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Hey, I already said I was wrong, no need to rub it in! 
On a more serious note, who else feels that today has been very odd?
On a more serious note, who else feels that today has been very odd?
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DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts. -
What was so odd about today? All the big US Stock indices cratered by more than 1% today. Lately, this seems like the usual pattern. Luckily such patterns are asymtotic“It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”
― C.S. Lewis, The Abolition of ManComment
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What do you mean when you say an individual day was odd. The market is chaotic, right. Don't you expect some odd days? What specifically is odd and is it odder than the normal type of odd that Brownian theories predict?Comment
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good news. I heard the economy grew 5.8% 1st quarter.Comment
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GNP is growing slower than GDP, but the difference between them is very small.
in 1980 GNP was 1.3% bigger than GDP
in 1990 it was 0.5% bigger
in 2000 it was 0.1% smaller
The main difference between them is repatriated profits - so whereas in 1980 the US recieved an extra 1.3% of it's income from profits that it's multinational companies made abroad, in 2000 it lost 0.1% of it's income as foreign multinationals sent profits made in the USA home to their own countries.
The gap turned negative in 1999 for the first time since records began in 1929.
It hasn't widened during the last few years, but that's probably because profits were collapsing much faster in the US than elsewhere.
Faded, it's not all good news - most of that 5.8% was due to inventory corrections (3.3% to be exact) and non-residential investment is still falling.19th Century Liberal, 21st Century EuropeanComment
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Gaak! I hate the GDP/GNP posts. Let's talk about things from an individual firm angle...
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(Don't stone me, please...macro-zealots...)Comment
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I felt that day was odd because of what Faded pointed out. Sure, consumer confidence fell but GDP growth was in the upper range of expectations so I wouldn't have expected US stocks and the US dollar to plunge.
El Freako, to be fair, most of the fall in nonrez investment was due construction. Q-Q capital spending was nearly stagnant, which is quite an improvement over the previous quarters, and capital spending is far more significant to future growth.DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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My point remains. There is a huge amount of pure volatility in day to day market indices. Read some of the technical articles that have been written on this. (Journal of Finance is a good academic journal here...do a search on "Brownian motion". There is also a decent section in Brealey and Myers on this..with references to technical articles.)Originally posted by Colon
I felt that day was odd because of what Faded pointed out. Sure, consumer confidence fell but GDP growth was in the upper range of expectations so I wouldn't have expected US stocks and the US dollar to plunge.
Sure you can try to analyze day to day variations but be wary. The type of anthropamorphic talk that you hear about the market on CNBC is mostly wasted air...Comment
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I couldn’t find that article you mentioned, but I think that for it I have to subscribe to the journal, so could you tell me in short what a Brownian motion is?
Anyway, I’m not into daily analyses of market fluctuations, it was more of an off-handed question.DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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brownian motion is the random motion of gas molecules. Natural phenomana are often descirbed as brownian if they have large amounts of randomness. There is some math too...
I thought you were at a university. Can't you do a hard copy search. (Use the abstracts).Comment
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Anyway....there is a decent part of Brealey and Myers on this. you should buy that book. It is the bible of corp finance and is very accessible and even funny in spots...Comment
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I'm not studying at a university yet, GP.
What's the title of that Brealey and Meyers book? I'll see if I can borrow it at the library.DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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Interesting links brought up in the following article. Labor Productivity & Wages, Capital Productivity & Profits. It seems so simple, but I had never thought about it in those terms.
I was interested in the capital productivity going negative while the stock market bubble was just getting a full head of steam.
Productivity has been going through the roof...I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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I think Kasriel's theory that profit growth will pick up due shrinking unit labour costs is correct but I also still believe that the productivity results have mostly been due increased investment rather than an acceleration in technological progress.
And I'm waiting until the next couple of revisions of the recent productivity figures before considering them.
DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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Principles of Corporate FinanceOriginally posted by Colon
I'm not studying at a university yet, GP.
What's the title of that Brealey and Meyers book? I'll see if I can borrow it at the library.
If your library doesn't have it, try interlibrary loan. Presumably Belgium has that. Might have to read the English version. Not sure if there is a Flemish translation. It's good though. Has really thoughtful boxed asides on theoretical arguments related to bankruptcy risk, dividends, etc.
amazon linkComment
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