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| Quotations - Invest | [Quote No.62555] Need Area: Money > Invest
"[Market booms and busts:] Bubbles are like an avalanche. The longer they build up, the worse they will be when they eventually destabilize." - Ben Carlson
Director of institutional asset management at Ritholtz Wealth Management. He is the author of 'Organizational Alpha: How to Add Value in Institutional Asset Management.' [https://www.bloomberg.com/view/articles/2017-06-21/canada-s-housing-bubble-will-burst ]
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| [Quote No.62599] Need Area: Money > Invest
"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities - that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future - will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party." - Warren Buffett
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| [Quote No.62643] Need Area: Money > Invest
"For [Market] bubbles to take place, what you usually see throughout history is suddenly the whole community becomes fixated on one object and they go mad in pursuit. Millions of people become simultaneously impressed with one illusion, which develops into a delusion. ...
What was once rational becomes irrational, with everyone seeking to become rich, because there's nothing more disturbing to one's psyche, well-being, and judgement, as to see a friend get rich. ...
Bear markets happen rapidly, and the declines are swift. All of sudden, greed turns to panic, which turns to revulsion." - Jim Puplava
Founder of Financial Sense. [http://www.financialsense.com/jim-puplava/final-phase-market-bubble? ]
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| [Quote No.62652] Need Area: Money > Invest
"Unemployment below the long-term natural rate suggests the economy is close to capacity and inflationary pressures should be building." - Colin Twiggs
Investment newsletter, August 4th, 2017.
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| [Quote No.62659] Need Area: Money > Invest
"Each person has to play the game given his own marginal utility considerations and in a way that takes into account his own psychology. If losses are going to make you miserable – and some losses are inevitable – you might be wise to utilize a very conservative patterns of investment and saving all your life. So you have to adapt your strategy to your own nature and your own talents. I don't think there's a one-size-fits-all investment strategy that I can give you." - Charlie Munger
Lawyer and successful fundamentals-value investor.
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| [Quote No.62678] Need Area: Money > Invest
"A well-informed mind is the best security against the contagion of folly and of vice!" - Ann Radcliffe
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| [Quote No.62712] Need Area: Money > Invest
"...equity markets do indeed turn for the better long before economies move upward and out of recessions, always fueled by monetary expansion. Also, they turn down long before those same economies fall into recessions and indeed are usually moving lower as those economies are moving to their best levels as capital is demanded for plant and equipment. That capital must be taken from somewhere and that 'somewhere' is the equity marke... especially if the monetary authorities are becoming 'stingy' with monetary expansion." - Dennis Gartman
Editor and publisher of the financial newsletter, 'The Gartman Letter'.
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| [Quote No.62713] Need Area: Money > Invest
"Never risk what you have and need for what you don't have and don't need." - Warren Buffett
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| [Quote No.62952] Need Area: Money > Invest
"Rough diamonds may sometimes be mistaken for worthless pebbles." - Sir Thomas Browne
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| [Quote No.62958] Need Area: Money > Invest
"A bull market is like sex. It feels best just before it ends." - Warren Buffett
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| [Quote No.62994] Need Area: Money > Invest
"[Bull markets that eventually crash are created by keeping interest rates too low for too long which unjustifiably inflates consumer and business envy, confidence and prospects - especially valuations of assets used for loan collateral. For example the utility industry during the 1920's. The industry was red-hot in the 1920's, and utility stocks had the largest market capitalization of any sector on the New York Stock Exchange. As head of Chicago's Commonwealth Edison, the country's largest utility, Samuel Insull was one of the nation's most powerful business executives. Insull had spent his career struggling to gain access to capital for acquisitions and expansion, but in the 1920's, bankers suddenly became generous, and began pushing loans on Insull and on other businesses across the nation, creating an economic frenzy that resulted in the Great Crash of 1929. Insull eventually took advantage of those loans. After the crash, Insull became a pariah:] During the [1920s], Samuel Insull would ascend higher and higher, until he attained power and prestige rarely if ever equaled by any businessman whose position rested on ability rather than wealth, and then come crashing to earth, to become less than a cipher, to degenerate into an arch-symbol of every manner of corporate evil. He would see his personal fortune increase from around $5,000,000 in 1927 to $150,000,000 in 1929, and then tumble, by mid-1932, to zero and below, to a net indebtedness so large that, as one banker put it, he was 'too broke to be bankrupt.' With him -- to the top and then to the bottom -- went hundreds of thousands of stockholders who shared his faith in his own invulnerability. ...
