Futures Market Stock Quotes

Market moralities and mentalities-- fueled by economic imperatives to make a profit at nearly any cost-- yield unprecedented levels of loneliness, isolation, and sadness. And our public life lies in shambles, shot through with icy cynicism and paralyzing pessimism. To put it bluntly, beneath the record-breaking stock markets on Wall Street and bipartisan budget-balancing deals in the White House lurk ominous clouds of despair across this nation.

After all, what does the stock market sell us if not the unfounded hope of a rosy future?

The idealized market was supposed to deliver ‘friction free’ exchanges, in which the desires of consumers would be met directly, without the need for intervention or mediation by regulatory agencies. Yet the drive to assess the performance of workers and to measure forms of labor which, by their nature, are resistant to quantification, has inevitably required additional layers of management and bureaucracy. What we have is not a direct comparison of workers’ performance or output, but a comparison between the audited representation of that performance and output. Inevitably, a short-circuiting occurs, and work becomes geared towards the generation and massaging of representations rather than to the official goals of the work itself. Indeed, an anthropological study of local government in Britain argues that ‘More effort goes into ensuring that a local authority’s services are represented correctly than goes into actually improving those services’. This reversal of priorities is one of the hallmarks of a system which can be characterized without hyperbole as ‘market Stalinism’. What late capitalism repeats from Stalinism is just this valuing of symbols of achievement over actual achievement. […] It would be a mistake to regard this market Stalinism as some deviation from the ‘true spirit’ of capitalism. On the contrary, it would be better to say that an essential dimension of Stalinism was inhibited by its association with a social project like socialism and can only emerge in a late capitalist culture in which images acquire an autonomous force. The way value is generated on the stock exchange depends of course less on what a company ‘really does’, and more on perceptions of, and beliefs about, its (future) performance. In capitalism, that is to say, all that is solid melts into PR, and late capitalism is defined at least as much by this ubiquitous tendency towards PR-production as it is by the imposition of market mechanisms.

If we exaggerate the present and future value of the stock market, then as a society we may invest too much in business start-ups and expansions, and too little in infrastructure, education, and other forms of human capital.

Here is an all-too-brief summary of Buffett’s approach: He looks for what he calls “franchise” companies with strong consumer brands, easily understandable businesses, robust financial health, and near-monopolies in their markets, like H & R Block, Gillette, and the Washington Post Co. Buffett likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud—as when he bought Coca-Cola soon after its disastrous rollout of “New Coke” and the market crash of 1987. He also wants to see managers who set and meet realistic goals; build their businesses from within rather than through acquisition; allocate capital wisely; and do not pay themselves hundred-million-dollar jackpots of stock options. Buffett insists on steady and sustainable growth in earnings, so the company will be worth more in the future than it is today.

The scary thing is that the more open our markets get, the faster people can move their money around and the more trading is based on this kind of speculation instead of serious analysis. And that’s scary because—recall—the whole point of the stock market is to decide the crucial question of what we, as a society, should build for the future. As Keynes says, “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

If the management has not performed well in their bad times in the past, chances are they will not perform well in their good times in the future too.

The nearly perfect historical correlation between increasing productivity and rising incomes broke down: wages for most Americans stagnated and, for many workers, even declined; income inequality soared to levels not seen since the eve of the 1929 stock market crash; and a new phrase—“jobless recovery”—found a prominent place in our vocabulary.

I visualized my grief if the stock market went way up and I wasn’t in it—or if it went way down and I was completely in it. My intention was to minimize my future regret. So I split my contributions 50/50 between bonds and equities.

the great British economist John Maynard Keynes, written 70 years ago: “It is dangerous . . . to apply to the future inductive arguments based on past experience, unless one can distinguish the broad reasons why past experience was what it was.

Some readers are bound to want to take the techniques we’ve introduced here and try them on the problem of forecasting the future price of securities on the stock market (or currency exchange rates, and so on). Markets have very different statistical characteristics than natural phenomena such as weather patterns. Trying to use machine learning to beat markets, when you only have access to publicly available data, is a difficult endeavor, and you’re likely to waste your time and resources with nothing to show for it. Always remember that when it comes to markets, past performance is not a good predictor of future returns—looking in the rear-view mirror is a bad way to drive. Machine learning, on the other hand, is applicable to datasets where the past is a good predictor of the future.

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell. It is far from certain that the typical investor should regularly hold off buying until low market levels appear, because this may involve a long wait, very likely the loss of income, and the possible missing of investment opportunities. On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is much higher than can be justified by well-established standards of value. If he wants to be shrewd he can look for the ever-present bargain opportunities in individual securities. Aside from forecasting the movements of the general market, much effort and ability are directed on Wall Street toward selecting stocks or industrial groups that in matter of price will “do better” than the rest over a fairly short period in the future. Logical as this endeavor may seem, we do not believe it is suited to the needs or temperament of the true investor—particularly since he would be competing with a large number of stock-market traders and first-class financial analysts who are trying to do the same thing. As in all other activities that emphasize price movements first and underlying values second, the work of many intelligent minds constantly engaged in this field tends to be self-neutralizing and self-defeating over the years. The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. He should never buy a stock because it has gone up or sell one because it has gone down. He would not be far wrong if this motto read more simply: “Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.” An

Knowing the why is the deepest and most powerful form of knowledge because the why is always the driver of the what and how. When you understand why the stock market goes up and down, making informed decisions about investing becomes easier. When you understand why someone does what they do, their actions and behaviors make a lot more sense.

Successful gamblers, instead, think of the future as speckles of probability, flickering upward and downward like a stock market ticker to every new jolt of information.

Becoming a successful investor in future should be effortless when you understand and let the market do the work for you." - Adam Messina

The stock market is 50% gambling. Futures and options markets (derivatives) are 90% gambling.

Investors who focus on currencies, bonds, and stock markets generally assume a normal distribution of price changes: values jiggle up and down, but extreme moves are unusual. Of course, extreme moves are possible, as financial crashes show. But between 1985 and 2015, the S&P 500 stock index budged less than 3 percent from its starting point on 7,663 out of 7,817 days; in other words, for fully 98 percent of the time, the market is remarkably stable.

Investment Owner’s Contract I, _____________ ___________________, hereby state that I am an investor who is seeking to accumulate wealth for many years into the future. I know that there will be many times when I will be tempted to invest in stocks or bonds because they have gone (or “are going”) up in price, and other times when I will be tempted to sell my investments because they have gone (or “are going”) down. I hereby declare my refusal to let a herd of strangers make my financial decisions for me. I further make a solemn commitment never to invest because the stock market has gone up, and never to sell because it has gone down. Instead, I will invest $______.00 per month, every month, through an automatic investment plan or “dollar-cost averaging program,” into the following mutual fund(s) or diversified portfolio(s): _________________________________, _________________________________, _________________________________. I will also invest additional amounts whenever I can afford to spare the cash (and can afford to lose it in the short run). I hereby declare that I will hold each of these investments continually through at least the following date (which must be a minimum of 10 years after the date of this contact): _________________ _____, 20__. The only exceptions allowed under the terms of this contract are a sudden, pressing need for cash, like a health-care emergency or the loss of my job, or a planned expenditure like a housing down payment or a tuition bill. I am, by signing below, stating my intention not only to abide by the terms of this contract, but to re-read this document whenever I am tempted to sell any of my investments. This contract is valid only when signed by at least one witness, and must be kept in a safe place that is easily accessible for future reference.

[..] neoproletariat caste, the future cybercattle of neurocracy, joyous sophisticate of the always-incomplete chain of predation, primed by silos of soya, stocks of onions, pork bellies…and completed by the global apotheosis of the Great Futures Market of neurolivestock, more volatile (and more profitable) than all the livestock of the Great Plains. Neurolivestock certainly enjoy an existence more comfortable than serfs or millworkers, but they do not easily escape their destiny as the self-regulating raw material of a market as predictable and as homogeneous as a perfect gas, a matter counted in atoms of distress, stripped of all powers of negotiation, renting out their mental space, brain by brain.

