The Stock Market

[midas]

I am just curious............

How do the TBTF banks go around determining " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

[flying]

I am just curious............

How do the TBTF banks go around determining " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

I don't know but often wonder when so many homes sit empty why they have not accepted what I thought were reasonable offers.

It could tie into what your asking. Maybe if they hold them they hold the asset at their fantasy book value? It would explain a lot.

If that is what you meant by foreclosure gate

Edited October 13, 2010 by flying

[siamamerican]

1. It is rarely simple when it comes to Naam's posts. I avoid arguing with his views because inevitably I look the fool. Too much wit and the knowledge he possesses is rarely shared. Usually in the vain of the above esoteric post he ridicules without providing how he makes his own economic judgement.

2. In the end he is entertaining and when he dummies down his views to my level, they are interesting. I know Naam, I'm an idiot.

1. i have not aired any views but stated an undeniable fact as far as external debt of Luxembourg and Switzerland is concerned. stating a fact is not an economic judgment.

2. why you feel blamed when CIA factbook or Wikipedia publishes rubbish is beyond my comprehension.

please elaborate.

Didn't know it was rubbish. Please elaborate - what do you consider non-rubbish? I could base my decisions on whims or try to look for data that tells a story. As for the CIA and Wiki, probably half true but not sure what you're getting at. I base my investment actions on available data and it works for me. It doesn't have to be completely accurate or tell the whole story. Rubbish - up to you.

Edited October 13, 2010 by siamamerican

[midas]

I am just curious............

How do the TBTF banks go around determining " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

I don't know but often wonder when so many homes sit empty why they have not accepted what I thought were reasonable offers.

It could tie into what your asking. Maybe if they hold them they hold the asset at their fantasy book value? It would explain a lot.

If that is what you meant by foreclosure gate

No i am talking about what Rep. Brad Miller ( D ) North Carolina says

in this interview with Dylan Ratigan. He admits the TBTF banks could end

up having to buy back more than their asset backing........oh oh do i detect another

round of bank bailouts coming.........I mean will the American public stand

for it yet again ?

Anyway this is an interesting interview :-

http://www.msnbc.msn.com/id/21134540/vp/39582228#39582228

[Naam]

1. It is rarely simple when it comes to Naam's posts. I avoid arguing with his views because inevitably I look the fool. Too much wit and the knowledge he possesses is rarely shared. Usually in the vain of the above esoteric post he ridicules without providing how he makes his own economic judgement.

2. In the end he is entertaining and when he dummies down his views to my level, they are interesting. I know Naam, I'm an idiot.

1. i have not aired any views but stated an undeniable fact as far as external debt of Luxembourg and Switzerland is concerned. stating a fact is not an economic judgment.

2. why you feel blamed when CIA factbook or Wikipedia publishes rubbish is beyond my comprehension.

please elaborate.

1. Didn't know it was rubbish.

2.Please elaborate - what do you consider non-rubbish?

I could base my decisions on whims or try to look for data that tells a story. As for the CIA and Wiki, probably half true but not sure what you're getting at. I base my investment actions on available data and it works for me. It doesn't have to be completely accurate or tell the whole story. Rubbish - up to you.

1. now you know and that without me charging any fees nobody blames you that you didn't know what a lot of seasoned investors don't know.

2. non-rubbish and a fact is -quote- "the external debt figures for L and CH comprise all financial vehicles (no matter whether from Kazakhstan or any other country) which have been established in Luxembourg and Switzerland under Lux or Suisse jurisdiction."

[midas]

I don't know but often wonder when so many homes sit empty why they have not accepted what I thought were reasonable offers.

It could tie into what your asking. Maybe if they hold them they hold the asset at their fantasy book value? It would explain a lot.

Regarding this matter flying.........here is an interesting revelation :-

FDIC and Shared Loss Agreements - Banks Making Big Money

http://www.trulia.com/blog/AnnetteLawrence/2010/02/banks_making_big_money_on_toxic_assets

[flying]

Regarding this matter flying.........here is an interesting revelation :-

FDIC and Shared Loss Agreements - Banks Making Big Money

http://www.trulia.com/blog/AnnetteLawrence/2010/02/banks_making_big_money_on_toxic_assets

Not surprising eh?