Between 1924 and 1927 virtually every old pro in the Chicago banking community died, leaving the banks in the hands of persons whose lack of seasoning prepared them ill for the financial storms ahead. Assuming command during the expansionist fever of the late twenties, they began throwing money at everyone who seemed prosperous; Insull they deluged with easy credit, begging him to accept it, for any purpose. At a party, the new president of the Continental Bank sidled up to [Insull's son] and, with the manner of a French postcard peddler, said, 'Say, I just want you to know that if you fellows ever want to borrow more than the legal limit, all you have to do is organize a new corporation, and we'll be happy to lend you another $21,000,000.'
As Phil McEnroe, Insull's bookkeeper, said, 'The bankers would call us up the way the grocer used to call my mamma, and try to push their money at us. 'We have some nice lettuce today, Mrs. McEnroe; we have some nice fresh green money today, Mr. Insull. Isn't there something you could use maybe $10,000,000 for?' To an organization that had always been kept in check by the difficulty of raising capital for expansion, this new situation had the impact of three stiff drinks on an empty stomach." - Forrest McDonald
Quote from his book, 'Insull: The Rise and Fall of a Billionaire Utility Tycoon'.
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| [Quote No.63064] Need Area: Money > Invest
"[Profit from banks's borrowing short-term and lending long-term drives the credit cycle and thereby the share market:] The simplest reason for the flattening [of the yield curve - the difference between short-term rates and long-term bond yields] comes from looking separately at what's going on with short rates, the most sensitive to Fed[eral Reserve's] policy expectations, and longer-term yields, which take their cues from the outlook for inflation and economic growth. [It is important to not that an inverted yield curve precedes nearly all share-market crashes and economic recessions!]" - Brian Chappatta
[https://www.bloomberg.com/news/articles/2017-11-13/the-u-s-yield-curve-is-flattening-and-here-s-why-it-matters ]
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| [Quote No.63099] Need Area: Money > Invest
"I will tell you how to become rich - Be fearful when others are greedy. Be greedy when others are fearful." - Warren Buffett
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| [Quote No.63106] Need Area: Money > Invest
"[Share market booms, irrational exuberance and momentum investing: Sky high valuations eventually go back to their fair value - if not lower, for a time. When and how this happens is always unknown. Remember, like a leaf in a hurricane...] You have no idea where the leaf will be a minute or an hour from now. But eventually gravity will win out and it will land on the ground." - Ben Inker
Co-head of the asset-allocation team at Boston-based money management firm GMO.
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| [Quote No.63125] Need Area: Money > Invest
"[Interest rates:] Earnings don't move the overall market; it's the Federal Reserve Board.... Focus on the central banks and focus on the movement of liquidity.... Most people in the market are looking for earnings and conventional measures. It's liquidity that moves markets." - Stan Druckenmiller
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| [Quote No.63137] Need Area: Money > Invest
"Just because I called it a bubble doesn't mean it will automatically pop." - Vitaliy Katsenelson
The Chief Investment Officer at Investment Management Associates.
