Posts Tagged ‘rational thinking’

Your Financial Horoscope

Tim draws parallels between believing in horoscopes and other superstitions and "magical investment thinking." – Ilene

Your Financial Horoscope

Courtesy of Tim at The Psy-Fi Blog  

horoscopeUsing the latest in IP address geo-detection and profiling technology we’re delighted to bring you your personalized horoscope:

You have a great need for other people to like and admire you. You have a tendency to be critical of yourself. You have a great deal of unused capacity which you have not turned to your advantage. While you have some personality weaknesses you are generally able to compensate for them. Your sexual adjustment has presented problems for you. Disciplined and self-controlled on the outside, you tend to be worrisome and insecure on the inside. At times you have serious doubts as to whether you have made the right decision or done the right thing. You prefer a certain amount of change and variety and become dissatisfied when hemmed in by restrictions and limitations. You pride yourself as an independent thinker and do not accept others’ statements without satisfactory proof. You have found it unwise to be too frank in revealing yourself to others. At times you are extroverted, affable, sociable, while at other times you are introverted, wary, and reserved. Some of your aspirations tend to be pretty unrealistic. Security is one of your major goals in life.

Trick or treat?

cargo cultCargo Cults

In the Second World War many remote Pacific islands found themselves occupied by warring forces. This often led to an unexpected windfall for the primitive islanders as the troops were supplied from the air with unimaginable luxuries like corned beef, custard powder and anti-aircraft guns. When the war ended and the troops went home the planes stopped coming so, naturally, the islanders hatched a cunning plan to make them come back again.

They created the rudiments of the apparatus that the ground crew had used – paddles to welcome the aircraft, fake headsets for the radio operator, fake landing lights – and engaged in the same strange ritual ceremonies, behaviour generally known as a cargo cult. Yet no matter how they adjusted the ceremony they couldn’t get it quite right and the planes never came back. It would be crass simplicity to suggest that the same kind of magical thinking pervades the world of investment. Only it does, of course.

Paranormal Beliefs

The curiously enduring…
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Bacteria, Boids and Market Instability

Here’s some weekend reading in advance. Consider throwing away economic models based on the misconception that people behave rationally and start anew with the premise that we are like mindless bacteria. – Ilene

Bacteria, Boids and Market Instability

bacterial behaviorCourtesy of Tim at  The Psy-Fi Blog

The Gaps Between People

Old-time economics saw investors as rational individuals, all behaving autonomously in a logical fashion, rather like Mr. Spock umbilically attached to Deep Thought. Today not even economists really believe that this is how people actually operate, but figuring out something better is a not insignificant task. Psychologists, however, have long known that what happens in the gaps between people is as important as what happens in the gaps between their ears – so is there something going on in the interactions between investors, which causes market instability?

One possible answer comes from the study of bacteria. Just as we might have suspected all along, stockmarket investor behaviour can be modelled by examining the way a bunch of brainless, single celled and barely animate creatures interested only in food and reproduction disport themselves on a Petri plate. Sometimes analogies are just too sweet.

Investing Earthquakes

The critical thing about any economic model is that it arrives at results that look like what we actually see in markets. Mostly the jargon fixated commentators who dominate the media are happy to talk in terms of business cycles when, in reality, the only cycles seen in most investing circles are the ones used by the boys and girls delivering lunchboxes. What we actually get, if we look at stockmarkets and stock prices, is something that looks like the readout we see from a seismograph when an earthquake occurs.

If we start by making a few assumptions about what investors actually do in real life – like, for instance, that they don’t behave rationally and that they tend to copy successful behaviour from people they’re closely connected to – we can rapidly create a model that produces outputs that look very different from those generated by models of people who behave independently and rationally. In fact the output of these models looks a lot like the readout we see from a seismograph when an earthquake occurs.

So it seems that the interactions between investors and how these interactions affect their willingness or otherwise to invest is the critical thing in these models.…
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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Volatility in Tech Shares Drags Market Lower (NY Times)

Stocks posted steep losses Friday, ending the week with broad declines after a report showing that job creation in the United States slowed last month.

Tesla is getting crushed — again (Business Insider)

Tesla shares are down 9%, to $160, a...



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Zero Hedge

Paths of Glory

Courtesy of ZeroHedge. View original post here.

Submitted by Tim Knight from Slope of Hope.