Also they made no mention of all the interest the bank likely sucked up for the first year or two. Guessing it was a interest only like many Ninja loans were.

Also what they said about the homeowners being on the hook for the taxes?...It is why I hear more & more are now going the bankruptcy route.

I do agree with the Move your money statement in the final section.

[Abrak]

Regarding this matter flying.........here is an interesting revelation :-

FDIC and Shared Loss Agreements - Banks Making Big Money

http://www.trulia.com/blog/AnnetteLawrence/2010/02/banks_making_big_money_on_toxic_assets

Not surprising eh?

Also they made no mention of all the interest the bank likely sucked up for the first year or two. Guessing it was a interest only like many Ninja loans were.

Also what they said about the homeowners being on the hook for the taxes?...It is why I hear more & more are now going the bankruptcy route.

I do agree with the Move your money statement in the final section.

Never heard of this before. Sounds like a good scam.

But a couple of things sound like nonsense.

First the role of the FDIC does not make sense.

Original loan US$400,000

Bought by bank (I assume) US$400,000x.8=US$320,000

Original buyer purchases at US$250,000

FDIC makes up loss of US$150,000x.8=US$120,000

Bank makes US$50,000 = Bt250k+US$120k-US$320k

Those are their numbers. This clearly a scam on the basis that it is impossible for the bank to lose money. The lowest amount they will possibly sell it to me is US$0 and on that basis the bank will be reimbursed exactly the same as he paid for the loan.

I also dont get the personal tax charge. I see I realize a gain by rebuying the loan at a lower price but I have also made a capital loss on the property which should be offsettable.

It doesnt seem logical that you can be taxed on the gain on the debt while you are fully liable to the bank for their loss (in other words you have made no gain.)

I was also under the understanding that you could hand over the keys to your house and walk away from the property without further recourse (although that is fairly unusual.)

I mean obviously there is a fantastic scam here because the bank gets repaid 80% of its losses and the buyer can agree with the bank a low enough price whereby he effectively repays the bank in full through FDIC. If I was to buy it back at US$150k the bank would receive US$200k FDIC compensation plus a say US$70k consultation fee which would also absolve me of any future liability. I buy at US$220k and the bank makes US$100k profit instead of US$50k.

[siamamerican]

1. now you know and that without me charging any fees nobody blames you that you didn't know what a lot of seasoned investors don't know.

2. non-rubbish and a fact is -quote- "the external debt figures for L and CH comprise all financial vehicles (no matter whether from Kazakhstan or any other country) which have been established in Luxembourg and Switzerland under Lux or Suisse jurisdiction."

1. I guess I should thank you then - THANKS!

2. Oh I get it now. I forgot about L and CH.

Remember, this isn't your Mensa International meeting. For love of god, come down a few levels.

[siamamerican]

double post

Edited October 14, 2010 by siamamerican

[midas]

I am just curious............

How do the TBTF banks go around determining " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

I don't know but often wonder when so many homes sit empty why they have not accepted what I thought were reasonable offers.

and here is yet again another illustration of what i mean

" Earlier, we wrote about Felix Salmon's contention that there's a new mortgage fraud scandal that has the potential to dwarf Goldman's ABACUS dealings. In this fraud scenario, banks took advantage of their information advantage and sold CDOs with mortgages they knew to be bad without clear representation to investors.

In August, Manal Mehta and Branch Hill Capital put together a presentation targeting Bank of America's potential exposure to this mortgage fraud, as well as other problems in the mortgage market.

The presentation comes to a pretty damning conclusion: Bank of America's exposure could nearly halve its share price."

Read more: http://www.businessinsider.com/bank-of-america-mortgage-report-2010-10#ixzz12PrLczoW

[zorro1]

I am just curious............