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| [Quote No.63142] Need Area: Money > Invest
"Timing the end of a major bubble [or crash] is extraordinarily difficult as it entails figuring out when a critical mass of investors shift from greed [fear] to fear [greed]." - Graham Summers
Chief Market Strategist of Phoenix Capital Research. [http://www.zerohedge.com/news/2017-12-08/it-late-2007-everything-bubble ]
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| [Quote No.63153] Need Area: Money > Invest
"[Inverted yield curves and central bank interest rate rising too far, too fast causing recessions:] The Fed can set interest rates, but doesn't dictate how easy it is for borrowers to get credit. In a typical economic expansion, the Fed will start to raise rates to make it more expensive to borrow money (to tighten financial conditions!). But because the economy does well, banks might ease lending standards; or demand by borrowers may pick up for other reasons despite higher rates. As a result, the Fed continues to tighten until, well, until the economy at some point slows down. It's this indirect dynamic that makes it so difficult for the Fed to engineer a soft-landing, i.e. to stop tightening just in time for excesses to be avoided." - Axel Merk
President and Chief Investment Officer, Merk Investments.
[Refer Merk 2018 Outlook - http://news.goldseek.com/GoldSeek/1512574438.php ]
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| [Quote No.63178] Need Area: Money > Invest
"All courses of action are risky, so prudence is not in avoiding danger (it's impossible), but calculating risk and acting decisively!
" - Niccolo Machiavelli
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| [Quote No.63182] Need Area: Money > Invest
"Forecasts usually tell us more of the forecaster than the future." - Warren Buffett
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| [Quote No.63183] Need Area: Money > Invest
"[Forecasts:] Markets will fluctuate." - J.P. Morgan
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| [Quote No.63184] Need Area: Money > Invest
"Forecasts are financial candy. Forecasts give people who hate the feeling of uncertainty something emotionally soothing." - Thomac Vician Jnr.
A student of Ed Seykota.
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| [Quote No.63185] Need Area: Money > Invest
"[Forecasts:] Many of us smile at old fashioned fortune tellers. But when the soothsayers work with computer algorithms rather than tarot cards, we take their predictions seriously and are prepared to pay for them." - Gerd Gigerenzer
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| [Quote No.63186] Need Area: Money > Invest
"
[Forecasts:] Our industry is full of people who got famous for being right once in a row.
" - Howard Marks
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| [Quote No.63187] Need Area: Money > Invest
"Forecasts create the mirage that the future is knowable.
" - Peter Bernstein
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| [Quote No.63188] Need Area: Money > Invest
"There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly build into human nature, that always gets in the way of human intelligence. Of this I am sure." - Jesse Livermore
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| [Quote No.63189] Need Area: Money > Invest
"The problem with bubbles is that they force one to decide whether to look like an idiot before the peak or an idiot after the peak." - John Hussman
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| [Quote No.63190] Need Area: Money > Invest
"[Advice on the pricking of bubbles:] The specific manner by which prices collapsed is not the most important problem. A crash occurs because the market has entered an unstable phase and any small disturbance or process may have triggered the instability. Think of a ruler held up vertically on your finger. This very unstable condition will lead eventually to its collapse, as a result of a small or the absence of adequate motion of your hand or due to any tiny whiff of air. The collapse is fundamentally due to the unstable position, the instantaneous cause of the collapse is secondary." - Didier Sornette
French geophysicist
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| [Quote No.63191] Need Area: Money > Invest
"[Technical analysis:] Follow the trend lines not the headlines.
