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CrossingWallStreet.com: Deep Truth about the Markets and Investing
Geplaatst: April 14th, 2010, 6:36pm CEST
a href="http://www.crossingwallstreet.com/archives/2010/04/deep_truth_abou.html?utm_source=feedburneramp;utm_medium=feedamp;utm_campaign=Feed%3A+Crossingwallstreet+%28Crossing+Wall+Street%29"CrossingWallStreet.com: Deep Truth about the Markets and Investing/a divspan class="Apple-style-span" style="font-family: verdana, arial, helvetica, 'sans serif'; font-size: 12px; "b/bblockquotebApril 13, 2010/b bDeep Truth about the Markets and Investing/bpIn his 1988 Baseball Abstract, Bill James listed a number of lessons had had learned so far through his study of baseball statistics. In that vein, I’ll list some observations that I’ve learned over the years:/pblockquoteThe Federal Reserve isn’t nearly as powerful as is commonly believed.pThere isn’t a person or group of people in charge of the market./ppThere’s no such thing as a “healthy correction.”/ppGood stocks can go down for no reason./ppBad stocks can go up for no reason./ppA trend can last much longer than you thought possible./ppStocks don’t know you own them./ppThe market doesn’t care about politics./ppThe most important variable to the stock market, by far, is the direction of long-term interest rates./ppMega-mergers rarely work./ppInvestment bubbles aren’t due to the moral failings of the market participants./ppIgnore anyone who tells you that the Federal Reserve is a private bank./ppCommodities are almost always terrible investments./ppThe stock market hates inflation. The only thing it hates more is deflation. The best environment for stocks is a low stable inflation rate./ppAs an investment tool, P/E Ratios work much better for individual stocks than for the market as a whole./ppThe best three fundamental metrics are (in order) ROE, Debt Ratios and Cash Flow./ppWherever possible, seek out stocks with expanding margins./ppDividends are underrated by investors, especially companies that consistently raise them./ppPortfolio diversity is overrated./ppAs a general rule, IPOs are a bad deal./ppBoring but profitable always beats exciting and unprofitable./ppCAPM and MPT are nonsense./ppNo one can consistently time the market. No one./ppThe Equity Risk Premium (over long-term debt) is probably much smaller than commonly believed./ppThe data showing a return premium for small-cap stocks is probably wrong./ppThe media never questions the bond market. Only stock investors are “greedy.”/ppPerma-bears are never held to account for being wrong so if you want to sound smart, be very bearish and very vague./ppThe market really does “climb a wall of worry.”/ppFollow unfollowed stocks./ppThe market is self-aware. Scary but true./ppIt’s far easier to rationalize selling than buying./ppThe market isn’t efficient—it can be beaten./ppBut it’s very, very, very, very hard./ppMost technical analysis is complete garbage./ppA high P/E Ratio is much better sign of a stock to sell than a low P/E Ratio is a sign to buy./ppIt’s pointless to measure the stock market relative to gold or in euros or pork bellies or whatever else people can come up with./ppIgnore any chart that has seemingly similar lines trying to show how this market is “just like’ the one in 1831./ppExcept at very low levels, volatility is neutral./ppMany gold bugs are quite simply fanatics./ppWhatever the issue, your typical finance professor will blame the investing public and urge more self-denial as the solution. Bank on it./ppNever base an investment decision of demographics./ppThe worst investor in the world is the guy holding on to a small loss waiting for the rally because “they don’t want to take the loss.” Again, the stock doesn’t know you own it./ppVery, very few serious companies are traded on the pink sheets./ppNever stress out about what a stock does after you sell it./p/blockquotep/pdiv id="a005007more"div id="more"/div/divp class="posted"Posted by edelfenbein at April 13, 2010 4:04 PM/p/blockquotep class="posted"/p/span/divdiv span style="font-style: italic;font-size:85%;"Disclaimer: /span span style="font-weight: bold;font-size:78%;"© goldengecko.nl/span/divdiv class="blogger-post-footer"http://www.goldengecko.nlimg width='1' height='1' src='https://blogger.googleusercontent.com/tracker/19483758-4267748752227638237?l=www.goldengecko.nl' alt='' //div