Tag Archives: Stocks

“The Wall Street Math Hustle”

Run immediately over to Institutional Investor and read this excellent piece on all of the fake number crunching investment firms use into making decisions and buying products that are not in your best interest.

The yes blunt but 100% accurate conclusion:

These strategies carry the stamp of scientific certitude, but Wall Street’s researchers, like all scientists, have an ethical responsibility to communicate the limitations of these supposedly systematically proven models to an aroused but insufficiently skeptical, public.

Yet much of their world is bullshit. And yes, maybe we’re a bit too blunt. But we don’t want them to sell you more of what isn’t working.

Read it and don’t be the lower-case fool.

OMG DAVID STOCKMAN SAYS STOCKS ARE GOING TO “PLUNGE” 40%!!!

So says CNBC. And he might be right.

But here’s a few more CNBC headlines from the archive:

Sept. 30, 2017: David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge
November 5, 2016: David Stockman warns both Trump and Clinton could lead to 25% sell-off
August 7, 2015: Stocks are a ‘disaster waiting to happen’: Stockman
April 29, 2014: Fed fueling century’s ‘greatest bubble’: Stockman

He could well be right this time. But if there is one takeaway from this, it is that you shouldn’t just sell (or buy) because David Stockman (or anyone else you see on TV) says you should. If you sold everything on April 29, 2014, after watching his interview, you’ve missed out on a 77.97% gain on the Nasdaq Composite.

And even if he is correct, it means nothing for a long-term holder. The S&P lost more than 40% of its value from the start of 2008 through mid-2009. It had fully-recovered those losses by mid-2011.

As always, don’t have money you might need in the next three years or so in equities. And don’t listen to the talking heads and time the market. It’s a crummy business model for CNBC, which is why people like Stockman get on, but it is the best way to handle the stock market.

Wall Street today

You have to admit, this is a terrible, ugly, no-good chart of S&P movement.

It’s worth noting, though, that this is not a chart of this week’s declines, the ones currently causing people to scream at each other on TV. Rather it is a chart of the declines that occurred back in February.

Remember those? Yeah no one else does either.

The lesson? Don’t panic over stock movement. Buy good companies and hold them. And don’t watch much CNBC.