" - Bill Clinton
Ex-US President
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| [Quote No.63217] Need Area: Money > Invest
"Investing means buying an asset that actually creates products and services and cashflow for an extended period of time. Like a piece of a profitable business or a rentable piece of real estate. An investment is something that has intrinsic value – that is, it would be worth owning from a financial perspective, even if you could never sell it. [Investing differs from speculating which is about buying something, regardless of its intrinsic value, with the hope to recover your money and get a profit by selling it later for more than you bought it to someone who hopes to do the same.]" - mrmoneymustache.com
[https://www.mrmoneymustache.com/2018/01/02/why-bitcoin-is-stupid/ ]
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| [Quote No.63218] Need Area: Money > Invest
"The very definition of an unsophisticated investor is 'Being more willing to buy something, the more its price goes up.' " - mrmoneymustache.com
[https://www.mrmoneymustache.com/2018/01/02/why-bitcoin-is-stupid/ ]
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| [Quote No.63219] Need Area: Money > Invest
"Skilful risk control is the mark of the superior investor. [Remember managing risk is what separates the best from the rest!]" - Howard Marks
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| [Quote No.63254] Need Area: Money > Invest
"Who is the wise person? The one who foresees the consequences." - Talmud
Tamid, 32a
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| [Quote No.63339] Need Area: Money > Invest
"[At the end of a boom period, the know-little, Johnny-come-lately, 'bigger-fool' suckers arrive to try to get their piece of what they perceive is 'easy money':] The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity. People who look for easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth." - Jesse Livermore
Famous stock trader
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| [Quote No.63363] Need Area: Money > Invest
"The greatest lesson in life is to know that even fools are right sometimes." - Winston Churchill
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| [Quote No.63399] Need Area: Money > Invest
"...it is insane to risk what you have and need in order to obtain what you don't need." - Warren Buffett
[https://www.marketwatch.com/story/deal-crazed-ceos-are-like-oversexed-teens-and-other-highlights-from-buffetts-letter-2018-02-24 ]
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| [Quote No.63400] Need Area: Money > Invest
"Though markets are generally rational, they occasionally do crazy things [i.e. bull market peaks and bear market troughs]. Seizing the opportunities then offered does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period - or even to look foolish - is also essential." - Warren Buffett
[https://www.marketwatch.com/story/deal-crazed-ceos-are-like-oversexed-teens-and-other-highlights-from-buffetts-letter-2018-02-24 ]
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| [Quote No.63410] Need Area: Money > Invest
"When unemployment is low, it's the end of the bull market. Last Sunday, I published a chart that shows every time the [USA] unemployment is around 4.1% or 4.2%, and you can see this in 1973, 1987, 1990 and 2007, and you can go on and on, and now, also, you have a [USA] market crash. [Usually this is accompanied by high inflation and rising short-term interest rates - including an inverted yield curve - although that is not yet happening at this time, due to demographic aging and The Federal Reserve's QE related efforts to keep rates extremely low.]" - Charles Nenner
Geopolitical and financial cycle expert. [https://www.zerohedge.com/news/2018-03-02/charles-nenner-were-totally-out-stocks-whats-coming-big ]
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| [Quote No.63427] Need Area: Money > Invest
"An extensive analysis of various models leads us to conclude that the term spread is by far the most reliable predictor of recessions. [A negative yield curve, where the return to investors on shorter-dated securities is above that on longer-term bonds, has predicted all nine U.S. recessions since 1955, with a lag of six to 24 months. This makes sense as banks borrow at long rate cost and lend at short rate, so when inverted there is no bank profit and therefore less loans and so economic activity slows and recessions start!]" - Michael Bauer and Thomas Mertens
Both are economists at the San Francisco Fed. [https://www.bloomberg.com/news/articles/2018-03-05/fed-study-finds-inverted-yield-curve-still-good-recession-alert ]
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| [Quote No.63428] Need Area: Money > Invest
"[Slowdown and recession indicator:] ...the quality spread -- the difference between the yields on junk bonds and investment-grade corporate bonds -- has been widening for several months. That happens because the rising default risk for junk bonds during economic slowdowns makes their yields climb faster than those of investment-grade bonds, which are less likely to default." - Lakshman Achuthan and Anirvan Banerji
