Investing, Trading, Speculating, MEH, Ratioal Expectation etc.
Investing, Trading, Speculating, MEH, Ratioal Expectation etc.
First, let's see the languages of different group of people:
Investors say : " look, this stock is going higher, it's so cheap".
Traders say : " look, this stock is going higher, it's in a rising channel".
Speculators say: "look, 3par has been acquired by HPQ, those who were in the stock made a killing. Well, maybe 33par will be acquired next? OK, I'm going to make a killing by buying early."
Second, let's parse what that all means:
Investing: is to figure out the relationship between price and value.
Trading: is to figure out the relationship between price and price.
speculating: is to figure out the relationship between imagination and price.
3rd: There is no right and wrong about investing and trading, if you are indeed good, you can make money both ways.
4th: If market efficiency hypothesis is valid, the natural conclusion is you can't beat the market, the only valid way to play the market is to buy the market, e.g., index fund. If market efficiency is valid, we would never have a guy like Buffet who beat the market year in year out for so many years, Buffet said himself that the reason he succeeded is there are so many people believe the junk MEH. If market efficiency hypothesis is valid, I would suggest to shut down this website, there is no point to have this site, really.
5th: The same thing with rational expectation, it's completely junk, yeah, those folks got Nobel prize, but who cares if their theories have been discredited time and time again. Try behavioral economics which predicts both the collapse of the tech bubble and the housing bubble.
6th: The very first step you start to play the market, you HAVE TO identify whether you are an investor, a trader or a speculator. It'll be a disaster if you think like a speculator, act like a trader, and talk like an investor, I would strongly suggest people to avoid those voices who mixed these 3 in their opinions, that basically says that those people can't be seriously taken as somebody who can play the market well.
Frankly, I don't come here to seek knowledge on investing, I'm here mostly because it is a site that gathers quite some useful information on companies (especially those in-depth reports). I would warn people not to take anyone on this forum seriously, if you really want to know more about investing, macroeconomics, I can recommend a list of books that may be helpful to you. Remember most of the stuff on internet is junk, if you seek knowledge, you really need to read books.
Lastly, talk is cheap, what matters is performance. Throwing some big topics to pretend to be an expert can only fool novices, misleading is the word I would use here. e.g., I think I have a very decent understanding of the intrinsic flaws of euro and the problem of the euro zone, but I don't want to pretend to be an expert on that, if you want to seek opinions, go to someone like Martin Feldstein who gave the reasons why Euro doesn't work in the very beginning. There is really no reason to listen to anyone other than the experts in the field.
Happy investing, trading, speculating!
First, let's see the languages of different group of people:
Investors say : " look, this stock is going higher, it's so cheap".
Traders say : " look, this stock is going higher, it's in a rising channel".
Speculators say: "look, 3par has been acquired by HPQ, those who were in the stock made a killing. Well, maybe 33par will be acquired next? OK, I'm going to make a killing by buying early."
Second, let's parse what that all means:
Investing: is to figure out the relationship between price and value.
Trading: is to figure out the relationship between price and price.
speculating: is to figure out the relationship between imagination and price.
3rd: There is no right and wrong about investing and trading, if you are indeed good, you can make money both ways.
4th: If market efficiency hypothesis is valid, the natural conclusion is you can't beat the market, the only valid way to play the market is to buy the market, e.g., index fund. If market efficiency is valid, we would never have a guy like Buffet who beat the market year in year out for so many years, Buffet said himself that the reason he succeeded is there are so many people believe the junk MEH. If market efficiency hypothesis is valid, I would suggest to shut down this website, there is no point to have this site, really.
5th: The same thing with rational expectation, it's completely junk, yeah, those folks got Nobel prize, but who cares if their theories have been discredited time and time again. Try behavioral economics which predicts both the collapse of the tech bubble and the housing bubble.
6th: The very first step you start to play the market, you HAVE TO identify whether you are an investor, a trader or a speculator. It'll be a disaster if you think like a speculator, act like a trader, and talk like an investor, I would strongly suggest people to avoid those voices who mixed these 3 in their opinions, that basically says that those people can't be seriously taken as somebody who can play the market well.
Frankly, I don't come here to seek knowledge on investing, I'm here mostly because it is a site that gathers quite some useful information on companies (especially those in-depth reports). I would warn people not to take anyone on this forum seriously, if you really want to know more about investing, macroeconomics, I can recommend a list of books that may be helpful to you. Remember most of the stuff on internet is junk, if you seek knowledge, you really need to read books.
Lastly, talk is cheap, what matters is performance. Throwing some big topics to pretend to be an expert can only fool novices, misleading is the word I would use here. e.g., I think I have a very decent understanding of the intrinsic flaws of euro and the problem of the euro zone, but I don't want to pretend to be an expert on that, if you want to seek opinions, go to someone like Martin Feldstein who gave the reasons why Euro doesn't work in the very beginning. There is really no reason to listen to anyone other than the experts in the field.
Happy investing, trading, speculating!