How do the TBTF banks go around determining " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

I don't know but often wonder when so many homes sit empty why they have not accepted what I thought were reasonable offers.

and here is yet again another illustration of what i mean

" Earlier, we wrote about Felix Salmon's contention that there's a new mortgage fraud scandal that has the potential to dwarf Goldman's ABACUS dealings. In this fraud scenario, banks took advantage of their information advantage and sold CDOs with mortgages they knew to be bad without clear representation to investors.

In August, Manal Mehta and Branch Hill Capital put together a presentation targeting Bank of America's potential exposure to this mortgage fraud, as well as other problems in the mortgage market.

The presentation comes to a pretty damning conclusion: Bank of America's exposure could nearly halve its share price."

Read more: http://www.businessinsider.com/bank-of-america-mortgage-report-2010-10#ixzz12PrLczoW

Midas since you started posting most shares have tripled in price. Keep posting

[midas]

I am just curious............

How do the TBTF banks go around determining " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

I don't know but often wonder when so many homes sit empty why they have not accepted what I thought were reasonable offers.

so valuation of say the TBTF banks wouldnt bother you ?

and here is yet again another illustration of what i mean

" Earlier, we wrote about Felix Salmon's contention that there's a new mortgage fraud scandal that has the potential to dwarf Goldman's ABACUS dealings. In this fraud scenario, banks took advantage of their information advantage and sold CDOs with mortgages they knew to be bad without clear representation to investors.

In August, Manal Mehta and Branch Hill Capital put together a presentation targeting Bank of America's potential exposure to this mortgage fraud, as well as other problems in the mortgage market.

The presentation comes to a pretty damning conclusion: Bank of America's exposure could nearly halve its share price."

Read more: http://www.businessinsider.com/bank-of-america-mortgage-report-2010-10#ixzz12PrLczoW

Midas since you started posting most shares have tripled in price. Keep posting

so the actual valuation of the shares doesnt seem to worry you ?

Edited October 15, 2010 by midas

[zorro1]

whats a "valuation" ?

[Parvis]

whats a "valuation" ?

"Valuation" is a hypothetical argument of "fair value" which fundamental analysts tend to use to support their investments decision - not realizing that "fair value" is a conceptual view of the individual investor/speculator.

As long as there are diverse arguments of "fair value" - the Market tends to go up. Eventually when everybody agrees and even pessimistic individuals like Midas accept defeat and throw in the towel - the Market is ready for a healthy correction.

Their exist ofcourse individuals who were apparently born pessimists and throughout their lives find forever more "sophisticated" arguments to support their views ----- (that we have a "homing instinct" for failure).

Edited October 16, 2010 by Parvis

[midas]

whats a "valuation" ?

"Valuation" is a hypothetical argument of "fair value" which fundamental analysts tend to use to support their investments decision - not realizing that "fair value" is a conceptual view of the individual investor/speculator.

As long as there are diverse arguments of "fair value" - the Market tends to go up. Eventually when everybody agrees and even pessimistic individuals like Midas accept defeat and throw in the towel - the Market is ready for a healthy correction.

Their exist ofcourse individuals who were apparently born pessimists and throughout their lives find forever more "sophisticated" arguments to support their views ----- (that we have a "homing instinct" for failure).

I am not pessimistic Parvis. In fact I am very optimistic there is about to be

an enormous change and then perhaps we can back to sensible business principles

like balancing the cheque book.

But then someone who is absorbed in predicting oscillations isn't probably interested in that

sort of thing

Edited October 16, 2010 by midas

[Parvis]

I am not pessimistic Parvis. In fact I am very optimistic there is about to be

an enormous change and then perhaps we can back to sensible business principles

like balancing the cheque book.

But then someone who is absorbed in predicting oscillations isn't probably interested in that

sort of thing

Midas my "absorbing interest" is and always has been Human Nature. Market oscillation - as it relates to human nature and economical progress - is only a minute part of it.

What fascinates me is the human spirit of perseverance of SOME individuals - when one is a few 1000 feet in a hole in Chile (or in an economical hole).