Co-founders of the Economic Cycle Research Institute in New York. [https://www.bloombergquint.com/view/2018/03/09/the-global-economy-s-wile-e-coyote-moment ]
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| [Quote No.63442] Need Area: Money > Invest
"People will try to tell you that all the great opportunities have been snapped up. In reality, the world changes every second, blowing new opportunities in all directions, including yours." - Ken Hakuta
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| [Quote No.63518] Need Area: Money > Invest
"There are two ways that a human being can feel confidence. One is knowledge, and the other is ignorance. [Remember that learning a little about something can make us overconfident! As absolute beginners we are usually perfectly conscious and cautious about what we don't know; however a little experience often replaces our caution with sometimes a false sense of competence. Alexander Pope described this accurately in the following lines: 'A little learning is a dangerous thing; Drink deep, or taste not the Pierian spring: There shallow draughts intoxicate the brain, And drinking largely sobers us again.']" - Charles Darwin
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| [Quote No.63547] Need Area: Money > Invest
"At its core, investment is about valuation. It's about purchasing a stream of expected future cash flows at a price that's low enough to result in desirable total returns, at an acceptable level of risk, as those cash flows are delivered over time. The central tools of investment analysis include an understanding of market history, cash flow projection, the extent to which various measures of financial performance can be used as 'sufficient statistics' for that very long-term stream of cash flows (which is crucial whenever valuation ratios are used as a shorthand for discounted cash flow analysis), and a command of the basic arithmetic that connects the current price, the future cash flows, and the long-term rate of return.
At its core, speculation is about psychology. It's about waves of optimism and pessimism that drive fluctuations in price, regardless of valuation. Value investors tend to look down on speculation, particularly extended periods of it. Unfortunately, if a material portion of one's life must be lived amid episodes of reckless speculation that repeatedly collapse into heaps of ash, one is forced to make a choice. One choice is to imagine that speculation is actually investment, which is what most investors inadvertently do. The other choice is to continue to distinguish speculation from investment, and develop ways to measure and navigate both.
The central tools of speculative analysis focus on the observable prices, trading volume, sentiment, and other objects that emerge as the expression of investor psychology. For our part, two sorts of measures are useful; one dealing with the uniformity or divergence of price behavior, and the other dealing with overextended extremes.
We gauge investor preferences toward speculation or risk-aversion by extracting a signal from what we call 'market internals' – the behavior of thousands of securities; individual stocks, industries, sectors, and security-types, including debt securities of varying creditworthiness. While we do keep our methods proprietary on that front, we're very open about the underlying concepts: 1) when investors are inclined to speculate, they tend to be indiscriminate about it, and 2) when two securities diverge, the dispersion provides information about factors that they do not share in common. The simplest example here is debt: if yields on junk bonds are rising and yields on high-grade bonds are not, the divergence conveys investor concerns or information about oncoming credit risk and default.
With regard to overextended extremes, prior episodes of speculation in market cycles across history usually ended, or encountered sharp air-pockets, at the point where valuations, price extremes, and investor sentiment simultaneously reflected overvalued, overbought, overbullish conditions. Unfortunately, we learned the very hard way in recent years that, faced with zero interest rate policies [Refer the US Federal Reserve's Quantitative Easing policies following the 2007-9 market crash], these syndromes were virtually useless in signaling even a pause in the relentless yield-seeking speculation and 'there is no alternative' [TINA] mindset that the Federal Reserve deliberately encouraged. So we had to adapt, ultimately restricting our discipline from taking a negative outlook unless we also observed explicit deterioration in our measures of market internals.
At present [April 2018], stock market investors are faced with offensively extreme valuations, particularly among the measures best-correlated with actual subsequent market returns across history. Investment merit is absent. Investors largely ignored extreme 'overvalued, overbought, overbullish' syndromes through much of the recent half-cycle advance, yet even since 2009, the S&P 500 has lost value, on average, when these syndromes were joined by unfavorable market internals.
