Gisi

Beating the Quants at Their Own Game

In my opinion, technical analysis is only useful in REINFORCING the right TIME to buy or sell a stock. I would never rely solely on techs in carrying out my trades simply because I don't think historical price movements are any indicator of how the stock is going to move a month, or even a week from now. I strongly believe that fundamentals drive a business, whether those are the company's customer base, global presence, management team, or whatnot. It's the stuff we can't control that typically causes huge price fluctuations... On the other hand, behavioral trading techniques, as you mentioned in the article, are most easily handled through tech analysis (though not necessarily all the time). And behavior is pretty predictable.

Great article!

Measure, Don't Model: The Forest and the Trees

Don- just out of curiosity, what is your view on trading based on behavioral indicators?

My personal belief is that you can never, ever predict the market so why waste your time trying to do that? You CAN, however, always predict how people will react to a situation. Humans just don't change. I recall in one of your comments you mentioned extreme, unpredictable events (something with the ASCO convention). An example like that could be explained by investor overconfidence in the company for finding a breakthrough cure in cancer (otherwise why would they hold the conference to begin with?) Please keep in I'm taking a pretty general view here, just to get my point across.

Let me know. As someone who also doesn't believe in statistics, I'm really curious about what you think about behavioral finance trading...

Why the New York Times Won't Cease Printing

Excuse me, typo in my last comment. I meant that until the Internet can replace the newspaper in that sense, then NYT will be fine.

Why the New York Times Won't Cease Printing

Despite how NYT has been doing on its balance sheet, I do still believe they have a large market. Yes, companies are buckling up on advertising costs, which makes up a bulk of the NYT profits. On the other hand, while the Internet is a completely accessible and easier-to-read news source, many people are still loyal to the actual newspaper. It's not just about the news, or the fashion, magazine, crossword, etc. that Smarty mentioned. When you're commuting somewhere, how would you get access to the Internet, for example? Not everyone is connected everywhere... yet. I think that until the Internet can replace the newspaper in that sense (complete omnipresence), then the NYT will be facing a crisis.

Why We Need a Recession

Your article makes a very good point and I especially agree with your last comment regarding the Fed's obligation to interfere. However, this ultimately goes back to the underlying problems in American capitalism. The recession is not only necessary to move us through the economic cycle but also to, in a way, reinvent American values. A sort of a call back to reality.

I think it's absolutely ridiculous, for example, that as the price of gas increased, Americans become enamored with hybrid cars and saving the environment. Then gas prices dropped and now consumers welcome back with open arms those unnecessarily large SUVs (though clearly not enough for the Big Three). This just goes to show that Americans DON'T believe in saving money. They want to spend every bit they have and a lot of what they don't have if they can get their hands on it. What I'm seeing now is two extremes: one causing the economic meltdown and the other prolonging it.

What we really need is to encourage saving everyday, not only in emergencies. As the saying goes, buy an umbrella on a rainy day.