And I ask myself - would I want to be next to a pessimist crying ohh - we never get out, - YOU are all liars. YOU do it all wrong, YOU were/are at fault - at every turn.

(I realize - every pessimist calls him/herself a realist - and some of them even Optimists).

Edited October 16, 2010 by Parvis

[midas]

I am not pessimistic Parvis. In fact I am very optimistic there is about to be

an enormous change and then perhaps we can back to sensible business principles

like balancing the cheque book.

But then someone who is absorbed in predicting oscillations isn't probably interested in that

sort of thing

Midas my "absorbing interest" is and always has been Human Nature. Market oscillation - as it relates to human nature and economical progress - is only a minute part of it.

What fascinates me is the human spirit of perseverance of SOME individuals - when one is a few 1000 feet in a hole in Chile (or in an economical hole).

And I ask myself - would I want to be next to a pessimist crying ohh - we never get out, - YOU are all liars. YOU do it all wrong, YOU were/are at fault - at every turn.

(I realize - every pessimist calls him/herself a realist - and some of them even Optimists).

I am also interested in human nature and this is exactly what fascinates me about the stock market participants who seem to happy with the approach of kicking the can down the road.

As far as optimists , realists or pessimist are concerned i don’t worry about the labels !

I am sure there are times when even heroin addicts and alcoholics consider themselves to be

optimists as well

I also believe in perseverance but is it sensible to perservere trying to prop up an obviously very broken system i.e.an economy in which the only solution seems to be to keep borrowing more to try to service debts or do you let things find their natural level ? Oh yes I remember you encourage inflation so no need to ask you.

Yes those guys in Chile were fantastic but I read they only did it through discipline and because their leader Luis Urzua kept strict order. What would have happened if some miners had cheated the others out of their rations ?

Please tell me why I am pessimistic to say sorry but I don’t see the same style of leadership regarding what the Obama Admin is doing with the USA economy ?

Edited October 16, 2010 by midas

[midas]

(I realize - every pessimist calls him/herself a realist - and some of them even Optimists).

Well today i am a realist and optimist because of this :-

http://news.smh.com.au/breaking-news-business/a-hits-parity-with-us-dollar-20101016-16nut.html

When i was making regular trips to California in the late 80's and through the 90's

we were getting 60 US cents for our dollar

[Abrak]

I am also interested in human nature and this is exactly what fascinates me about the stock market participants who seem to happy with the approach of kicking the can down the road.

Yes but Midas, I dont think you understand how markets work which is often counter-intuitive. Do you know exactly what that can is so you can explain how they are kicking it down the road.

Market fundamentals where looked at over time and cycles are incredibly steady. Profits remain almost exactly constant relative to real GDP if you strip out earnings cycles. Investors are very volatile and often get very carried away or entirely lose interest. Or they are influenced by relatively short term (say 6 or 7 year earnings fluctuations). It is blatantly obvious that it is the UST market which is manipulated because it is done openly by the Fed. The US market has been in general decline for 11 years because at 2000 it was as overvalued as at anytime in living history or assuming real GDP growth of 8% over the next 10 years.

So what fascinates me about you Midas is why for instance you are concerned with what retail investors are going to do. Because a stock has value based on its long term discounted FCF. The price of a share does not reflect its inherent value it is simply a price of what the stock is trading at. So I dont really know what you are talking about. Do you expect wholesale nationalisation of corporates. Is it hyperinflation you are worried about because I can tell you inflation is just a nominator and denominator. Is that you assume that valuations assume real economic growth over the next 10 years?

Look I do agree that it is possible that there will be a major collapse in confidence which could create massive opportunities if say valuations halved. I have been investing in Thai SET for 16 years and it peaked 1786 in Jan 1994 and bottomed at 260 and will probably take another 6 years to reach previous highs but there has been a lot of money to be made because Siam Cement is still Siam Cement whether it is 2000 or 150.

