Punchinello's Chronicles

September 11, 2009

Nonexistent Investors Gain Confidence

Filed under: Moron Speak — Punchinello @ 12:50 am
Tags: , , ,

The financial headlines and top-of-the-hour news today all speak about the wondrous rally on Wall Street. A week ago, the DOW closed at around 9200. Today, it closed at around 9600, the largest comeback over the year so far. And we’re told the reason is “investors” must be gaining confidence. “They” hear that unemployment numbers (for the week) were less than expected. The recession is over, the world is in great shape, and so “we” (investors), the little guys, are driving this rally.

Toro poo-poo!

There are very few individual investors doing much of anything nowadays. In fact, most of those individual investors have had their head handed to them, along with their butt and whatever other parts of their anatomy. People have had their entire pension funds and retirement portfolios wiped out. Foreclosures are at a record high, banks are failing left and right, and only the high-end Wall Street investment banks are making money.

The truth is that modern investment is often handled by computers. Massive software programs, which give rise to the term “program trading,” examine all sorts of minutiae. Those applications can make instantaneous trades, moving vast sums of money back and forth without really involving human beings much at all. The software can take advantage of price changes taking place over minutes or hours, all automatically.

It’s like automatic bidding on eBay, which in my opinion, helped wipe out the whole concept. You see an item and decide you’re willing to pay $19 for that item. So you set your computer to automatically bid in increments of say, 50-cents. Someone else has set their computer to go to $19.50.

In less than 10 seconds, the two computers bid, up the bid, re-bid, and zoom through the entire set of permutations. What’s the difference if you and another person take 10 minutes to make the same bids, or 10 seconds? Well, suppose that ten seconds takes place at the very last minute of the auction? A human being wouldn’t be able to respond in time, but a computer can do it all in those few seconds. You might as well have flat-rate pricing, which is what eventually happened.

Same with price fluctuations over a single trading day. Some set events drives speculation on a stock that raises the price 50-cents per share. Institutional traders, handling billions of dollars in pension funds, government funds, corporate funds or whatever make a trade for 100,000 shares. That’s a sale producing $50,000 right there.

Then consider that General Motors was performing so badly, the company was removed from the overall index. So how many other failing companies have been removed? I could prove to you that I’m a wealthy person, simply by reporting only what I’ve gained over the past 40 years and never reporting what I’ve lost. Or what I might lose.

Yet every day we hear idiots in 30-second sound bytes telling us that because the DOW has moved up 100 points, therefore the entire set of historic events taking place…doesn’t exist. There’s no collapse in the US dollar, nobody’s worried about the price of gold, housing and employment are immediately fixed, and life is perfect!

Until tomorrow, or the next day when the DOW suddenly drops 100 points. Then the world “suddenly” is concerned about whatever nonsense the AP Wire suggests.

If you really and truly believe that when the stock market these days goes up or down, it’s “investors” making those decisions, then you’re in for a massive and rude awakening. Wall Street has become the world’s largest gambling casino, and it’s entirely fixed. You, the individual, haven’t got the slightest chance of making any real money in that casino. It’s very similar to Las Vegas or Atlantic City. Yes, you could possibly make a bit of money, but the odds of walking out with a major win are very, very small.

Wall Street gained for the fourth straight day, as investors gained confidence over signs that the recession is coming to an end. Yah, right. Anyone interested in buying a bridge I happen to have?


October 30, 2008

Everyone Has a Right to Their Own Opinion

Filed under: Word of the Day — Punchinello @ 5:30 am
Tags: , , , , ,

How often have you heard this, or said it yourself: “Well, everyone has a right to their own opinion.” It’s right up there with that other modern corporate positive-spin phrase, “We’ll just agree to disagree.” Both are excellent ways to walk away from an argument without saying anything. They’re non-explosive, non-committal, and basically meaningless drivel.

Of course everyone has a right to their own opinion! You’d think not, nowadays, with the amount of screaming in the presidential campaign about mud-slinging, extremist views, hate speech, and negative campaign rhetoric. Even so, anyone with a brain has a right to use that brain. Or not.

The question is whether or not an opinion is informed, thoughtful, reasoned; or whether it’s just a spontaneous stream of projectile vomiting from the language center of the mind. Is an opinion an actual thought, or is it blather assigned to feelings?