You make plans and decisions assuming randomness and chaos are for chumps. The illusion of control is a peculiar thing because it often leads to high self-esteem and a belief your destiny is yours for the making more than it really is. This over-optimistic view can translate into actual action, rolling with the punches and moving ahead no matter what. Often, this attitude helps lead to success. Eventually, though, most people get punched in the stomach by life. Sometimes, the gut-punch doesn’t come until after a long chain of wins, until you’ve accumulated enough power to do some serious damage. This is when wars go awry, stock markets crash, and political scandals spill out into the media. Power breeds certainty, and certainty has no clout against the unpredictable, whether you are playing poker or running a country. Psychologists point out these findings do not suggest you should throw up your hands and give up. Those who are not grounded in reality, oddly enough, often achieve a lot in life simply because they believe they can and try harder than others. If you focus too long on your lack of power, you can slip into a state of learned helplessness that will whirl you into a negative feedback loop of depression. Some control is necessary or else you give up altogether. Langer proved this when studying nursing homes where some patients were allowed to arrange their furniture and water plants—they lived longer than those who had had those tasks performed by others. Knowing about the illusion of control shouldn’t discourage you from attempting to carve a space for yourself out of whatever field you want to tackle. After all, doing nothing guarantees no results. But as you do so, remember most of the future is unforeseeable. Learn to coexist with chaos. Factor it into your plans. Accept that failure is always a possibility, even if you are one of the good guys; those who believe failure is not an option never plan for it. Some things are predictable and manageable, but the farther away in time an event occurs, the less power you have over it. The farther away from your body and the more people involved, the less agency you wield. Like a billion rolls of a trillion dice, the factors at play are too complex, too random to truly manage. You can no more predict the course of your life than you could the shape of a cloud. So seek to control the small things, the things that matter, and let them pile up into a heap of happiness. In the bigger picture, control is an illusion anyway.

For a number of years, professors at Duke University conducted a survey in which the chief financial officers of large corporations estimated the returns of the Standard & Poor’s index over the following year. The Duke scholars collected 11,600 such forecasts and examined their accuracy. The conclusion was straightforward: financial officers of large corporations had no clue about the short-term future of the stock market; the correlation between their estimates and the true value was slightly less than zero!

When people scratch their heads and wonder how it can be that the stock market is booming and executive compensation is at an all-time high but the overall economy is less dynamic and workers are not benefiting, look no further than the trillions of dollars in stock buybacks.

The options also were a way of shifting enormous risk from Renaissance to the banks. Because the lenders technically owned the underlying securities in the basket-options transactions, the most Medallion could lose in the event of a sudden collapse was the premium it had paid for the options and the collateral held by the banks. That amounted to several hundred million dollars. By contrast, the banks faced billions of dollars of potential losses if Medallion were to experience deep troubles. In the words of a banker involved in the lending arrangement, the options allowed Medallion to “ring-fence” its stock portfolios, protecting other parts of the firm, including Laufer’s still-thriving futures trading, and ensuring Renaissance’s survival in the event something unforeseen took place. One staffer was so shocked by the terms of the financing that he shifted most of his life savings into Medallion, realizing the most he could lose was about 20 percent of his money.

No one is alone in this world. No act is without consequences for others. It is a tenet of chaos theory that, in dynamical systems, the outcome of any process is sensitive to its starting point-or, in the famous cliche, the flap of a butterfly's wings in the Amazon can cause a tornado in Texas. I do not assert markets are chaotic, though my fractal geometry is one of the primary mathematical tools of "chaology." But clearly, the global economy is an unfathomably complicated machine. To all the complexity of the physical world of weather, crops, ores, and factories, you add the psychological complexity of men acting on their fleeting expectations of what may or may not happen-sheer phantasms. Companies and stock prices, trade flows and currency rates, crop yields and commodity futures-all are inter-related to one degree or another, in ways we have barely begun to understand. In such a world, it is common sense that events in the distant past continue to echo in the present.

For example, trading in S&P 500-linked futures totaled more than $60 trillion(!) in 2011, five times the S&P 500 Index total market capitalization of $12.5 trillion. We also have credit default swaps, which are essentially bets on whether a corporation can meet the interest payments on its bonds. These credit default swaps alone had a notional value of $33 trillion. Add to this total a slew of other derivatives, whose notional value as 2012 began totaled a cool $708 trillion. By contrast, for what it’s worth, the aggregate capitalization of the world’s stock and bond markets is about $150 trillion, less than one-fourth as much. Is this a great financial system . . . or what!

To make matters worse, learning about health care is inherently difficult not only for the poor, but for everyone.33 If patients are somehow convinced that they need shots to get better, there is little chance that they could ever learn they are wrong. Because most diseases that prompt visits to the doctor are self-limiting (i.e., they will disappear no matter what), there is a good chance that patients will feel better after a single shot of antibiotics. This naturally encourages spurious causal associations: Even if the antibiotics did nothing to cure the ailment, it is normal to attribute any improvement to them. By contrast, it is not natural to attribute causal force to inaction: If a person with the flu goes to the doctor, and the doctor does nothing, and the patient then feels better, the patient will correctly infer that it was not the doctor who was responsible for the cure. And rather than thanking the doctor for his forbearance, the patient will be tempted to think that it was lucky that everything worked out this time but that a different doctor should be seen for future problems.This reaction creates a natural tendency to overmedicate in a private, unregulated market. This is compounded by the fact that, in many cases, the prescriber and the provider are the same person, either because people turn to their pharmacists for medical advice, or because private doctors also stock and sell medicine. It

The only thing you can be confident of while forecasting future stock returns is that you will probably turn out to be wrong. The only indisputable truth that the past teaches us is that the future will always surprise us—always! And the corollary to that law of financial history is that the markets will most brutally surprise the very people who are most certain that their views about the future are right. Staying humble about your forecasting powers, as Graham did, will keep you from risking too much on a view of the future that may well turn out to be wrong.

If you could take one ride in a time machine, which way would you go? The future or the past? Sally forth or turn back?...Do you prefer the costumed pageant of history or the techno-marvels to come? It seems there are two kinds of people. Both camps have their optimists as well as their pessimists. Disease is a worry. Time traveling while black or female poses special hazards. Then again, some people see ways to make money at lotteries, stock markets, and racetracks. Some just want to relive past loves. Many back travelers are driven by regret—mistakes made, opportunities lost.

I didn’t tell her that Anton Kirschler, the artist I wrote about, was a character of my own invention. I wrote that his work was instructive for how to maintain “a humanistic approach to art facing the rise of technology.” I described various made-up pieces: Dog Urinating on Computer, Stock Market Hamburger Lunch. I wrote that his work spoke to me personally because I was interested in how “art created the future.” It was a mediocre essay. My mother seemed unperturbed by it, which shocked me, and handed it back with the suggestion that I look up a few words in the thesaurus because I’d repeated them too often. I didn’t take her advice. I applied to Columbia early decision and got in.

Early on in the top, some parts of the credit system suffer, but others remain robust, so it isn’t clear that the economy is weakening. So while the central bank is still raising interest rates and tightening credit, the seeds of the recession are being sown. The fastest rate of tightening typically comes about five months prior to the top of the stock market. The economy is then operating at a high rate, with demand pressing up against the capacity to produce. Unemployment is normally at cyclical lows and inflation rates are rising. The increase in short-term interest rates makes holding cash more attractive, and it raises the interest rate used to discount the future cash flows of assets, weakening riskier asset prices and slowing lending.

The first concerns how an investor should choose among different types of broad-based index funds. The best-known of the broad stock market mutual funds and ETFs in the United States track the S&P 500 index of the largest stocks. We prefer using a broader index that includes more smaller-company stocks, such as the Russell 3000 index or the Dow-Wilshire 5000 index. Funds that track these broader indexes are often referred to as “total stock market” index funds. More than 80 years of stock market history confirm that portfolios of smaller stocks have produced a higher rate of return than the return of the S&P 500 large-company index. While smaller companies are undoubtedly less stable and riskier than large firms, they are likely—on average—to produce somewhat higher future returns. Total stock market index funds are the better way for investors to benefit from the long-run growth of economic activity.

