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« The Persistence of Mythology about Earnings Estimates | Main | Trading the 200-Day Moving Average »

June 29, 2011

Comments

oldprof

wsm -- The author of this piece, John Lounsbury, is something of a colleague, since I am a contributor at his site. I think he does very good work, but I disagree with his conclusion here. I showed in my article how the CDS trigger was determined, and I'll stick with that.

Meanwhile, have you shifted your position once again? At first you thought that Greece was a big deal. Then you said that everyone knew it wasn't and the market ignored it. Is it now a big deal again?

Just wondering....

Jeff

oldprof

wsm -- there are a number of polls showing that about 1/3 of those stating an opinion do not believe the debt ceiling will be raised. CNBC had one of their online "polls" this morning (normally not too valuable since the sample reflects only viewers, and only those interested in responding). This showed that 56% were influenced in their investing by the debt limit story.

A problem that I try to address is that the pundits are costly for the average investor. It is possible that your firm deals with more sophisticated investors. I do not know about "operators."

Jeff

wsm

http://www.creditwritedowns.com/2011/07/sp-says-greek-plan-is-default.html

wsm

I will try to be more polite in future comments. I am not trying to be malicious.

Despite trying to claim that my comment was mistaken, you fail to refute the simple, factual reality that markets have not been spooked by the past year's events in Europe.

Since you asked for my opinion on the debt ceiling: I think it is largely a non-event. It will obviously be raised after politicians bump their gums arguing about dollar amounts that are inconsequential in the context of the size of the actual problems. I could not disagree more strongly with your assessment that "Many investors think that the debt ceiling will not be raised, leading to a default on US government obligations." Perhaps a number of idiot pundits have said this on financial infotainment tv, but I don't think there are any operators who have positioned themselves accordingly.

oldprof

wsm -- I try to engage with readers in a friendly and polite fashion, but you seem to be on a mission of some sort.

You may have set the "Dash" record for the greatest number of mistakes and analytical errors in one comment. Everyone knew about the Greek risk? Sheesh. Look at your own comment from that day. No market effect? Look at a chart.

I suspect that I talk with more individual investors than you do. I know many who were scared and some who even sold money market funds because of the irresponsible reporting and "scoops."

Here is a suggestion, which you will probably ignore now, but might appreciate as you get more experience. You can add value and impress people more by making your own constructive comments and predictions. Why don't you tell us all what you think about the debt ceiling, for example? That would be better than coming along later and telling us all that it is obvious.

Just a thought from someone who has had hundreds of very bright young students and written many effective job recommendations.

Jeff

wsm

While I definitely agree that the pundits have overblown the impact of Greece on the global economy and markets, I definitely disagree that the viewpoint is "pretty widespread among the investment and trading community."

Most investors and traders worth anything realize that the pundits are wrong, that Greece's eventual default will not be all that consequential to global markets, and that therefore it is not the 'next Lehman' event.

So I view your statement "Most importantly, it led to the wrong conclusion, providing an investment opportunity for everyone else" as disingenuous, self-serving, and most importantly, vague.

Specifically, the markets (S&P as a proxy) have not been spooked by Greece. We are up 6% YTD and 30% over the past year. So what "investment opportunity" are you talking about?

It seems more like you just want to beat the dead horse of how the pundits are wrong about Greece. Problem is, the whole market (i.e. all the professionals operating money) have known this all along!

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