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JOHN KENNETH GALBRAITH ON STOCK MARKET MEMORY LOSS

  
  Education
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Where else but in the markets can short term memory loss be both beneficial and profitable?

John Kenneth Galbraith, an economist, says the financial markets are characterized by…

“…extreme brevity of the financial memory.  In consequence, financial disaster is quickly forgotten.  In further consequence, when the same or closely similar circumstances occur again, SOMETIMES IN A FEW YEARS, they are hailed by a new, often youthful, and always extremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world.  There can be few fields of human endeavor in which history counts for so little as in the world of finance.” [emphasis mine].

German economic optimism on the rise in August

  
Analysis, Education
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BNEWSGermans are feeling much better than expected about their economy, with the just-released ZEW sentiment index giving a reading of 42, up from 36.3 in July.

The Zew Institute’s Current Conditions Index rose even more – to 18.3 from 10.6 in July.

Analysts expected readings of 40 and 12 respectively for the two indices and sentiment is at its highest since March.

The institute comments that the “first signs of an end to the recession in important Eurozone countries may have contributed to the indicator’s rise…. furthermore, the economic optimism is supported by the robust domestic demand in Germany”.

There has also been a strong increase in economic expectations for the Eurozone, the index climbing 11.2 points to 44.

Eurozone industrial production numbers for June are also out. They show an increase of 0.7 per cent, compared to economist expectations of 0.8 per cent and a decline of 0.3 per cent in May.

A Simple Logic Question That Most Harvard Students Get Wrong

  
Education, Life
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Havard students get near-perfect SAT scores. These are smart, smart kids. So they shouldn’t have trouble with a simple logic question, right?
Try the following puzzle:
A bat and ball cost $1.10.
The bat costs one dollar more than the ball.
How much does the ball cost?
Scroll down for the answer … (more…)

Survival of the fittest

  
  Education
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When he hear the term ‘survival of the fittest’ bandied about, people are usually referring to contests of absolute strength and think of the Darwinian struggle for life. Trading is often thought of in a similar light.

It’s interesting to note that while Darwin came up the idea of natural selection, the term ‘survival of the fittest’ was coined by economist philosopher Herbert Spencer. What is more, both Darwin and Spencer were not referring to competitions of brute strength, but of best fit. That is, the survivors were those who best fit in to the environment around them. Brute strength is an aspect of this, but it is only half the story. Adaptation to the environment is also required.
Chance and randomness plays a big role in natural selection, as it does with trading success, but we can be sure that regardless of how strong we are with respect to risk management, discipline etc, if we don’t have an edge then we will likely die out. Likewise, an edge and no strength could prove equally fatal. Because the environment of the active investor is dynamic and forever changing, it may be useful to think of the circles below as constantly moving around about other, only rarely intersecting.

Apple on the cover of Economist

  
Analysis, Education, Life
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Individual companies seldom make it to the cover of Economist. When they do, it might be  a kiss of death. You can not go by cover alone , but something to keep an eye on. Jobs was also named CEO of the Decade by Fortune recently. As they say when CEO is on cover, it might be a top.

JOHN KENNETH GALBRAITH ON STOCK MARKET MEMORY LOSS

  
  Education
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Where else but in the markets can short term memory loss be both beneficial and profitable?

John Kenneth Galbraith, an economist, says the financial markets are characterized by…

“…extreme brevity of the financial memory.  In consequence, financial disaster is quickly forgotten.  In further consequence, when the same or closely similar circumstances occur again, SOMETIMES IN A FEW YEARS, they are hailed by a new, often youthful, and always extremely self-confident generation as a brilliantly innovative discovery in the financial and larger economic world.  There can be few fields of human endeavor in which history counts for so little as in the world of finance.” [emphasis mine].

A true story

  
Education, Humour
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“I heard this from one of my professors. To protect him, no names will be revealed. This professor was about to get married. He went to the jewelers to get a wedding ring for his fiancee. The jeweler told him that he can have the inside of the ring engraved with the name of his fiancee for an additional $20 (remember, this was a LONG time ago). He said, “But that will reduce the resale value!” The jeweler was aghast. He said, “How can you say such a thing. You are a butcher!” “No,” replied the professor, “I am an economist”.”
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