And you never justify anything apart from 'Albert Edward's says' when you didnt understand what he said or the assumptions he was making that were massively heroic. Is your argument that stocks will become incredibly undervalued, that everything is a fraud, that they are incredibly overvalued and against what? Cash, bonds, gold, housing, oil, copper nitrate, rare earths, Patpong hookers or that the economic world will cease to function, trade will dissipate, riots, food wars, barter etc. I mean I do not make many huge assumptions when I invest but I do tend to assume that my sugar producer will still be able to produce sugar and that sugar will have worth which broadly reflects some costs etc.

Things do not go up forever or down forever - Japan has done 20 years and still doesnt look great. The real problem Midas is that you dont like stocks so you dont understand them and you dont understand the way investors think or why China can be the fastest growing economy and worst stockmarket or Thailand the best performing market and I really dont know what you do believe in.

Edited October 16, 2010 by Abrak

[midas]

I am also interested in human nature and this is exactly what fascinates me about the stock market participants who seem to happy with the approach of kicking the can down the road.

Yes but Midas, I dont think you understand how markets work which is often counter-intuitive. Do you know exactly what that can is so you can explain how they are kicking it down the road.

Market fundamentals where looked at over time and cycles are incredibly steady. Profits remain almost exactly constant relative to real GDP if you strip out earnings cycles.

So what fascinates me about you Midas is why for instance you are concerned with what retail investors are going to do. Because a stock has value based on its long term discounted FCF. The price of a share does not reflect its inherent value it is simply a price of what the stock is trading at. So I dont really know what you are talking about. Do you expect wholesale nationalisation of corporates. Is it hyperinflation you are worried about because I can tell you inflation is just a nominator and denominator. Is that you assume that valuations assume real economic growth over the next 10 years?

Look I do agree that it is possible that there will be a major collapse in confidence which could create massive opportunities if say valuations halved. I have been investing in Thai SET for 16 years and it peaked 1786 in Jan 1994 and bottomed at 260 and will probably take another 6 years to reach previous highs but there has been a lot of money to be made because Siam Cement is still Siam Cement whether it is 2000 or 150.

And you never justify anything apart from 'Albert Edward's says' when you didnt understand what he said or the assumptions he was making that were massively heroic. Is your argument that stocks will become incredibly undervalued, that everything is a fraud, that they are incredibly overvalued and against what? Cash, bonds, gold, housing, oil, copper nitrate, rare earths, Patpong hookers or that the economic world will cease to function, trade will dissipate, riots, food wars, barter etc. I mean I do not make many huge assumptions when I invest but I do tend to assume that my sugar producer will still be able to produce sugar and that sugar will have worth which broadly reflects some costs etc.

Things do not go up forever or down forever - Japan has done 20 years and still doesnt look great. The real problem Midas is that you dont like stocks so you dont understand them and you dont understand the way investors think or why China can be the fastest growing economy and worst stockmarket or Thailand the best performing market and I really dont know what you do believe in.

" So what fascinates me about you Midas is why for instance you are concerned with what retail investors are going to do."

Come on Abrak you know and I know ( and many many others out there know )

what this charade is really all about

But this started with me only asking a simple question in post #2761 which no one commented on :-

How can the TBTF banks determine " profitabililty " for the current

earnings season with foreclosure gate hanging over them ?

Of course the serious nature of this foreclosure mess is getting worse every day and the implications for the US economy is a disaster with implications far beyond the stock market performance.

I think my question was pretty relevant Abrak don’t you ………considering an increasing number of lawyers in USA are now saying these words

".... regarding residential and commercial property and i can say with a high degree of confidence, no one in this country for sure can know who owns any real estate unless it was before the days of securitisation “

Actually the can i was referring to was the extend and pretend mentality of trying to portray that everything looks

“ normal “ just because the USA stockmarket is going up ……ha ha ha what a joke

Edited October 16, 2010 by midas

[zorro1]

"Yes but Midas, I dont think you understand how markets work which is often counter-intuitive. Do you know exactly what that can is so you can explain how they are kicking it down the road."