The case for bitcoin as a cash item on a balance sheet is very compelling for anyone with a time horizon extending beyond four years. Whether or not fiat authorities like it, bitcoin is now in free-market competition with many other assets for the world’s cash balances. It is a competition bitcoin will win or lose in the market, not by the edicts of economists, politicians, or bureaucrats. If it continues to capture a growing share of the world’s cash balances, it continues to succeed. As it stands, bitcoin’s role as cash has a very large total addressable market. The world has around $90 trillion of broad fiat money supply, $90 trillion of sovereign bonds, $40 trillion of corporate bonds, and $10 trillion of gold. Bitcoin could replace all of these assets on balance sheets, which would be a total addressable market cap of $230 trillion. At the time of writing, bitcoin’s market capitalization is around $700 billion, or around 0.3% of its total addressable market. Bitcoin could also take a share of the market capitalization of other semihard assets which people have resorted to using as a form of saving for the future. These include stocks, which are valued at around $90 trillion; global real estate, valued at $280 trillion; and the art market, valued at several trillion dollars. Investors will continue to demand stocks, houses, and works of art, but the current valuations of these assets are likely highly inflated by the need of their holders to use them as stores of value on top of their value as capital or consumer goods. In other words, the flight from inflationary fiat has distorted the U.S. dollar valuations of these assets beyond any sane level. As more and more investors in search of a store of value discover bitcoin’s superior intertemporal salability, it will continue to acquire an increasing share of global cash balances.

Because so many people were betting against GameStop —and brick-and-mortar retail in general — the overall short position was enormous, almost comically so. At certain points over the past six months, it had bounced between 50 and even 100 percent of the overall float, meaning nearly all the shares of GameStop in existence had been borrowed and sold by short sellers, all of whom had an obligation to rebuy those shares at some point in the future. So, what if Keith was right, and the stock went up instead of down? It would be like watching investors trying to get out of a burning building, through a single, narrow door. The stock would rocket. As a financial educator, Keith knew that short selling could be one of the riskiest plays on the market. You really needed to be certain a stock was going down, because your upside was limited, but your losses could, theoretically, be infinite. The fact that so many competent investors were short selling GameStop could mean the stock really was a dog; but it also meant the stock was loaded with rocket fuel, and it wouldn't take much to ignite and sent it right to the moon.

For years the financial services have been making stock-market forecasts without anyone taking this activity very seriously. Like everyone else in the field they are sometimes right and sometimes wrong. Wherever possible they hedge their opinions so as to avoid the risk of being proved completely wrong. (There is a well-developed art of Delphic phrasing that adjusts itself successfully to whatever the future brings.) In our view—perhaps a prejudiced one—this segment of their work has no real significance except for the light it throws on human nature in the securities markets. Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied. Their interpretations and forecasts of business conditions, of course, are much more authoritative and informing. These are an important part of the great body of economic intelligence which is spread continuously among buyers and sellers of securities and tends to create fairly rational prices for stocks and bonds under most circumstances. Undoubtedly the material published by the financial services adds to the store of information available and fortifies the investment judgment of their clients.

This kind of speculation reached a high point with the Pentagon's initiative of creating a 'futures market in events', a stock market of prices for terrorist attacks or catastrophes. You bet on the probable occurrence of such events against those who don't believe they'll happen. This speculative market is intended to operate like the market in soya or sugar. You might speculate on the number of AIDS victims in Africa or on the probability that the San Andreas Fault will give way (the Pentagon's initiative is said to derive from the fact that they credit the free market in speculation with better forecasting powers than the secret services). Of course it is merely a step from here to insider trading: betting on the event before you cause it is still the surest way (they say Bin Laden did this, speculating on TWA shares before 11 September). It's like taking out life insurance on your wife before you murder her. There's a great difference between the event that happens (happened) in historical time and the event that happens in the real time of information. To the pure management of flows and markets under the banner of planetary deregulation, there corresponds the 'global' event- or rather the globalized non-event: the French victory in the World Cup, the year 2000, the death of Diana, The Matrix, etc. Whether or not these events are manufactured, they are orchestrated by the silent epidemic of the information networks. Fake events.

Then came the so-called flash crash. At 2:45 on May 6, 2010, for no obvious reason, the market fell six hundred points in a few minutes. A few minutes later, like a drunk trying to pretend he hadn’t just knocked over the fishbowl and killed the pet goldfish, it bounced right back up to where it was before. If you weren’t watching closely you could have missed the entire event—unless, of course, you had placed orders in the market to buy or sell certain stocks. Shares of Procter & Gamble, for instance, traded as low as a penny and as high as $100,000. Twenty thousand different trades happened at stock prices more than 60 percent removed from the prices of those stocks just moments before. Five months later, the SEC published a report blaming the entire fiasco on a single large sell order, of stock market futures contracts, mistakenly placed on an exchange in Chicago by an obscure Kansas City mutual fund. That explanation could only be true by accident, because the stock market regulators did not possess the information they needed to understand the stock markets. The unit of trading was now the microsecond, but the records kept by the exchanges were by the second. There were one million microseconds in a second. It was as if, back in the 1920s, the only stock market data available was a crude aggregation of all trades made during the decade. You could see that at some point in that era there had been a stock market crash. You could see nothing about the events on and around October 29, 1929.

Economics today creates appetites instead of solutions. The western world swells with obesity while others starve. The rich wander about like gods in their own nightmares. Or go skiing in the desert. You don’t even have to be particularly rich to do that. Those who once were starving now have access to chips, Coca-Cola, trans fats and refined sugars, but they are still disenfranchized. It is said that when Mahatma Gandhi was asked what he thought about western civilization, he answered that yes, it would be a good idea. The bank man’s bonuses and the oligarch’s billions are natural phenomena. Someone has to pull away from the masses – or else we’ll all become poorer. After the crash Icelandic banks lost 100 billion dollars. The country’s GDP had only ever amounted to thirteen billion dollars in total. An island with chronic inflation, a small currency and no natural resources to speak of: fish and warm water. Its economy was a third of Luxembourg’s. Well, they should be grateful they were allowed to take part in the financial party. Just like ugly girls should be grateful. Enjoy, swallow and don’t complain when it’s over. Economists can pull the same explanations from their hats every time. Dream worlds of total social exclusion and endless consumerism grow where they can be left in peace, at a safe distance from the poverty and environmental destruction they spread around themselves. Alternative universes for privileged human life forms. The stock market rises and the stock market falls. Countries devalue and currencies ripple. The market’s movements are monitored minute by minute. Some people always walk in threadbare shoes. And you arrange your preferences to avoid meeting them. It’s no longer possible to see further into the future than one desire at a time. History has ended and individual freedom has taken over. There is no alternative.

As I saw it, there was a 75 percent chance the Fed’s efforts would fall short and the economy would move into failure; a 20 percent chance it would initially succeed at stimulating the economy but still ultimately fail; and a 5 percent chance it would provide enough stimulus to save the economy but trigger hyperinflation. To hedge against the worst possibilities, I bought gold and T-bill futures as a spread against eurodollars, which was a limited-risk way of betting on credit problems increasing. I was dead wrong. After a delay, the economy responded to the Fed’s efforts, rebounding in a noninflationary way. In other words, inflation fell while growth accelerated. The stock market began a big bull run, and over the next eighteen years the U.S. economy enjoyed the greatest noninflationary growth period in its history. How was that possible? Eventually, I figured it out. As money poured out of these borrower countries and into the U.S., it changed everything. It drove the dollar up, which produced deflationary pressures in the U.S., which allowed the Fed to ease interest rates without raising inflation. This fueled a boom. The banks were protected both because the Federal Reserve loaned them cash and the creditors’ committees and international financial restructuring organizations such as the International Monetary Fund (IMF) and the Bank for International Settlements arranged things so that the debtor nations could pay their debt service from new loans. That way everyone could pretend everything was fine and write down those loans over many years. My experience over this period was like a series of blows to the head with a baseball bat. Being so wrong—and especially so publicly wrong—was incredibly humbling and cost me just about everything I had built at Bridgewater. I saw that I had been an arrogant jerk who was totally confident in a totally incorrect view. So there I was after eight years in business, with nothing to show for it. Though I’d been right much more than I’d been wrong, I was all the way back to square one.