How much more truthful would it be to say everyone has a right to feel the way they feel?

Actually, feelings cannot be justified. People all the time ask, “Why do you feel that?” Instead, they should be asking why someone thinks something. Thoughtful processing has reasons. Feelings are just feelings, and totally subjective. Nobody can literally feel what someone else is feeling.

All Opinions are Not Equal

All Opinions are Not Equal

Two engineers had two differening opinions. They couldn’t seem to resolve those differences, so they just “agreed to disagree.” They each went their merry way, smiling as they parted. “Well, everyone has a right to their own opinion,” they told each other.

They’re fired, of course, and likely will have a hard time getting work in the future. But that’s only my opinion.

Not only do you have a right to an opinion, but you also have an obligation to form an opinion. Especially when asked for that opinion explicitly. Elections are crucial to the structure and running of this country, and a vote is an opinion.

But not all opinions are equal. Some are really stupid. Some are ignorant, totally uninformed by anything related to reality. Some are insane. What makes an opinion worth something?

An opinion is a judgement. In a culture where we’re supposed to be non-judgemental, we also can’t have an opinion. To judge is to determine one of four things: true, false, like, dislike. We don’t judge something as being not enough information to judge. We conclude that, but it’s not a judgement.

There are two categories involved, the objective (having to do with reality) and the subjective (having to do with internal selfhood). Truth and falsehood apply to objective reality. Liking and disliking something are entirely internal and subjective. Nobody can question why you like something, you just do. But you should have a functional reason as to why you judge something to be true or false.

And that judgement of truth shouldn’t be “just a feeling.” Or just a guess.

Opinions are valuable when they’re based on knowledge, experience, skilled analyses, or historical data. An unusual exception is where an opinion is based on intuition. But since we have no clear science of intuition yet, it’s very difficult to assign a value to intuitive judgements.

Intuition isn’t a feeling. We use the expression because it’s handier than saying, “I have an intuition,” but intuition is essentially based on real experience that isn’t readily accessible at any moment. It’s stored in the mind, but can’t be consciously articulated at that moment. It still requires past experience, though, unlike a hormonal storm of nothing.

More often than not, an intuition is a complex trend analysis with a projection into the future. We may discover that clairvoyance is real, and some intuitions are indeed precognition. For now, we can only say that some people are strongly intuitive. Their “guesses” turn out right more than probability would suggest.

If we’re going to value intuitive opinions, we still need a past history. We need a decent sample of past opinions and the results of those opinions. In many ways, polling data is an intuitive guess based on samples, statistics, and trends. The problem is that intuition is less certain than judgement.

Having an opinion isn’t in any way astonishing. It’s no more fascinating than having an idea. Everyone has ideas. Not everyone puts those ideas into action. Many people have opinions, but a lot of people’s opinions are stupid. Either way, having an opinion doesn’t give anyone an “entitlement” to a platform for that opinion.

The Constitution guarantees the right to speak freely, but it does NOT guarantee that someone must listen. Biology provides the fact that everyone forms opinions, but nothing other than reality itself determines the validity of anyone’s opinion.

What’s nice about reality is that it can’t be legislated away. Politicians and upset people can try to deny that reality exists, but they’re no more functional than the fabled emperor claiming he was wearing new clothes.

The proper and immediate next question to ask when someone says they have an opinion, is “What’s the basis for your opinion?”

October 1, 2008

Gambling Problem? Call 1-800-BAILOUT

When you decide to invest money into stocks, bonds, investment banks, or any other speculative venture, you’re told right there that you may lose all or some of your money. Buying shares in a bank is an investment, and anyone who does so knows up front that they’re taking a gamble. It’s not a wild gamble, for the most part, and there are facts and figures to help estimaate the odds, but they’re still gambling that the company will increase in value and shares will go up.

On the other hand, when you deposit your weekly paycheck in a bank, you don’t normally read a notification that “Depositors do so at their own risk. You may lose all or part of your money.” Right?

So how come it’s the investors who get bailed out if this so-called rescue package is passed? What’s the next step: offering a return of all money lost at a casino? How long before investing money in the stock market ends up listed in the medical journals as an addiction?

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