"The price of a share does not reflect its inherent value it is simply a price of what the stock is trading at. So I dont really know what you are talking about."

Abrak, the second paragraph in particular should be pinned. The first I will wait very patiently for Midas to respond in detail .

[Abrak]

Two of the best points you have ever made.

It is very simple. If you lend people money you do not actually know if you have made a profit until it is paid back.

If you have been in business, you will understand what is a profit what and cash flow. And really no one is fooled people play around and punt in this sort of stuff but 90% of businesses are genuine. Obviously companies capitalize interest, pre-operating costs, depreciate assets with use or over 40 years. Look people were happy to pay 50x sales for Yahoo. But honestly there are about 800 companies in Thailand to choose from. If you think say McDonald's isn't a real business you should get out more.

And Midas you do know that using banks as a form of argument is setting the bar below ground.

[Abrak]

"Yes but Midas, I dont think you understand how markets work which is often counter-intuitive. Do you know exactly what that can is so you can explain how they are kicking it down the road."

"The price of a share does not reflect its inherent value it is simply a price of what the stock is trading at. So I dont really know what you are talking about."

Abrak, the second paragraph in particular should be pinned. The first I will wait very patiently for Midas to respond in detail .

Yes and its an important point. I know when Parvis poo-poos hypothetical values it rests happy in the only value that is 'reality' is what you pay for the stock (and hopefully what you actually sell it at.) He cannot rest too happy because I have two variables. Typically a good trader will actually have 3 the price he paid 'a perception of value' a price he will sell 'the perception of where perception is going to' and a 'stop loss' 'a price when he should presume that his perception of perception is wrong.) To be honest I think most of the profit is in the stop loss because it trades against a loss/hold strategy of punters.

To be honest punters trade value (usually along the lines that say intel is a really good company that makes really good chips that will be in you know pretty well anything in 5 years time) and technicals (basically the stock consistently outperforms and the market is going up.)

Actually technical guys like you dont give a flying fuc_k about fundamentals, although you do occasionally make them up for fun. I invest solely on the basis that there is virtually no correlation between price and value over the short term and almost 100% correlation in the long term. Given that long term takes a while I have to be confident of say a 100% mismatch over time given like error and time. And traders, trade on much smaller margins over much smaller periods, which may or may not result in greater returns.

The traders 'hypothetical value' is not his buy price but his 'sell price' which is a combination of discipline and prediction of perception. We both trade against extreme sentiment - a concept that Midas fails to understand. Value investors will also tend to place value over momentum (usually buying and selling too early) and traders valuing momentum and (buying and selling on the late side).

And in terms of value, analysts will always make it up to fit the price as they are basically paid too. I saw an absolute classic from the gold thread the other day which was 'investors are buying gold whether the dollar goes up or down, whether prices go up or down and whether interest are falling or rising..... it essentially a one way bet because blah blah blah.... fundamentally in value terms given fixed supply and no return this means absolutely exactly one thing. People are buying this dollar asset because they believe it is going up....no other reason at all....which it is....'

For sentiment fixing, I find E Entertainment gives the most consistent good advice especially on currencies. J.Lo picked one bottom perfectly and Jay z another by renogiating contracts at absolutely the wrong time within a day. They rarely give advice but it is very accurate.

'So sorry, the answer to your question is that 'value' is concept that you have no concept in and when you 'pretend' to (like the market going up indicates a 'v' shape recovery, you dont even vaguely believe in. I dont believe I have the vaguest idea of how to predict short term price, although maybe I pretend to sometimes. Actually they are totally separate disciplines and a lot of your worst mistakes are made when you confuse the two.'

BTW, I would be interested in what people think the markets are going to do over the next 3 months.

[Parvis]

"Yes but Midas, I dont think you understand how markets work which is often counter-intuitive. Do you know exactly what that can is so you can explain how they are kicking it down the road."

"The price of a share does not reflect its inherent value it is simply a price of what the stock is trading at. So I dont really know what you are talking about."

Abrak, the second paragraph in particular should be pinned. The first I will wait very patiently for Midas to respond in detail .

