispensable role in fueling economic growth and development. There is equally no doubt that large amounts of capital are misallocated and therefore wasted. Part of the misallocation occurs because far too many conflicts of interest and instances of self-dealing continue to be tolerated. That is in addition to those who with malice aforethought create false information to mislead the unwary. However, responsibility for the greater part of this misallocation arises from a different source: those who claim that the future cannot be predicted usefully. Notice how this plays out.
Those who are optimistically inclined, whether genuinely or not, and those who are optimistic in order to promote sales, deals and commissions are of course often contradicted by events. Are they then held to account? Rarely. The prognosticators always invoke their great excuse, claiming that nobody could see the anomaly coming, that they were all wrong together. After all, the future is unknowable, they plead. But they plead not for forgiveness, but for acquiescence in the state of their version of reality.
Of course, they are right about one aspect of predicting the future, the aspect they use to excuse all else. Indeed, the future cannot be predicted in great detail, or in any detail in some circumstances. But that does not mean it cannot be predicted usefully. The definition of useful in this context is quite clear. Can you use the prediction to guard yourself from danger, or in some cases to advance your economic interests? And for economic predictions that are thoughtfully applied, the answer is emphatically yes.
This blog has long argued that the only realistic outlook for the global economy is slow growth, at best. The reason is entirely clear: all of the world’s major marketplaces face serious and multiple problems. The governments of the United States and the European Union, for example, are near dysfunctional. And interest rates are so low only because growth is illusive. To predict sustained growth at historically high rates requires us to assume that all or almost all of the world’s major problems are resolved nearly simultaneously. That is an assumption only the heroically blind optimist could make.
Nevertheless, modest growth in the United States and no immediate crisis like 2007-08 were enough to propel the financial markets upward, with no allowance for anything to go wrong. Strictly speaking, it actually meant that everything had to go right!
As this blog has pointed out, these multiple, complex and overlapping problems inevitably produce both high uncertainty and high volatility. So how could you be surprised that energy and commodity prices are unstable? Or perhaps you are surprised at exactly how low energy prices have fallen? But it is the essence of volatility in uncertain times that the swings will be very wide, if not wild.
Notice what assumption was necessary in order for energy and commodity prices to be even approximately stable. China would have had to slow its massive economy from unsustainable to sustainable growth rates and would have had to do so smoothly. China would have had to do this even though it had never done it before and its financial and regulatory institutions are still in development. It would have needed timely and reliable statistics, and minimal corruption. It could not overshoot its targets in either direction. And why we are surprised that China has struggled with this great challenge? And as China struggles, the energy and commodity markets weaken further.
So now that reality has emphatically asserted itself, the optimists have bailed and the markets have tanked. Of course, once you really do believe that the future is completely unknowable, adversity easily causes over-reaction. So the markets are likely to fall far further than circumstances warrant. But even that observation is uncertain. So where does that leave the individual?
Since everyone’s circumstances are different, there is no single way to effectively respond to today’s environment. But there are several basic approaches that serve in times of great uncertainty. Avoid inflexible obligations. Try to insulate part of yourself from the external environment. One way is to seek out individual investment opportunities that are not strongly dependent on the overall economy; ideally, you find an investment that is strengthened by volatility and slow growth. They do exist.
Last and not least, make sure your career strategy is aggressive. Add to your advantage by enhancing your innovative capability. Remember the highly innovative problem solver is always in demand.
There is no doubt that the world’s financial markets play an indispensable role in fueling economic growth and development. There is equally no doubt that large amounts of capital are misallocated and therefore wasted. Part of the misallocation occurs because far too many conflicts of interest and instances of self-dealing continue to be tolerated. That is in addition to those who with malice aforethought create false information to mislead the unwary. However, responsibility for the greater part of this misallocation arises from a different source: those who claim that the future cannot be predicted usefully. Notice how this plays out.
Those who are optimistically inclined, whether genuinely or not, and those who are optimistic in order to promote sales, deals and commissions are of course often contradicted by events. Are they then held to account? Rarely. The prognosticators always invoke their great excuse, claiming that nobody could see the anomaly coming, that they were all wrong together. After all, the future is unknowable, they plead. But they plead not for forgiveness, but for acquiescence in the state of their version of reality.
Of course, they are right about one aspect of predicting the future, the aspect they use to excuse all else. Indeed, the future cannot be predicted in great detail, or in any detail in some circumstances. But that does not mean it cannot be predicted usefully. The definition of useful in this context is quite clear. Can you use the prediction to guard yourself from danger, or in some cases to advance your economic interests? And for economic predictions that are thoughtfully applied, the answer is emphatically yes.
