Posted on 09/19/2007 6:51:42 PM PDT by Revel
It’s an adult world. Folks tend to act in their own best interests, those who don’t are either saints or morons.
Not sure what force would make it ever stop working. The people with lots of money certainly aren’t going to stop it. The people without money can’t stop it...
It’s a simple calc and has been correct for the past 30 yrs.
http://www.clifdroke.com/index.mgi
Here’s where I found the IBES. He has some interesting pieces there
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Not sure what force would make it ever stop working.
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An epidemic with high mortality such as the 1918 flu, a significant nuclear military attack, or a significant natural disaster such as the Yellowstone caldera opening up would be my candidates.
Absolutely true but, brother, that doesn't stop 'em from trying, now does it?
Strictly speaking, if the clueless were barred by law from imposing various rules on various people, the Regress could disband and not be missed at all by any adult (good phrasing, btw!).
Wups, forgot -- the Regress is constitutionally required, so they'd have to meet for coffee once a month or something.
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Well, if some rude Indian guy in Australia says so, it must be true. :p
Only changes in the value of *final* claims, can lead to a *net* gain or loss to the society as a whole.
Everything else is playing poker over who gets what portion of the pot. The real change in the value of final claims is the pot.
So it is entirely sensible to focus on the size of the whole economy, corporate profits, stock indices, and real estate values, all of which reflect real gains or losses, not to this or that side of a trade, but to everyone as a whole.
Debt transactions do not. Derivative transactions do not. Poker with your friends does not. All just move wealth around, they can't create or destroy a particle of it.
Now, there are ways in which credit instability and with it debt transactions (especially too rapid growth of debt, followed by net contraction of it) can change those real sources of wealth, and therefore indirectly have an effect. Bankruptcies destroy real businesses that might have gone on providing valuable services. Creditors pick up the remaining assets, but blown into disarticulated pieces and therefore usually worth less. Also, people can spend real effort fighting over the leavings and thereby waste them on lawyers and such.
But that is all second order. What can't happen is, "oh, debt markets went this a-way instead of that-away, and now we are all impoverished". There are no losers in such things without equal and opposite gainers, any more than there are perpetual motion machines in physics.
All credit transactions involve trades of something that doesn't (yet) exist. What makes a transaction a credit one is that it is an *intertemporal* trade. It is not about changing who owns the existing stock of A today, but about trading goods today against goods tomorrow. Since tomorrow does not exist yet by definition, those are always trades of something now for some sort of promise. The one who surrenders anything now is said to "credit" the one who promises, with an ability to perform. The promiser might in fact fail to perform, of course. That is a risk the promisee knowingly runs.
In the case of modern exchange traded derivatives, lots of firms underwrite the contracts, so that e.g. the option clearing house will pay even if the explicit counterparty to one trade cannot. But that just means everyone trading at an exchange is doing a credit transaction with the whole exchange, and believes it can perform. Might, might not, that is their business to estimate.
The larger over the counter dealings between banks, direct, without an exchange, don't have that and always involve pure credit risk. The banks try to handle that by diversification. But they all know there is credit risk involved and worry about it constantly. They trade derivatives on the credit risk itself (lol).
First off, the typical real estate transaction is not a ''trade'', by definition. The usual delineation between trading and investing is ''a capital commitment of less (for trading) or more (for investing) of one year's time.''
Those who inflated real estate mkts via 'flipping' and so forth -- well, the clock has run out on their spec play. Too bad. Nonetheless, they are not and never have been traders, merely specs. Nothing wrong with specs, they come, they go, good luck to them...but their pattern of loss, and in many cases disaster, is unmistakeable, and NOT an object of pity, nor should be of subsidy.
A trade is a trade. Generally, there is a winner, and a loser, but not always, and under very common circumstances, BOTH the long and the short can lose, as I demonstrated. Your semi-static ''analysis'' of gainers and losers is both uninformed and laughable.
There are no ''final'' claims to the ''pot'', none whatever, and the fact that you've even used this sort of phrasing indicates very clearly that you haven't the first clue about what traders do. I won't bother to explain further, since apparently you've your own little hobby horse to ride. Good luck to you.
Traders do not trade for the benefit of ''society'', and I've no idea where you came up with that bit of crapola. Since you base your most recent post on that notion, the rest of your post is worthless.
Your notion that one must perforce focus on the ''whole economy'' when trading is nothing more or less than a runaway Stalinist concept. Frankly, I don't much care, because it's screamingly evident that -- from your commentary -- you're just another little statist jerk who hasn't the first clue about trading.
Who ARE you trying to con? You'll never con a trader -- we see your sort of BS all the time and have, of necessity, learned to ignore it. Just curious.
May I also suggest, when dealing with the subject of trading, that you become just a trifle more disciplined, and not -- as a non-trader, or at best a poor one -- crime any real traders' comments about trading as ''utter nonsense''. On the subject of trading, boyo, I'll trade $100 vs a cold beer that you haven't the first effing clue, as proven by your last two posts, no matter what other expertise you may have acquired.
Anyone else care to make a fast cold one, payoff somewhat dubious, right here?
That doesn't make sense. OK, I'll agree that losers exist, but they don't exist for long --and good riddance because they just make messes for the rest of us to clean up. Serious adult traders win, even when they trade with each other.
very informative
Losers not only exist, they are the majority in the world of trading.
That's true for gambling but not true for trading.
Losers go to Las Vegas and get chewed up and spit out and the rest of us clean up the mess. Each bet is a losing proposition for the bettor; anyone who pays a dollar to buy a 48% chance of 'red' showing up is a loser.
Trading makes us all better off because when I bought GM last week for $33, the guy who took my money made a $3 profit over his purchase a week earlier, just like I did today. If I bought an option on GM last week, I paid the market value for that option and I made even more money. The guy I bought it from was a smart guy that sold me the option because he wanted to hedge his other shares and he made an over all profit too. OK, his profit wasn't as big as mine but he suffered less volatility --an advantage that he was happy to pay for.
It goes on and on, and that's why there are people who get hired to trade on behalf of other people. Nobody gets paid to plunk someone else's coins into a slot machine.
In the late 1990s we were told by Robert Rubin and BJ Klintoon that they had “overcome the business cycle.” The result of this was that nobody paid a bit of attention to price/earnings ratios or even profitability. Dot.com companies with no profits and no business model that predicted profits were suddenly worth billions. Then the market started looking at P/E ratios and everything came back to earth.
P/E ratios today are at historical LOWS, this means the market has a lot higher to go to even get where it should be. This credit nonsense is a just that, nonsense. Businesses still have no problem borrowing money and they are more profitable than ever. What we are witnessing is an ongoing campaign by the media to talk down the economy and put a ‘Rat back in the White House next year.
''Some'' turns out to be a quite large percentage of traders in my particular world. CFTC estimates that 78% of all traders are net losers; I happen to think that the percentage is higher, but who knows?
Exactly; a trader measures risk and makes a profit. A gambler deludes himself into thinking he's exempt from the laws of probability --those guys are losers and their kind are soon out of the market, though not soon enough.
Morons who buy high and sell low mess us all up, not only by exacerbating volatility but after they've blown their kid's tuition money they go crying off to congress for tuition paid by us --and then they go and call for punitive regulations on us guys who've been reducing volatility all along by buying low and selling high.
What convinces me that trading is not and never should be considered a zero-sum game, is the fact that if everyone bought your book and traded accordingly then they'd all be better off and likewise would be the entire nation.
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