10 Busted Investment Myths

Technical Investment Methods - Analyzing market trends with technical methods. 

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Subject Author Date 10 Busted Investment Myths vgenx 07-10-2008  Re: 10 Busted Investment Myths Steven L. 07-10-2008  Re: 10 Busted Investment Myths Spacey Spade 07-10-2008  Re: 10 Busted Investment Myths JB 07-11-2008  Re: 10 Busted Investment Myths rick++ 07-10-2008
Posted by on July 10, 2008, 9:03 am "The market slump isn't just shredding millions of college funds and retirement accounts. It's also shredding the financial playbook that many American families had come to rely on to protect and grow their savings. Think of all the rules and beliefs that worked reliably for decades, and which have been trashed in the last year..." Wall Street Journal: http://tinyurl.com/BustedMyths Posted by Steven L. on July 10, 2008, 12:10 pm vgenx@safe-mail.net wrote: > "The market slump isn't just shredding millions of college funds and > retirement accounts. It's also shredding the financial playbook that > many American families had come to rely on to protect and grow their > savings. Think of all the rules and beliefs that worked reliably for > decades, and which have been trashed in the last year..." > > Wall Street Journal: http://tinyurl.com/BustedMyths I read this article. Actually, the conventional wisdom that "housing prices always appreciate" has NOT been "true for decades." We had a big housing slump around 1990. Lots of homeowners found themselves upside down on their mortgages through no fault of their own. OTOH, the endless series of bubbles we've experienced: the "dot.com" bubble, the housing bubble, the commodities bubble, etc., has gotten a lot of economists to question the Efficient Market Hypothesis (EMH) once again. If the market is truly "efficient" and news about overpriced assets are available to everybody, then why do these bubbles keep occurring? What are these investors betting on? -- Steven L. Email: sdlitvin@earthlinkNOSPAM.net Remove the NOSPAM before replying to me. Posted by Spacey Spade on July 10, 2008, 4:42 pm > vg...@safe-mail.net wrote: > > "The market slump isn't just shredding millions of college funds and > > retirement accounts. It's also shredding the financial playbook that > > many American families had come to rely on to protect and grow their > > savings. Think of all the rules and beliefs that worked reliably for > > decades, and which have been trashed in the last year..." > > > Wall Street Journal:http://tinyurl.com/BustedMyths > > I read this article. > > Actually, the conventional wisdom that "housing prices always > appreciate" has NOT been "true for decades." We had a big housing slump > around 1990. Lots of homeowners found themselves upside down on their > mortgages through no fault of their own. > > OTOH, the endless series of bubbles we've experienced: the "dot.com" > bubble, the housing bubble, the commodities bubble, etc., has gotten a > lot of economists to question the Efficient Market Hypothesis (EMH) once > again. If the market is truly "efficient" and news about overpriced > assets are available to everybody, then why do these bubbles keep > occurring? What are these investors betting on? > > -- > Steven L. > Email: sdlit...@earthlinkNOSPAM.net > Remove the NOSPAM before replying to me. Surely, you know the masses are easily fooled by those in power... Am I being cynical in assuming that those in power are usually not very altruistic? Posted by JB on July 11, 2008, 3:37 am > vgenx@safe-mail.net wrote: >> "The market slump isn't just shredding millions of college funds and >> retirement accounts. It's also shredding the financial playbook that >> many American families had come to rely on to protect and grow their >> savings. Think of all the rules and beliefs that worked reliably for >> decades, and which have been trashed in the last year..." >> >> Wall Street Journal: http://tinyurl.com/BustedMyths > > I read this article. > > Actually, the conventional wisdom that "housing prices always appreciate" > has NOT been "true for decades." We had a big housing slump around 1990. > Lots of homeowners found themselves upside down on their mortgages through > no fault of their own. > > OTOH, the endless series of bubbles we've experienced: the "dot.com" > bubble, the housing bubble, the commodities bubble, etc., has gotten a lot > of economists to question the Efficient Market Hypothesis (EMH) once > again. If the market is truly "efficient" and news about overpriced > assets are available to everybody, then why do these bubbles keep > occurring? What are these investors betting on? > > > -- > Steven L. > Email: sdlitvin@earthlinkNOSPAM.net > Remove the NOSPAM before replying to me.< A Mathematician Plays the Stockmarket by Paulos has an interesting logical argument regarding EMH. From memory it goes something like this....if everyone believed the market was efficient, the prices would never change and there would be no market. When nobody believes in EMH, the market will be dynamic and efficient. I know I mangled this a bit but the basic idea makes sense to me. If that's true, blind belief in the EMH or blatent rejection of it are both incorrect. I tend to view the market as a non-stationary random process where none of the statistics can be relied upon except for historical characterizations. Posted by rick++ on July 10, 2008, 4:55 pm I love those "rear view mirror" dorks who say "last year it was obvious" ... B.S. 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