We observed a clear deterioration in our measures of market internals in the week of February 2nd. While we have to be open to changes in market internals that might signal a resumption of speculative investor psychology, we don't see that here. So speculative merit is also absent (apart than the rather weak potential that emerges from short-term 'oversold' conditions). When we examine market collapses across history, the common feature is that both investment merit and speculative merit are absent. [So remember... Investment is about valuation [Fundamental Value Long-Term Investing Methodology]. Speculation is about psychology [Technical Charting and Sentiment Short-Term Speculating Methodology]." - John P. Hussman, Ph.D.
President, Hussman Investment Trust. As quoted in the market commentary entitled 'Risk-Aversion Meets a Hypervalued Market', published April 2018.
[https://www.hussmanfunds.com/comment/mc180406/ ]
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| [Quote No.63577] Need Area: Money > Invest
"J.P. Morgan once had a friend who was so worried about his stock holdings that he could not sleep at night. The friend asked, 'What should I do about my stocks?' Morgan replied, 'Sell down to your sleeping point.'" - Burton Malkiel
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| [Quote No.63602] Need Area: Money > Invest
"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine - that is, they made no real money out of it. Men who can both be right and sit tight are uncommon." - Jesse Livermore
in his book, 'Reminiscences of a Stock Operator'.
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| [Quote No.63610] Need Area: Money > Invest
"Fear causes you to panic and sell at the bottom, while greed motivates you to buy right near the top. These are the driving factors behind the crowd's yo-yo mentality." - Stan Weinstein
Noted share investor who wrote the book 'Secrets for Profiting in Bull and Bear Markets'.
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| [Quote No.63648] Need Area: Money > Invest
"[The commonly discussed terms of market interest rates, volatility, volume and liquidity as related to the ease of buying and selling large volumes of stock at a given price, are particularly important for chart investing because it involves a lot more buys and sells than fundamental investing as a general rule:] The Liquidity Problem:
Individual investors generally don't think about liquidity. You send a market order for 200 shares of something, it gets filled instantaneously, no problem.
Institutional investors have to think about liquidity a lot.
Say you have 200,000 shares of a stock to sell that only trades, on average, a million shares a day. You have a problem.
As a general rule, if you are more than 10 percent of the volume in a stock, you are going to have an impact on the price. You could spread the execution out over two days, but then you assume more price risk.
In ye olde days, you could call up the equities floor at a bank and do a block trade in the third market [a third market consists of trading by non-exchange member brokers/dealers and institutional investors of exchange-listed stocks. In other words, the third market involves exchange-listed securities that are being traded over-the-counter between brokers/dealers and large institutional investors], and transfer your risk immediately. But that doesn't really exist anymore. You are kind of stuck putting it in the machine, and you are kind of stuck having a bunch of computers sniff out your order and trade ahead of it.
The proponents of the computers say that they provide liquidity, which is partially true, and the detractors of the computers say they consume liquidity, which is also partially true. It is a complicated issue. Of course, there are all sorts of countermeasures and counter-countermeasures to this sort of thing, which has been the subject of a couple of books.
The problem is that there is a lot less liquidity out there than there was six months ago, and there is really a lot less liquidity than there was 10+ years ago. We will explain why. ...
--- Volatility and Interest Rates:
When volatility goes up, liquidity generally goes down. As you know, volatility has been higher, so liquidity has been lower.
By the way, a good definition for liquidity is being able to transact at a price that is not disadvantageous - i.e., the price you see on the screen.
Perhaps some of you have access to a futures terminal and have seen the order book for S&P 500 e-mini futures. You have probably seen that it is often less than 100 contracts per tick.
If you go back to 2006, there were about 2,000 contracts per tick. Yes, liquidity is down over 90 percent.
So, individual investors generally don't think about liquidity, but they probably should.
Anyway, there is an axiom in markets: volatility and liquidity are inversely correlated [move in opposite directions]. There is a second axiom in markets: as interest rates increase, volatility usually increases, too [i.e. directly correlated - move in the same direction].
The Fed has been withdrawing liquidity by hiking interest rates and conducting quantitative tightening. It's not a coincidence that volatility exploded and liquidity disappeared.