In contemporary Western society, buying a magazine on astrology - at a newsstand, say - is easy; it is much harder to find one on astronomy. Virtually every newspaper in America has a daily column on astrology; there are hardly any that have even a weekly column on astronomy. There are ten times more astrologers in the United States than astronomers. At parties, when I meet people that do not know I’m a scientist, I am sometimes asked “Are you a Gemini?” (chances of success, one in twelve), or “What sign are you?” Much more rarely am I asked “Have you heard that gold is made in supernova explosions?” or “When do you think Congress will approve a Mars Rover?” (...) And personal astrology is with us still: consider two different newspaper astrology columns published in the same city on the same day. For example, we can examine The New York Post and the New York Daily News on September 21, 1979. Suppose you are a Libra - that is, born between September 23 and October 22. According to the astrologer for the Post, ‘a compromise will help ease tension’; useful, perhaps, but somewhat vague. According to the Daily News’ astrologer, you must ‘demand more of yourself’, an admonition that is also vague but also different. These ‘predictions’ are not predictions; rather they are pieces of advice - they tell you what to do, not what will happen. Deliberately, they are phrased so generally that they could apply to anyone. And they display major mutual inconsistencies. Why are they published as unapologetically as sport statistics and stock market reports? Astrology can be tested by the lives of twins. There are many cases in which one twin is killed in childhood, in a riding accident, say, or is struck by lightning, while the other lives to a prosperous old age. Each was born in precisely the same place and within minutes of the other. Exactly the same planets were rising at their births. If astrology were valid, how could two such twins have such profoundly different fates? It also turns out that astrologers cannot even agree among themselves on what a given horoscope means. In careful tests, they are unable to predict the character and future of people they knew nothing about except their time and place of birth.

Learning to meditate helped too. When the Beatles visited India in 1968 to study Transcendental Meditation at the ashram of Maharishi Mahesh Yogi, I was curious to learn it, so I did. I loved it. Meditation has benefited me hugely throughout my life because it produces a calm open-mindedness that allows me to think more clearly and creatively. I majored in finance in college because of my love for the markets and because that major had no foreign language requirement—so it allowed me to learn what I was interested in, both inside and outside class. I learned a lot about commodity futures from a very interesting classmate, a Vietnam veteran quite a bit older than me. Commodities were attractive because they could be traded with very low margin requirements, meaning I could leverage the limited amount of money I had to invest. If I could make winning decisions, which I planned to do, I could borrow more to make more. Stock, bond, and currency futures didn’t exist back then. Commodity futures were strictly real commodities like corn, soybeans, cattle, and hogs. So those were the markets I started to trade and learn about. My college years coincided with the era of free love, mind-expanding drug experimentation, and rejection of traditional authority. Living through it had a lasting effect on me and many other members of my generation. For example, it deeply impacted Steve Jobs, whom I came to empathize with and admire. Like me, he took up meditation and wasn’t interested in being taught as much as he loved visualizing and building out amazing new things. The times we lived in taught us both to question established ways of doing things—an attitude he demonstrated superbly in Apple’s iconic “1984” and “Here’s to the Crazy Ones,” which were ad campaigns that spoke to me. For the country as a whole, those were difficult years. As the draft expanded and the numbers of young men coming home in body bags soared, the Vietnam War split the country. There was a lottery based on birthdates to determine the order of those who would be drafted. I remember listening to the lottery on the radio while playing pool with my friends. It was estimated that the first 160 or so birthdays called would be drafted, though they read off all 366 dates. My birthday was forty-eighth.

Once you create and dominate a niche market, then you should gradually expand into related and slightly broader markets. Amazon shows how it can be done. Jeff Bezos’s founding vision was to dominate all of online retail, but he very deliberately started with books. There were millions of books to catalog, but they all had roughly the same shape, they were easy to ship, and some of the most rarely sold books—those least profitable for any retail store to keep in stock—also drew the most enthusiastic customers. Amazon became the dominant solution for anyone located far from a bookstore or seeking something unusual. Amazon then had two options: expand the number of people who read books, or expand to adjacent markets. They chose the latter, starting with the most similar markets: CDs, videos, and software. Amazon continued to add categories gradually until it had become the world’s general store. The name itself brilliantly encapsulated the company’s scaling strategy.

By spring of ’98, each company’s stock had more than quadrupled. Skeptics questioned earnings and revenue multiples higher than those for any non-internet company. It was easy to conclude that the market had gone crazy.

I was once asked in one of those meetings to express my views on the stock market. I stated, not without a modicum of pomp, that I believed that the market would go slightly up over the next week with a high probability. How high? “About 70%.” Clearly, that was a very strong opinion. But then someone interjected,“But, Nassim, you just boasted being short a very large quantity of SP500 futures, making a bet that the market would go down. What made you change your mind?” “I did not change my mind! I have a lot of faith in my bet! [Audience laughing.] As a matter of fact I now feel like selling even more!”The other employees in the room seemed utterly confused. “Are you bullish or are you bearish?” I was asked by the strategist. I replied that I could not understand the words bullish and bearish outside of their purely zoological consideration. Just as with events A and B in the preceding example, my opinion was that the market was more likely to go up (“I would be bullish”), but that it was preferable to short it (“I would be bearish”), because, in the event of its going down, it could go down a lot. Suddenly, the few traders in the room understood my opinion and started voicing similar opinions. And I was not forced to come back to the following discussion.

In short, then, state companies have most of the assets, fill oligopolistic and thus profitable economic positions, receive virtually all bank credit (and at preferential rates), represent most of the stock market capitalisation and generate most of the profit. Private enterprises constitute most of the companies, provide most of the jobs, dominate exports, represent over two-thirds of economic activity and drive the economy. When analysed, this presents a rather unusual picture and demonstrates why there is a strong lobby against further economic reform.

Then came the so-called flash crash. At 2:45 on May 6, 2010, for no obvious reason, the market fell six hundred points in a few minutes. A few minutes later, like a drunk trying to pretend he hadn’t just knocked over the fishbowl and killed the pet goldfish, it bounced right back up to where it was before. If you weren’t watching closely you could have missed the entire event—unless, of course, you had placed orders in the market to buy or sell certain stocks. Shares of Accenture traded for a penny, for instance, while shares of Hewlett-Packard traded for more than $100,000. Twenty thousand different trades happened at stock prices more than 60 percent removed from the prices of those stocks just moments before. Five months later, the SEC published a report blaming the entire fiasco on a single large sell order, of stock market futures contracts, mistakenly placed on an exchange in Chicago by an obscure Kansas City mutual fund. That explanation could only be true by accident, because the stock market regulators did not possess the information they needed to understand the stock markets. The unit of trading was now the microsecond, but the exchanges might report their activity in increments as big as a second. There were one million microseconds in a second. It was as if, back in the 1920s, the only stock market data available was a crude aggregation of all trades made during the decade. You could see that at some point in that era there had been a stock market crash. You could see nothing about the events on and around October 29, 1929. The first thing Brad noticed as he read the SEC report on the flash crash was its old-fashioned sense of time. “I did a search of the report for the word ‘minute,’ ” said Brad. “I got eighty-seven hits. I then searched for ‘second’ and got sixty-three hits. I then searched for ‘millisecond’ and got four hits—none of them actually relevant. Finally, I searched for ‘microsecond’ and got zero hits.” He read the report once and then never looked at it again.

On January 7, 1973, the New York Times featured an interview with one of the nation’s top financial forecasters, who urged investors to buy stocks without hesitation: “It’s very rare that you can be as unqualifiedly bullish as you can now.” That forecaster was named Alan Greenspan, and it’s very rare that anyone has ever been so unqualifiedly wrong as the future Federal Reserve chairman was that day: 1973 and 1974 turned out to be the worst years for economic growth and the stock market since the Great Depression.