This blog has long argued that the only realistic outlook for the global economy is slow growth, at best. The reason is entirely clear: all of the world’s major marketplaces face serious and multiple problems. The governments of the United States and the European Union, for example, are near dysfunctional. And interest rates are so low only because growth is illusive. To predict sustained growth at historically high rates requires us to assume that all or almost all of the world’s major problems are resolved nearly simultaneously. That is an assumption only the heroically blind optimist could make.
Nevertheless, modest growth in the United States and no immediate crisis like 2007-08 were enough to propel the financial markets upward, with no allowance for anything to go wrong. Strictly speaking, it actually meant that everything had to go right!
As this blog has pointed out, these multiple, complex and overlapping problems inevitably produce both high uncertainty and high volatility. So how could you be surprised that energy and commodity prices are unstable? Or perhaps you are surprised at exactly how low energy prices have fallen? But it is the essence of volatility in uncertain times that the swings will be very wide, if not wild.
Notice what assumption was necessary in order for energy and commodity prices to be even approximately stable. China would have had to slow its massive economy from unsustainable to sustainable growth rates and would have had to do so smoothly. China would have had to do this even though it had never done it before and its financial and regulatory institutions are still in development. It would have needed timely and reliable statistics, and minimal corruption. It could not overshoot its targets in either direction. And why we are surprised that China has struggled with this great challenge? And as China struggles, the energy and commodity markets weaken further.
So now that reality has emphatically asserted itself, the optimists have bailed and the markets have tanked. Of course, once you really do believe that the future is completely unknowable, adversity easily causes over-reaction. So the markets are likely to fall far further than circumstances warrant. But even that observation is uncertain. So where does that leave the individual?
Since everyone’s circumstances are different, there is no single way to effectively respond to today’s environment. But there are several basic approaches that serve in times of great uncertainty. Avoid inflexible obligations. Try to insulate part of yourself from the external environment. One way is to seek out individual investment opportunities that are not strongly dependent on the overall economy; ideally, you find an investment that is strengthened by volatility and slow growth. They do exist.
Last and not least, make sure your career strategy is aggressive. Add to your advantage by enhancing your innovative capability. Remember the highly innovative problem solver is always in demand.
Tuesday, 29 March 2016
Saturday, 5 March 2016
Update: $SI_F Silver Futures
$SI_F (Silver Futures) update
— Rubin (@traderrubin) Mar. 5 at 06:00 PM
Tuesday, 1 March 2016
Monday, 29 February 2016
Is Trump Unstoppable Now?
This time around, the weight of voter apathy seems greater than the mainstream media's attempt at pacifying public opinion through catapulting establishment candidates into the White House by way of the conventional PR campaign. Tepid economic growth, flat real wage growth, and social media's effect on culture, society, and the mainstream media's capacity to craft a political narrative over the past eight years, has culminated into what is now Donald Trump. Ironically, he's the only candidate running an unorthodox campaign (self-funding, anti-PC, no political background) in an unorthodox political climate. The further Hollywood, the GOP, (and the Pope) push Trump away, the closer he gets to the general public. The question isn't who is going to let him, but who is going to stop him?
Sunday, 28 February 2016
Monday, 1 February 2016
F (Ford) - Short-Term Target: 10.40, Current Price: 12.01
$F Near-term target: 10.40Current price: 12.01
— Rubin (@traderrubin) Feb. 1 at 12:20 PM
Wednesday, 27 January 2016
Update: TSLA Hits Price Target of 187.00 (01-27-2016)
UPDATE: $TSLA blew passed price target of 187; LOD 185.77. $FB $AMZN
— Rubin (@traderrubin) Jan. 27 at 11:06 PM
Tuesday, 26 January 2016
SLV (Silver) Near-Term Price Target: $14.83, Medium-Term: $15.50
$SLV$SLV **Near-term price target: 14.83Medium-term: 15.50
— Rubin (@traderrubin) Jan. 26 at 04:57 PM
Update: TSLA Falls to $188.88 Intraday ($1.88 From Price Target)
Update: $TSLA hit $188.88 intraday today ($1.88 from price target initiated yesterday, 01-25-2016) $QQQ $AAPL $TWTR
— Rubin (@traderrubin) Jan. 26 at 04:23 PM
Monday, 25 January 2016
TSLA - Price Target Lowered to $187.00
$TSLA - short term price target: $187.00. $QQQ $AAPL $TWTR
— Rubin (@traderrubin) Jan. 25 at 03:52 PM
Sunday, 24 January 2016
Friday, 15 January 2016
Thursday, 14 January 2016
Wednesday, 30 December 2015
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