Yes and its an important point. I know when Parvis poo-poos hypothetical values it rests happy in the only value that is 'reality' is what you pay for the stock (and hopefully what you actually sell it at.) He cannot rest too happy because I have two variables. Typically a good trader will actually have 3 the price he paid 'a perception of value' a price he will sell 'the perception of where perception is going to' and a 'stop loss' 'a price when he should presume that his perception of perception is wrong.)

'So sorry, the answer to your question is that 'value' is concept that you have no concept in and when you 'pretend' to (like the market going up indicates a 'v' shape recovery, you dont even vaguely believe in. I dont believe I have the vaguest idea of how to predict short term price, although maybe I pretend to sometimes. Actually they are totally separate disciplines and a lot of your worst mistakes are made when you confuse the two.'

BTW, I would be interested in what people think the markets are going to do over the next 3 months.

Abrak I "poo-poo" theoretical value in concept because there is no single exact formula possible - perceptions vary as do human emotions - and future condition change unpredictably. I pretty much agree with what you are saying in many words - but I tend to be believe more in the technical aspect of trading reducing all these concepts to a few "squiggly lines" - rather than trying to peer through the fog (or is it smog?) of all economical data - even if presented factually (if that is possible - because of human emotions etc. etc. etc.).

My "prediction for the next major tradeable opportunity" - DOWN.

(not necessarily contained in 3 months of duration - nor necessarily as long - not in straight line - nor necessarily from this moment on).

Edited October 17, 2010 by Parvis

[Abrak]

You would be amazed how boring fundamentals and how nothing really changes much. Nuclear bomb in New York makes practically no difference. Forecast of no economic growth over the next ten years doesnt really have much impact. Inflation is pretty much irrelevant. Obviously I would say investors are totally unpredictable while you would say they are predictably unpredictable. And to an extent I agree, we can predict there will be panics and fever, greed and fear and their actions reflexive.

[siamamerican]

My "prediction for the next major tradeable opportunity" - DOWN.

(not necessarily contained in 3 months of duration - nor necessarily as long - not in straight line - nor necessarily from this moment on).

That was in jest?

Well I can predict with 100% certainty that the above prediction will be correct at some point in the future.

As for me, I'm "guessing" the S&P will be 1250+ by years end. Basing my opinion on consumer sentiment picking up and a strong holiday season. Technically I haven't a clue where it should go or really care. To each his own.

[zorro1]

"Yes but Midas, I dont think you understand how markets work which is often counter-intuitive. Do you know exactly what that can is so you can explain how they are kicking it down the road."

"The price of a share does not reflect its inherent value it is simply a price of what the stock is trading at. So I dont really know what you are talking about."

Abrak, the second paragraph in particular should be pinned. The first I will wait very patiently for Midas to respond in detail .

Yes and its an important point. I know when Parvis poo-poos hypothetical values it rests happy in the only value that is 'reality' is what you pay for the stock (and hopefully what you actually sell it at.) He cannot rest too happy because I have two variables. Typically a good trader will actually have 3 the price he paid 'a perception of value' a price he will sell 'the perception of where perception is going to' and a 'stop loss' 'a price when he should presume that his perception of perception is wrong.) To be honest I think most of the profit is in the stop loss because it trades against a loss/hold strategy of punters.

To be honest punters trade value (usually along the lines that say intel is a really good company that makes really good chips that will be in you know pretty well anything in 5 years time) and technicals (basically the stock consistently outperforms and the market is going up.)

Actually technical guys like you dont give a flying fuc_k about fundamentals, although you do occasionally make them up for fun. I invest solely on the basis that there is virtually no correlation between price and value over the short term and almost 100% correlation in the long term. Given that long term takes a while I have to be confident of say a 100% mismatch over time given like error and time. And traders, trade on much smaller margins over much smaller periods, which may or may not result in greater returns.