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An Introduction to CFD Trading Increase, commit, and individuals trying to trade systems and their cash in different areas are usually trying to find new strategies. Like several good buyer, you won’t be joining the group, instead you had want in order to change lives begin or to create one. Stocks trading is really 80s within the sensation that perhaps young kids today understand how it operates, and have the ability to survive without any formal education. If you should be looking for a new company shift, you should provide a try to this new venture. First what’s a CFD? CFD stands for contract for difference. It’s thought as a small business contract an entrepreneur and by an expense business. If the contract expires, both parties can trade notes concerning the differences between the original and final price indices of particular monetary things like shares of items and futures. This is exactly what CFD Trading is focused on. The one edge that traders have within this economic contract is the fact that they get to purchase these factors at lower costs despite the fact that it includes nonvoting stocks where the trader can’t vote on all aspects of the company as opposed to what stockholders are blessed to do. Another thing is the fact that a CFD does not hold taxes on files even if these aspects are acquired in large amounts. In simple terms, it’s a in which a derivative asset is founded on an underlying asset’s cost between two entities that transactions the differences. These parties will need to pay the differences required to eachother. The way in which CFD Trading works is that among the entities gives the difference before contract ends included to the other. Just about like what occurs in spreadbetting, the trader continues the opposite end-of the deal with investment institution or CFD service, where the trader anticipates which cost will increase and having three selections to take whether to buy, to slide or to sell the component required. Another similarity with spreadbetting is the fact that you can find no tax tasks since CFD’s don’t involve buying of assets to become settled. It just requires the activity of the fee. Since the investor is just needed to spot a minor amount on these things, that are also called edges, the earnings and in addition losses will soon be on the basis of the money set in. In other words, a CFD is good for the entrepreneur since it gives him the chance of owning main assets without so much problem. Does It Work A good example of that is to ingest a share worth $20 and the entrepreneur buys 100 of these. He will be cost $2,000 by this exchange. Employing a stockbroker will demand the entrepreneur to shell 50% of this amount out. That is $1,000. A meager initial cashout is needed which amounts as much as only $100, should you evaluate that to an expenditure finished with a CFD representative. However, allow it to be regarded that whenever an investor enters a deal of difference, the cost place usually begins in a loss. Which damage is definitely equal to the spread. Which means the spread is at $8 along with if you come into a deal, the underlying resource must generate $8 merely to break even. Let us say if the actual resource reaches a quote cost of $ 20, then the CFD price will be a few cents less than that since the dealer will have to escape at that point. So as opposed to increasing your money to $40, he will must settle for several dollars. Nevertheless not really a terrible package to get a purchase with less trouble.

the price people are prepared to pay for a piece of a company tells you how much money they think that company will make in the future. In effect, stock markets hold hourly referendums on the companies whose shares are traded there: on the quality of their management, on the appeal of their products, on the prospects of their principal markets.

The masses long ago switched from stocks to investments having higher yields and more protection from inflation. Now the pension funds - the market’s last hope - have won permission to quit stocks and bonds for real estate, futures, gold, and even diamonds. The death of equities looks like an almost permanent condition.5

The stock investor can stay in the position forever. A futures speculator, on the other hand, will be forced out of the market when the contract expires. So even if he has financed a losing futures position, he is forced into making a new decision at expiration as to whether to stay with the position. The stock player has no such forcing point, which is why it’s especially important to decide what type of participant you’re going to be when you’re in the stock market.

The fundamentals of the economy remain strong.' That cliche is repeated by authorities as they try to restore public confidence after every major stock market decline. They have the opportunity to say this because just about every major stock market decline appears inexplicable if one looks only at the factors that logically ought to influence stock markets. It is practically always the stock market that has changed; indeed the fundamentals haven't. How do we know that these changes could not be generated by fundamentals? If prices reflect fundamentals, they do so because those fundamentals are useful in forecasting future stock payoffs. In theory the stock prices are the predictors of the discounted value of those future income streams, in the form of future dividends or future earnings. But stock prices are much too variable. They are even much more variable than those discounted streams of dividends (or earnings) that they are trying to predict.

for the common emotional traps mentioned earlier, we offer the following tools for escape: Recency bias. Never assume today’s results predict tomorrow’s. It’s a changing world. Overconfidence. No one can consistently predict short-term movements in the market. This means you and/or the person investing your money. Loss aversion. Be a risk manager instead of a risk avoider. Believing you are avoiding risk can be a costly illusion. Paralysis by analysis. Every day you don’t invest is a day less you’ll have the power of compounding working for you. Put together an intelligent investment plan and get started. If you need help, seek out a good financial planner to assist you. The endowment effect. Just because you own it, or are a part of it, doesn’t automatically mean it’s worth more. Get an objective evaluation. Invest no more than 10 percent of your portfolio in your employer’s stock. Mental accounting. Remember that all money spends the same, regardless of where it comes from. Money already spent is a sunk cost and should play no part in making future decisions. Anchoring. Holding out until you get your price to sell an investment is playing a fool’s game. So is blindly assuming that your financial person is doing a great job without getting an objective reading of what’s really going on. Get a second opinion. Financial negligence. Take the time to learn the basics of sound investing. It’s really pretty simple stuff. Knowing it can make the difference between having a life of poverty or one of prosperity.

No, definitely not,” replies Bill. “Exactly! Of course it won’t. It’s not gonna make you rich, and it’s not gonna make you poor, but what this trade will do is serve as a benchmark for future business. It’ll show you that I can put you into the market at the right time, and take you out as well. So why don’t we do this: “Since this is our first time working together, why don’t we start off a bit smaller this time. Instead of picking up a block of ten thousand shares, let’s pick up a block of a thousand shares, which is now a cash outlay of only thirty thousand dollars. Of course, you’ll make a bit less money as the stock trades higher, but your percentage gain remains the same, and you can judge me on that alone; and believe me, Bill, if you do even half as well as the rest of my clients in this program, the only problem you’re going to have is that you didn’t buy more. Sound fair enough?” And then you shut up and wait for a response.

It is dangerous ... to apply to the future inductive arguments based on past experience.

. If the efficient-markets hypothesis were true, it would ironically mean that stock markets would necessarily be very inefficient, since no one would gather any information.36 In the aftermath of the Great Recession, the efficient-markets model has taken a beating.37 In the meanwhile, though, some market advocates continue to use the “price discovery” argument for defending changes in markets that were actually making it more volatile and less efficient.

A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists. The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be.

Don’t time travel: don’t dwell on past bad trades, or fantasize about future great trades. Allow trading to teach you to live in the present.

Few want to consider that a great catastrophe could have erased almost all the evidence of earlier history… We also have a “normalcy bias” that makes it easy to assume that if the last few thousand years have been geologically stable then it always will be.  Most people assume that human civilization has been on a track of upwards, linear progress from the Stone Age to the Space Age – and that the future will see the same stability and progress as the recent past.  The same normalcy bias often destroys stock market investors, who want to believe that many years of a rising market mean it will continue to rise forever – when in fact there are known boom and bust cycles that eventually crush those who aren’t watching for signs that the party is ending soon.

Roomba, made headlines when the company’s CEO, Colin Angle, told Reuters about its data-based business strategy for the smart home, starting with a new revenue stream derived from selling floor plans of customers’ homes scraped from the machine’s new mapping capabilities. Angle indicated that iRobot could reach a deal to sell its maps to Google, Amazon, or Apple within the next two years. In preparation for this entry into surveillance competition, a camera, new sensors, and software had already been added to Roomba’s premier line, enabling new functions, including the ability to build a map while tracking its own location. The market had rewarded iRobot’s growth vision, sending the company’s stock price to $102 in June 2017 from just $35 a year earlier, translating into a market capitalization of $2.5 billion on revenues of $660 million.1 Privacy

To reiterate, in the upwave, debt is increased and financial wealth and obligations rise relative to tangible wealth to the point that these promises to pay in the future (i.e., the values of cash, bonds, and stocks) can’t be met. This causes “run on the bank”-type debt problems to emerge, which leads to the printing of money to try to relieve the problems of debt defaults and falling stock market prices, which leads to the devaluation of money and in turn to financial wealth going down relative to real wealth, until the real (inflation-adjusted) value of financial assets returns to being low relative to tangible wealth. Then the cycle begins again.

For investors with a mature portfolio, the markets like 1928 to 1945, 1969 to 1977, and 2000 to 2008 can be especially challenging. But for those who have a decade or more until they will need to spend down their portfolio and have future earnings power to save money over time, these terrible market environments are a blessing. In extremely volatile, low-returning markets, savers are consistently being offered stocks at lower prices.