From the Slope of Hope: A couple of Thursdays ago, we were all wringing our hands (or at least I was) about the powerful bureaucrat and lifetime government employee Haruhiko Kuroda and what his next move would be. He dropped a big bomb - negative interest rates - and created precisely the kind of market reaction he wanted.............for less than a single day. Since then, his world has once again fallen to pieces, since the cold fact of the matter is that Japan is doomed to be an old age colony, ...



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Phil's Favorites

As Madoff Airs On TV, Two Anonymous Whistleblowers Are Pounding On The SEC's Door Again

Courtesy of Pam Martens and Russ Martens at WallStreetOnParade.com

(As posted at ZeroHedge. View original post here.)

Last night ABC began its two-part series on the Bernie Madoff fraud. Viewers will be reminded about how investment expert, Harry Markopolos, wrote detailed letters to the SEC for years, raising red flags that Bernie Madoff was running a Ponzi scheme – only to be ignored by the SEC as Madoff fleeced more and more victims out of their life savings.

Today, there are two equally erudite scribes who have jointly been flooding the SEC with ex...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

S&P could reach 1,600 if this gives way, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

S&P 500 tops in 2000 and 2007 took place 91 one months apart. Did another top take place 91 months after the 2007 top. So far it looks very possible.

If you double that time frame, you get 182 months. What is the odds that the NDX 100 topped 182 months after the 2000 high, at the SAME price it hit in 2000?

We applied monthly momentum to the charts above, reflecting that momentum for the S&P is back at 2000 and 2007 highs and turning lower and the momentum for the NDX is back at 2000 levels.

...

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ValueWalk

Why Most Investors Fail in the Stock Market

 

Why Most Investors Fail in the Stock Market

Courtesy of ValueWalk, by  

Throughout the past 30 days of wild volatility, here’s what I didn’t do.

Panic. Worry. Sell.

In fact, the best I did was add to a couple of positions yesterday. The world was already in an uncertain state for the past 3+ years. It’s just that with the market rising, we pushed the issue to the back of our  mind and ignored it.

If you read Howard Marks latest memo, ...



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Insider Scoop

Tyson Foods' Stock Ticks Higher Following Q1 Print

Courtesy of Benzinga.

Related TSN 7 Stocks You Should Be Watching Today Earnings Scheduled For February 5, 2016 Tyson Foods beats by $0.26, misses on revenue (Seeking Alpha)

Shares of Tyson Foods, Inc. (NYSE: TSN) were trading higher by more nearly 4 percent early Friday morning after the company reported its ...



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Chart School

Pause in Action

Courtesy of Declan.

Small Gains as indecision held sway. The S&P finished inside the range of last Friday's breakout and held rising support, but the index did the minimum to pacify bulls.


The Nasdaq breakout has eased alongside former resistance turned support. Volume was lighter, and the spinning top finish marks indecision. While Thursday's action offered no side an advantage, a push towards 4,900 would appear to be the favoured path.


The Russell 2000 is caught inside t...

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OpTrader

Swing trading portfolio - week of February 1st, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Digital Currencies

2016 Theme #3: The Rise Of Independent (Non-State) Crypto-Currencies

Courtesy of Charles Hugh-Smith at Of Two Minds

A number of systemic, structural forces are intersecting in 2016. One is the rise of non-state, non-central-bank-issued crypto-currencies.

We all know money is created and distributed by governments and central banks. The reason is simple: control the money and you control everything.

The invention of the blockchain and crypto-currencies such as Bitcoin have opened the door to non-state, non-central-bank currencies--money that is global and independent of any state or central bank, or indeed, any bank, as crypto-currencies are structurally peer-to-peer, meaning they don't require a bank to function: people can exchange crypto-currencies to pay for goods and services without a bank acting as a clearinghouse for all these transactions.

This doesn't just open t...



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Sabrient

Sector Detector: New Year brings new hope after bulls lose traction to close 2015

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Chart via Finviz

Courtesy of Sabrient Systems and Gradient Analytics

Last year, the S&P 500 large caps closed 2015 essentially flat on a total return basis, while the NASDAQ 100 showed a little better performance at +8.3% and the Russell 2000 small caps fell -5.9%. Overall, stocks disappointed even in the face of modest expectations, especially the small caps as market leadership was mostly limited to a handful of large and mega-cap darlings.

Notably, the full year chart for the S&P 500 looks very much like 2011. It got off to a good start, drifted sideways for...



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If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Pharmboy

Baxter's Spinoff

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...



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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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