The traders 'hypothetical value' is not his buy price but his 'sell price' which is a combination of discipline and prediction of perception. We both trade against extreme sentiment - a concept that Midas fails to understand. Value investors will also tend to place value over momentum (usually buying and selling too early) and traders valuing momentum and (buying and selling on the late side).

And in terms of value, analysts will always make it up to fit the price as they are basically paid too. I saw an absolute classic from the gold thread the other day which was 'investors are buying gold whether the dollar goes up or down, whether prices go up or down and whether interest are falling or rising..... it essentially a one way bet because blah blah blah.... fundamentally in value terms given fixed supply and no return this means absolutely exactly one thing. People are buying this dollar asset because they believe it is going up....no other reason at all....which it is....'

For sentiment fixing, I find E Entertainment gives the most consistent good advice especially on currencies. J.Lo picked one bottom perfectly and Jay z another by renogiating contracts at absolutely the wrong time within a day. They rarely give advice but it is very accurate.

'So sorry, the answer to your question is that 'value' is concept that you have no concept in and when you 'pretend' to (like the market going up indicates a 'v' shape recovery, you dont even vaguely believe in. I dont believe I have the vaguest idea of how to predict short term price, although maybe I pretend to sometimes. Actually they are totally separate disciplines and a lot of your worst mistakes are made when you confuse the two.'

BTW, I would be interested in what people think the markets are going to do over the next 3 months.

"Typically a good trader will actually have 3 the price he paid 'a perception of value' a price he will sell 'the perception of where perception is going to' and a 'stop loss' 'a price when he should presume that his perception of perception is wrong.) To be honest I think most of the profit is in the stop loss because it trades against a loss/hold strategy of punters".

The whole post is <deleted> terrific and the above para will help new investors tremendously. Yes the stop loss is where the value is. You can wipe out a years profits if you dont use it. Interesting but nearly all the major forums discussing charts on different stocks dont ever mention fundemantals or allow for them in their charting.

eg the chart for "abc" shows its testing support.

" however an announcement update is due re its new bulldust discovery and should push the chart higher"

This above is totally discounted. The beauty of T/A is you "trade the trade"

something I learned the hard way. the fastest way to lose $$ is to not set the stop and pray for that "bulldust" report to be a biggy. IMO the biggest value of course is knowing when to sell. If you cant identify a trend reversal then best to set a trailing stop and see where the market takes you.

Another thing, where the economy is heading is totally discounted when charting a stock. Obama may do this or the fed may do that is totally irrelevant and the reason many missed the 2nd rally. They believed the news and NOT the charts.

what will the markets do next 3 months? they will go up and down however if you look at this DJIA chart there is plenty to like for now. There is simply no reason to sell whilst the herd keep buying.

However, Both RSI and stochastic looking a bit toppy so keeping a close eye on this chart in the upcoming weeks

Edited October 17, 2010 by zorro1

[zorro1]

just wanted to add that along with the collapse of the markets a new breed of investor has emerged. High speed internet and DYO trading has in a way created the worlds biggest casino. Nimble fingers and a basic understanding of T/A has created new opportunities to scalp from the new kids on the block who "wanna be stock market traders"..

[midas]

Two of the best points you have ever made.

It is very simple. If you lend people money you do not actually know if you have made a profit until it is paid back.

If you have been in business, you will understand what is a profit what and cash flow. And really no one is fooled people play around and punt in this sort of stuff but 90% of businesses are genuine. Obviously companies capitalize interest, pre-operating costs, depreciate assets with use or over 40 years. Look people were happy to pay 50x sales for Yahoo. But honestly there are about 800 companies in Thailand to choose from. If you think say McDonald's isn't a real business you should get out more.

And Midas you do know that using banks as a form of argument is setting the bar below ground.

And in which " category " would you have placed Enron and Worldcom ?

both publicly listed companies

Enron, overstated earnings for four years by $586 million

WorldCom overstated profits by $3.8 billion

The point is with my question about profitabilty of banks is will they paint a rosy

picture of what could happen or will they come clean when reporting their quarterly

results ? ( i.e. it could be so bad for them they will need TARP #2 )