The long-term increase in the stock market is entirely the result of the increase in long-term dividends and earnings growth of the companies that make up the market. How much investors are willing to pay for those earnings and dividends will change constantly. Much of these fluctuations have to do with speculation, but most of them have to do with the fact that investors are constantly projecting out the recent past into an uncertain future. That doesn't mean the odds are stacked against individual investors; just the ones who are unable to control their emotions.

Many financial analysts will find Emerson and Emery more interesting and appealing stocks than the other two—primarily, perhaps, because of their better “market action,” and secondarily because of their faster recent growth in earnings. Under our principles of conservative investment the first is not a valid reason for selection—that is something for the speculators to play around with. The second has validity, but within limits. Can the past growth and the presumably good prospects of Emery Air Freight justify a price more than 60 times its recent earnings?1 Our answer would be: Maybe for someone who has made an in-depth study of the possibilities of this company and come up with exceptionally firm and optimistic conclusions. But not for the careful investor who wants to be reasonably sure in advance that he is not committing the typical Wall Street error of overenthusiasm for good performance in earnings and in the stock market.* The same cautionary statements seem called for in the case of Emerson Electric, with a special reference to the market’s current valuation of over a billion dollars for the intangible, or earning-power, factor here. We should add that the “electronics industry,” once a fair-haired child of the stock market, has in general fallen on disastrous days. Emerson is an outstanding exception, but it will have to continue to be such an exception for a great many years in the future before the 1970 closing price will have been fully justified by its subsequent performance. By contrast, both ELTRA at 27 and Emhart at 33 have the earmarks of companies with sufficient value behind their price to constitute reasonably protected investments. Here the investor can, if he wishes, consider himself basically a part owner of these businesses, at a cost corresponding to what the

The classic view of the correct price of a common stock is that it is derived from the value of all the future earnings. These earnings are uncertain and subject to unknowable factors. Could anyone have known beforehand how to allow for the impact of 9/11 on the future earnings, hence on the then current market price, of firms headquartered in the Twin Towers of the World Trade Center?

The classic view of the correct price of a common stock is that it is derived from the value of all the future earnings. These earnings are uncertain and subject to unknowable factors. Could anyone have known beforehand how to allow for the impact of 9/11 on the future earnings, hence on the then current market price, of firms headquartered in the Twin Towers of the World Trade Center? These future payoffs are discounted to a present value reflecting their various probabilities and risks.

Such an investor may for example be a buyer of air-transport stocks because he believes their future is even more brilliant than the trend the market already reflects. For this class of investor the value of our book will lie more in its warnings against the pitfalls lurking in this favorite investment approach than in any positive technique that will help him along his path.

Not only were the best forecasters foxy as individuals, they had qualities that made them particularly effective collaborators—partners in sharing information and discussing predictions. Every team member still had to make individual predictions, but the team was scored by collective performance. On average, forecasters on the small superteams became 50 percent more accurate in their individual predictions. Superteams beat the wisdom of much larger crowds—in which the predictions of a large group of people are averaged—and they also beat prediction markets, where forecasters “trade” the outcomes of future events like stocks, and the market price represents the crowd prediction. It might seem like the complexity of predicting geopolitical and economic events would necessitate a group of narrow specialists, each bringing to the team extreme depth in one area. But it was actually the opposite. As with comic book creators and inventors patenting new technologies, in the face of uncertainty, individual breadth was critical. The foxiest forecasters were impressive alone, but together they exemplified the most lofty ideal of teams: they became more than the sum of their parts. A lot more.

What if you want the payouts to continue “forever,” as you might for an endowment? Computer simulations showed me that with the best long-term investments, such as stocks and commercial real estate, annual future spending should be limited to the inflation-adjusted level of 2 percent of the original gift. This surprisingly conservative figure assumes that future investment results will be similar in risk and return to US historical experience. In that case, the chance that the endowment is never exhausted turns out to be 96 percent. The 2 percent spending limit is so low because, if the fund is sharply reduced in its early years by a severe market decline, a higher spending requirement might wipe it out.

To fill this gap in the capital market, Davis and Rock set themselves up as a limited partnership, the same legal structure that had been used by a short-lived rival called Draper, Gaither & Anderson.[18] Rather than identifying startups and then seeking out corporate investors, they began by raising a fund that would render corporate investors unnecessary. As the two active, or “general,” partners, Davis and Rock each seeded the fund with $100,000 of their own capital. Then, ignoring the easy loans to be had from the fashionable SBIC structure, they raised just under $3.2 million from some thirty “limited” partners—rich individuals who served as passive investors.[19] The beauty of this size and structure was that the Davis & Rock partnership now had a war chest seven and a half times larger than an SBIC, and with it the ammunition to supply companies with enough capital to grow aggressively. At the same time, by keeping the number of passive investors under the legal threshold of one hundred, the partnership flew under the regulatory radar, avoiding the restrictions that ensnared the SBICs and Doriot’s ARD.[20] Sidestepping yet another weakness to be found in their competitors, Davis and Rock promised at the outset to liquidate their fund after seven years. The general partners had their own money in the fund, and thus a healthy incentive to invest with caution. At the same time, they could deploy the outside partners’ capital for a limited time only. Their caution would be balanced with deliberate aggression. Indeed, everything about the fund’s design was calculated to support an intelligent but forceful growth mentality. Unlike the SBICs, Davis & Rock raised money purely in the form of equity, not debt. The equity providers—that is, the outside limited partners—knew not to expect dividends, so Davis and Rock were free to invest in ambitious startups that used every dollar of capital to expand their business.[21] As general partners, Davis and Rock were personally incentivized to prioritize expansion: they took their compensation in the form of a 20 percent share of the fund’s capital appreciation. Meanwhile, Rock was at pains to extend this equity mentality to the employees of his portfolio companies. Having witnessed the effect of employee share ownership on the early culture of Fairchild, he believed in awarding managers, scientists, and salesmen with stock and stock options. In sum, everybody in the Davis & Rock orbit—the limited partners, the general partners, the entrepreneurs, their key employees—was compensated in the form of equity.

Is it really safe to invest in stocks? To answer that question, we would really first need to ask ourselves: what is safe after all? More so, what is safe in business? The answer would be “NOTHING”. Here it is – the stark reality: all businesses have their risks and as far as risks are concerned, the stock market is just another kind of business; that is it! All deep-rooted and unbeaten stock market will advise you on the affirmative. Yet the faint possibility remains that you, at the same time, will without doubt happen upon other stock market players who have done pathetically in the stock market. These traders, when their opinion is sought, will not leave a stone unturned in advising you to steer clear of the stock market. Mystified whose advice you should take? Fine, both are correct in their own points of view. To cross the threshold into well-paid stock market share trading in the marketplace of any place in the human race, it is to a great extent compulsory that you are geared up with the inclusive fluency of the sod above and beyond in receipt of rationalized with the up to date market shifts so that you prefer no less than probable stocks. In essence then can day businesses bear out valuable? If you are in a job in a different place and are unable to have a look at the trade area under conversation well again, it is advisable that you should not make your mind up on daylight trading. You will in point of fact happen upon other forms of trade which do not necessitate your day and night inspection. You in all probability will chew over those as well. Affecting the traders It would also be a reasonable word of warning to say publicly that the stock market affects different types of traders differently. There are cases in point of a lot of investors who have become cleaned out. Putting on next to nothing information and gambling into the share market perceiving others producing immense wealth possibly will provide evidence of being hazardous for you. You could wind up bringing up the rear to your richly deserved wealth and habitual failures will very soon plead your case before you to make your way out from the stock market panorama. Stage-managing and putting on unconditional awareness previous to putting money in will certainly twirl the bazaar in your prop up. Outline your objectives You will of course call for to outline your objectives and endeavor to come across the varied working expenditure alternatives in the stock market. At the beginning decide on fragile investments with the intention that even though you put on or incur fatalities, you will in next to no time gain knowledge of the ins and outs of the deal. Just the once you are contented, you can settle on volume funds. You in all probability will decide on each and every one of the three dealing preferences, specifically day business, short-term trading and enduring investment. At one fell swoop given your institution of resource of profits is exclusively the stock market; you will be able to broaden the horizons of your venture ambitions to a larger extent, for instance conjecture in mutual funds, money futures, product futures, and supplementary endeavor goods. You can accordingly keep up equilibrium of your ventures and disappointments if a few will by a hair's breadth inconvenience you. Seeking singular venture alternatives will additionally comply to you eloquent which one goes well with you the most excellent and you can in that case put in funds in capacity in the unwritten prospect. Make the best use of stock market It often comes to our notice that the stock market if used fine provides us with an exceptionally excellent occasion to put together loads of wealth and in addition utilize the stock market as our principal foundation of revenue. There are also the risks yet the faint possibility remains that risks are everywhere, in every trade.

