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« ETF Update: The Financial Rebound | Main | A Common Error: Confusing Direction, Level, and Intensity »

August 11, 2008

Comments

Alisa

Very legit questions that are also in the minds of other investors. Great and helpful dialogue.

oldprof

Vermont -- I agree. Asking questions about business is useful. I ask everyone, especially when traveling, how business is.

While I believe in data, it often helps to know where to look.

And you are right about the trade impact on GDP, if trade itself is not revised away!

Appreciate the comments.

Jeff

Vermont Trader

FYI trade deficit numbers this morning imply that 2Q GDP was understated by about 1% last week......

Vermont Trader

I would have asked him how his business is doing and what he expects in the near future..

Who cares about 300 point days. If you spent your days on conference calls and on the telephone with suppliers and customers of your holdingd you would know that business is slowing down all over the world.

How's your biz doing Jeff? Are you bullish on inflows for the next year? Are you buying any new infrastructure?

It's not a stock market, its a market of stocks.

RB

Barry talked about this too:
http://bigpicture.typepad.com/comments/2007/10/market-cheat-sh.html

Mike C

"We are aware of his comments on the cycle, but frankly do not see any advantage over what we have recommended. Do you?"

I'm not sure I understand what you are asking here.

"But can we stick to the topic of the article? Paul reads a number of sites that interpret everything as negative, including the same indicator whether it goes up or down. Are you saying that I should tell Paul to ignore these sites?"

Since you asked the question, I think my answer would be Yes, he should ignore the various sites because frankly I'm not sure he or many individual investors have the sort of skill set or time to put various arguments into context, and take actions with positive expectancy over time. Obviously, this message has to be delivered in a sensitive way.

I don't want to come across as arrogant, but I just don't think the average individual, even an intelligent one like Paul can read Barry Ritholtz's take on something, then read yours and somehow make sense out of it all. It just leaves them more confused then when they started.

Here's an example. Take yourself and Hussman for example. Both of you are extremely intelligent individuals (obvious from your writing) with PhDs and alot of credentials. Now take Hussman's last 2 pieces, "Nervous Bunny" and "Risk of Conceding Recession". I think I'm not going out on a limb to say there is alot in those 2 pieces that you'd probably be on the opposite side of or take issue with. How can Paul possibly make any sense out of it, and TAKE RESPONSIBILITY for the decisions he makes as a result?

I guess my thought is there is nothing wrong with Paul wanting real answers and having the conversation about these various items, but it probably becomes counterproductive when he sells everything in response to his reading and "analysis".

I guess I went off-topic in my response, but I thought I had a different take on the entire conversation instead of whether rising or falling oil prices is good or bad. Incidentally, I think the answer to that question is depends. Is the falling oil price going to be stimulative to the economy and consumer, or is it perhaps a symptom of a global economy that is in trouble?

Mike C

"We are aware of his comments on the cycle, but frankly do not see any advantage over what we have recommended. Do you?"

I'm not sure I understand what you are asking here.

"But can we stick to the topic of the article? Paul reads a number of sites that interpret everything as negative, including the same indicator whether it goes up or down. Are you saying that I should tell Paul to ignore these sites?"

Since you asked the question, I think my answer would be Yes, he should ignore the various sites because frankly I'm not sure he or many individual investors have the sort of skill set or time to put various arguments into context, and take actions with positive expectancy over time. Obviously, this message has to be delivered in a sensitive way.

I don't want to come across as arrogant, but I just don't think the average individual, even an intelligent one like Paul can read Barry Ritholtz's take on something, then read yours and somehow make sense out of it all. It just leaves them more confused then when they started.

Here's an example. Take yourself and Hussman for example. Both of you are extremely intelligent individuals (obvious from your writing) with PhDs and alot of credentials. Now take Hussman's last 2 pieces, "Nervous Bunny" and "Risk of Conceding Recession". I think I'm not going out on a limb to say there is alot in those 2 pieces that you'd probably be on the opposite side of or take issue with. How can Paul possibly make any sense out of it, and TAKE RESPONSIBILITY for the decisions he makes as a result?

I guess my thought is there is nothing wrong with Paul wanting real answers and having the conversation about these various items, but it probably becomes counterproductive when he sells everything in response to his reading and "analysis".

I guess I went off-topic in my response, but I thought I had a different take on the entire conversation instead of whether rising or falling oil prices is good or bad. Incidentally, I think the answer to that question is depends. Is the falling oil price going to be stimulative to the economy and consumer, or is it perhaps a symptom of a global economy that is in trouble?

oldprof

Mike C -- Thanks for the pointer to Random Roger, one of our featured sites. We are aware of his comments on the cycle, but frankly do not see any advantage over what we have recommended. Do you?

But can we stick to the topic of the article? Paul reads a number of sites that interpret everything as negative, including the same indicator whether it goes up or down. Are you saying that I should tell Paul to ignore these sites?

As always, I appreciate your comments -- always helpful, constructive, and thoughtful.

Best,
Jeff

Mike C

"Paul is a client. He is a very intelligent entrepreneur with a successful business.

Paul is frightened. "

Paul may be intelligent, but he sounds like many individual investors who are essentially slaves to their emotions?

"There are no easy answers in forecasting economic growth, profits, or stock prices. Sometimes the stock price already reflects a pessimistic assumption. That is what we currently see."

Maybe the answers to many of the questions Paul is asking are unknowable with the level of certainty Paul craves?

Maybe (probably?) this is a bear market rally, but like all bear markets, they eventually end and it isn't the end of the world, and maybe the best thing is to stay the course or some hedging of downside, rather then 100% liquidation of all other funds?

I thought Random Roger had an excellent post kinda connected to this subject both in the simplicity and common sense level of the message:

http://randomroger.blogspot.com/2008/08/mid-morning_11.html

I've noted with interest that he has been quite accurate on how the last 12 months have unfolded with respect to the overall market, financials, etc. and it seems to me like it has been due to a focus on simply observing how past cycles have unfolded instead of overanalyzing??? every single economic/market data point to make the case for why this time is different.

Maybe at the end of the day, the message to Paul is not a different way to analyze what he is reading, but to simply stop analzying so much to get the certainty that does not exist?

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