But there's more to it than that. ...
--- Index Arbitrage:
Index arbitrage is the act of trading small price discrepancies in stock index futures with the underlying stocks. In the old days, if you wanted to do this, you needed to carry a large balance of long stock, so you didn’t have to sell short on an uptick. Banks would generally carry a large short futures position, offset with a large long stock position, in order to facilitate this trade.
This was known as carrying 'balance sheet,' and banks used to carry a lot of it, because it was a profitable trade. The S&P futures roll was trading rich, so you could sell the roll at LIBOR + 25 and make additional profits if interest rates were going down.
The act of trading index arbitrage provides liquidity - liquidity is posted in the futures contracts, as well as the stocks. Index arbitrage as we knew it has all but disappeared, because the Volcker Rule [new US regulations in response to the excesses that contributed to the 2007-9 market crash] has done away with prop trading. Capital requirements also make it expensive to hold this balance sheet.
Index arbitrage is now conducted by electronic trading firms, and nonbank broker-dealers, but most of that liquidity has disappeared. And a lot of it is because of regulations.
People have a general idea that Dodd-Frank [also new US regulations to curb the excesses that resulted in the 2007-09 market crash] has contributed to a lack of liquidity in financial markets. If only they knew how big the problem is! No liquidity means being unable to transfer risk, as well as increased costs for investors.
And not just institutional investors. If XYZ mutual fund has more impact on its trades, XYZ mutual fund isn't the one that suffers. It's you, the shareholder, in the form of diminished returns. There is a lot of attention paid to mutual fund fees, but people should perhaps pay more attention to execution costs - that is where the big savings are. ...
I'm also a fan of increased tick size - go back to fractions in the stock market and you will see many of these problems disappear.
If you look at charts of stock market volume, you will see that today's volumes roughly correspond to mid-1990s levels. I would not consider that to be progress.
And I would not consider the mid-2000s levels of volume to be an aberration - that's what we should strive for in financial markets. We should incentivize people to post liquidity - not to consume it." - Jared Dillian
Editor, 'The 10th Man', as quoted May 10, 2018.
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| [Quote No.63650] Need Area: Money > Invest
"[Fundamental investing involves waiting for bargains when there is 'blood in the streets' and everyone else is fearful, for example near the end of a company or market crash. Technical, chart investing is much more a daily process of buying and selling to make a small profit frequently:] One of ['Dow Theory Letter' publisher] Richard Russell's sagest bits of advice compared the Rich Man to the Poor Man. The Rich Man doesn't need the markets, he reminded us. If stocks, or any other investment item, are great bargains, then he'll buy them.
But if not, then he's happy to just sit there, perhaps year after year, until there are great bargains." - Jon Strebler
Editor, 'Dow Theory Letters', 8th May 2018. [Refer https://www.moneyshow.com/articles/tptp072513-48540/dow-theory-letters-on-technicals-trendlines-and-triangles/ ]
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"['Sell when others are greedy and buy when others are fearful':] There is an intoxicating optimism at the top of every unstable boom when people latch on to good news and convince themselves that risk is fading, but that is precisely when the worst mistakes are made.
" - William White
The Swiss-based ex-chief economist for the Bank for International Settlements, who was one of the few commentators to warn of impending disaster before the 2007-09 market crash, as quoted at the Davos Economic Forum in 2018.
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"Old man Partridge's insistence on the vital importance of being continuously bullish in a bull market doubtless made my mind dwell on the need above all other things of determining the kind of market a man is trading in. I began to realize that the big money must necessarily be in the big swing. Whatever might seem to give a big swing, initial impulse, the fact is that its continuance is not the result of manipulation by pools or artifice by financiers, but depends upon basic conditions. And no matter who opposes it, the swing must inevitably run as far and as fast and as long as the impelling forces determine." - Jesse Livermore
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