2. Planning is important, but the most important part of every plan is to plan on the plan not going according to plan. What’s the saying? You plan, God laughs. Financial and investment planning are critical, because they let you know whether your current actions are within the realm of reasonable. But few plans of any kind survive their first encounter with the real world. If you’re projecting your income, savings rate, and market returns over the next 20 years, think about all the big stuff that’s happened in the last 20 years that no one could have foreseen: September 11th, a housing boom and bust that caused nearly 10 million Americans to lose their homes, a financial crisis that caused almost nine million to lose their jobs, a record-breaking stock-market rally that ensued, and a coronavirus that shakes the world as I write this. A plan is only useful if it can survive reality. And a future filled with unknowns is everyone’s reality. A good plan doesn’t pretend this weren’t true; it embraces it and emphasizes room for error. The more you need specific elements of a plan to be true, the more fragile your financial life becomes. If there’s enough room for error in your savings rate that you can say, “It’d be great if the market returns 8% a year over the next 30 years, but if it only does 4% a year I’ll still be OK,” the more valuable your plan becomes. Many bets fail not because they were wrong, but because they were mostly right in a situation that required things to be exactly right. Room for error—often called margin of safety—is one of the most underappreciated forces in finance. It comes in many forms: A frugal budget, flexible thinking, and a loose timeline—anything that lets you live happily with a range of outcomes. It’s different from being conservative. Conservative is avoiding a certain level of risk. Margin of safety is raising the odds of success at a given level of risk by increasing your chances of survival. Its magic is that the higher your margin of safety, the smaller your edge needs to be to have a favorable outcome.

Today, in 2020, I cannot see the future, but my instincts tell me that we are going to experience a replay of the first Great American Depression of the 1930’s, and that it will happen before the 100 year anniversary of that last one. (Keep in mind the uselessness of such personal premonitions) (Update September 2020 in light of record setting stock market valuations (for some companies) while economies were still under water) The above made so little sense, it became possible to imagine that certain companies had a pipeline to free Federal reserve cash.

History can be a misleading guide to the future of the economy and stock market because it doesn’t account for structural changes that are relevant to today’s world.

We don’t greet each other with the best things going on in our lives—we hide them—and greet each other instead with the dire news or the pessimistic stock market predictions. We are a culture of whiners and complainers.

Why should the future returns of stocks always be the same as their past returns? When every investor comes to believe that stocks are guaranteed to make money in the long run, won’t the market end up being wildly overpriced? And once that happens, how can future returns possibly be high?

Technology stocks crash after forming history’s biggest stock market bubble—the culmination of irrational exuberance, decades of herd-like behavior, and the recent injection of cheap money and moral hazard by the Federal Reserve.

Instead, let’s tune out the noise and think about future returns as Graham might. The stock market’s performance depends on three factors: real growth (the rise of companies’ earnings and dividends) inflationary growth (the general rise of prices throughout the economy) speculative growth—or decline (any increase or decrease in the investing public’s appetite for stocks)

Look at stocks as part ownership of a business. 2. Look at Mr. Market—volatile stock price fluctuations—as your friend rather than your enemy. View risk as the possibility of permanent loss of purchasing power, and uncertainty as the unpredictability regarding the degree of variability in the possible range of outcomes. 3. Remember the three most important words in investing: “margin of safety.” 4. Evaluate any news item or event only in terms of its impact on (a) future interest rates and (b) the intrinsic value of the business, which is the discounted value of the cash that can be taken out during its remaining life, adjusted for the uncertainty around receiving those cash flows. 5. Think in terms of opportunity costs when evaluating new ideas and keep a very high hurdle rate for incoming investments. Be unreasonable. When you look at a business and get a strong desire from within saying, “I wish I owned this business,” that is the kind of business in which you should be investing. A great investment idea doesn’t need hours to analyze. More often than not, it is love at first sight. 6. Think probabilistically rather than deterministically, because the future is never certain and it is really a set of branching probability streams. At the same time, avoid the risk of ruin, when making decisions, by focusing on consequences rather than just on raw probabilities in isolation. Some risks are just not worth taking, whatever the potential upside may be. 7. Never underestimate the power of incentives in any given situation. 8. When making decisions, involve both the left side of your brain (logic, analysis, and math) and the right side (intuition, creativity, and emotions). 9. Engage in visual thinking, which helps us to better understand complex information, organize our thoughts, and improve our ability to think and communicate. 10. Invert, always invert. You can avoid a lot of pain by visualizing your life after you have lost a lot of money trading or speculating using derivatives or leverage. If the visuals unnerve you, don’t do anything that could get you remotely close to reaching such a situation. 11. Vicariously learn from others throughout life. Embrace everlasting humility to succeed in this endeavor. 12. Embrace the power of long-term compounding. All the great things in life come from compound interest.

Research has shown that the winners in any endeavor think, feel, and act differently than those who lose. If you want to know if you have the self-discipline of a winner, try right now, starting today, to stop a habit that has challenged you in the past. If you have always wanted to be in better physical shape, try adding exercises such as running into your routine, and also take control of your salt and sugar intake. If you drink too much alcohol or coffee, try to see if for one month you can stay away from them. These are excellent tests to see if you are emotionally and intellectually strong enough or not to discipline yourself in the face of a losing trade. I am not saying that if you drink coffee or alcohol, or that if you are not a regular runner, you cannot become a successful trader, but if you make a try at these types of improvements and fail, then you should know that exercising self-control in trading will not be any easier to accomplish. Change is hard, but if you wish to be a successful trader, you need to work on changing and developing your personality at every level. Working hard at it is the only way to sustain the changes you need to make. The measure of intelligence is not in IQ tests or how to make money, but it is in the ability to change. As Oprah Winfrey, the American talk show host and philanthropist once said, the greatest discovery of all time is that a person can change their future by merely changing their attitude.

The dividend discount model suggests that in an efficient market, the current price of a stock should equal the present value of all expected future dividends, assuming for the sake of simplicity that the investor has no intention of selling the stock. (The present value is sometimes called the discounted value, since the present value of an item is discounted from its value in the future.)

By placing too low a discount on the future earnings of companies, investors ended up paying too much. The discounting error was widely acknowledged at the time. In early 1928, Moody’s Investors Services declared that stock prices had ‘over-discounted anticipated progress’.30 After the crash, Benjamin Graham and David Dodd wrote in their book Security Analysis that the late 1920s witnessed ‘a transfer of emphasis [in the valuation of stocks] from current income to future income and hence inevitably to future enhancement of principal value’.31 Or, as the market analyst Max Winkler memorably described: ‘The imagination of our investing public was greatly heightened by the discovery of a new phrase: discounting the future. However, a careful examination of quotations of many issues revealed that not only the future, but even the hereafter, was being discounted.

After 28 years at this post, and 22 years before this in money management, I can sum up whatever wisdom I have accumulated this way: The trick is not to be the hottest stock-picker, the winningest forecaster, or the developer of the neatest model; such victories are transient. The trick is to survive! Performing that trick requires a strong stomach for being wrong because we are all going to be wrong more often then we expect. The future is not ours to know. But it helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances. Being wrong comes with the franchise of an activity whose outcome depends on an unknown future . . . (Jeff Saut, “Being Wrong and Still Making Money,” Seeking Alpha, March 13, 2017, emphasis added)

FERNANDO IS NO APOLOGIST FOR the investment industry, arguing that despite huge strides over the past two decades there are still many mediocre money managers who spend too much time and money chasing the latest hot idea. As a result, retail investors often “get taken for a ride,” she concedes. But she worries that the now-indiscriminate shift into passive investment strategies is eroding the central role that financial markets play in the economy, with money blindly shoveled into stocks according to their size, rather than their prospects. “The stock market is supposed to be a capital allocation machine. But by investing passively you are just putting money into the past winners, rather than the future winners,” she argues. In other words, beyond the impact on markets or other investors, is the growth of index investing having a deleterious impact on economic dynamism?

Technical analysis is more concerned with the price movements of a stock or an index by examining historical records of trading activity. A technical analyst looks at past data to predict future price movements. They believe that history tends to repeat itself in the stock market and that past performance is the best indicator of what will happen in the future.

To apply first principles thinking to the field of value investing, consider several fundamental truths. Understand and practice the following if you want to become a good investor: 1. Look at stocks as part ownership of a business. 2. Look at Mr. Market—volatile stock price fluctuations—as your friend rather than your enemy. View risk as the possibility of permanent loss of purchasing power, and uncertainty as the unpredictability regarding the degree of variability in the possible range of outcomes. 3. Remember the three most important words in investing: “margin of safety.” 4. Evaluate any news item or event only in terms of its impact on (a) future interest rates and (b) the intrinsic value of the business, which is the discounted value of the cash that can be taken out during its remaining life, adjusted for the uncertainty around receiving those cash flows. 5. Think in terms of opportunity costs when evaluating new ideas and keep a very high hurdle rate for incoming investments. Be unreasonable. When you look at a business and get a strong desire from within saying, “I wish I owned this business,” that is the kind of business in which you should be investing. A great investment idea doesn’t need hours to analyze. More often than not, it is love at first sight. 6. Think probabilistically rather than deterministically, because the future is never certain and it is really a set of branching probability streams. At the same time, avoid the risk of ruin, when making decisions, by focusing on consequences rather than just on raw probabilities in isolation. Some risks are just not worth taking, whatever the potential upside may be. 7. Never underestimate the power of incentives in any given situation. 8. When making decisions, involve both the left side of your brain (logic, analysis, and math) and the right side (intuition, creativity, and emotions). 9. Engage in visual thinking, which helps us to better understand complex information, organize our thoughts, and improve our ability to think and communicate. 10. Invert, always invert. You can avoid a lot of pain by visualizing your life after you have lost a lot of money trading or speculating using derivatives or leverage. If the visuals unnerve you, don’t do anything that could get you remotely close to reaching such a situation. 11. Vicariously learn from others throughout life. Embrace everlasting humility to succeed in this endeavor. 12. Embrace the power of long-term compounding. All the great things in life come from compound interest.

Moreover, Fama’s thesis—titled “The Behavior of Stock-Market Prices”—corroborated earlier work by the likes of Mandelbrot and Samuelson which argued that markets are close to random, and therefore impossible to predict. As the young economist wrote in the introduction, “The series of price changes has no memory, that is, the past cannot be used to predict the future in any meaningful way.”19

In Trading, Every Setback is a Setup for a Comeback.

A pre-recorded message, timed to go off just as the crowd was reaching a fever pitch. A way to get them to take that one step further and push them from civility and into madness. Stocks are running out. Stocks are running out. STOCKS ARE RUNNING OUT.

Or take the stock market. The valuation of every company is simply a number from today multiplied by a story about tomorrow. Some companies are incredibly good at telling stories, and during some eras investors become captivated by the wildest ideas of what the future might bring. If you’re trying to figure out where something is going next, you have to understand more than its technical possibilities. You have to understand the stories everyone tells themselves about those possibilities, because it’s such a big part of the forecasting equation.

In the stock market, it is illegal to trade on inside information. If a CEO knows that her firm is about to buy a smaller competitor, she cannot go buy shares of that smaller firm before the news is publicly announced and the shares jump in value. The idea behind the ban on insider trading is that it makes the markets an even playing field for ordinary investors. Futures markets are different. When regulators built the modern futures markets during the 1930s, in fact, they wanted traders to use inside information when they bought and sold futures. This way, the thinking went, the markets would quickly reflect the most accurate price possible. When traders used inside information to buy or sell contracts, their actions would quickly send price signals to everyone else. While it was legal to use inside information in the futures markets, the power to do so was concentrating into fewer and fewer hands during the 1980s. Koch Industries was one of relatively few firms in the world that was able to ship oil by the barge load while simultaneously making bets in the futures market about what would happen when that barge load of oil arrived on shore. Koch exploited this advantage to the fullest extent.

Through Falk, he had come to understand that he who controlled electronic communication controlled everything. It was especially what Falk told him about how wars would be fought in the future that excited him. Bombs would be nothing more than computer viruses smuggled into the enemy’s storehouse of weapons. Electronic signals could eliminate the enemy’s stock markets and telecom networks. The time of nuclear submarines was over. Future threats would come barrelling down the miles of fiberoptic cables that were slowly entangling the world like a spiderweb.

The international oil majors currently use an internal shadow price of carbon in their investment decision making of between $60 and $85 a ton, somewhat in line with expectations that are currently reflected in U.S. stock market valuations.

The common thinking is that you can’t possibly sell something before you own it, and even if you could, some interest likely would be charged for borrowing the asset that you intend to sell. Although that might be true in stock trading, that logic doesn’t apply to the futures markets.

When expectations, theory, and reality diverge, that’s when the vibes get really weird. Economic theory is the perfect example of this. There is a gap between what textbooks say is going to happen and what companies actually end up doing. Economics is known as the dismal science, but it really should be known as the dismal art. Most stock valuation models are an educated guess about the future; most economic theory is measurable, but on the basis of loose facts. As the English author Hilary Mantel wrote in a 2017 Guardian piece on facts, history, and truth, “Evidence is always partial. Facts are not truth, though they are part of it—information is not knowledge. And history is not the past—it is the method we have evolved of organising our ignorance of the past. It’s the record of what’s left on the record.

These steps will help you remember that correlation is not causation, and that most market prophecies are based on coincidental patterns. That was the problem in the late 1990s at the Motley Fool website. Its Foolish Four portfolios were based on research claiming that factors like the ratio of a company’s dividend yield to the square root of its stock price could predict future outperformance. In the long run, however, a company’s stock can rise only if its underlying business earns more money.

In F&O what you earn is not real, because you up your bets - yes, it is betting - But, what you lose is real.

In any case, the theory of Brownian motion was independently developed in 1900 by a Frenchman, Louis Bachelier. Bachelier was not actually concerned with the motion of microscopic particles suspended in a liquid. He was concerned with prices on the French stock market. Prices on the Bourse, like particles in a liquid, are subject to a vast array of random forces, so many that the prices’ behavior can only be studied probabilistically. This is exactly what Bachelier did in his remarkable doctoral thesis, “The Theory of Speculation.” Yet although his paper is couched in terms of futures and stock options and “call-o-more’s” (whatever those are), the mathematics is identical to that of Brownian motion, and Bachelier’s equation explaining the drift of prices with time is the same as the one Einstein later derived for the position of particles. In his paper Bachelier anticipated the Black-Scholes approach to options trading, and for his prescient work he has in recent years been crowned the “father of economic modeling.” At the time, though, Bachelier seems to have been ignored, and he passed into obscurity. Could Einstein have known of his predecessor’s work and merely transplanted the mathematics to particles? I am aware of no evidence that this is the case.

Those that use only fundamental variables refer only to a company's business performance, not the relationship between that performance and its share price. Studies have sorted stocks using returns on equity or on total capital invested, growth in earnings per share, growth in assets—as opposed to sales growth—and various measures of profit margins. Companies with high marks on these variables are successful firms whose shares are inherently attractive to investors. However, consistent with the studies we discussed above, it is often the firms that ranked lowest on these measures—low returns on capital or narrow profit margins—that have tended to generate the highest future market returns.

A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists. The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be. No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the “margin of safety”—never overpaying, no matter how exciting an investment seems to be—can you minimize your odds of error. The secret to your financial success is inside yourself. If you become a critical thinker who takes no Wall Street “fact” on faith, and you invest with patient confidence, you can take steady advantage of even the worst bear markets. By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.