myself (OP)
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Activity: 938
Merit: 1000
chaos is fun...…damental :)
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March 28, 2013, 03:06:53 PM |
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When you get time you can read this http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/0767923634Analysts’ Increasingly Optimistic ForecastsAccording to data from Zacks Investment Research about analysts’ recommendations on some 6,000 companies, only 1.0% of recommendations were “sells” in late 1999 (while 69.5% were “buys” and 29.9% were “holds”). This situation stands in striking contrast to that indicated by previous data. Ten years earlier, the fraction of sells, at 9.1%, was nine times higher.16 Analysts are now reluctant to recommend that investors sell anything. One reason often given for this reluctance is that a sell recommendation might incur the wrath of the company involved. Companies can retaliate by refusing to talk with analysts whom they view as submitting negative reports, excluding them from information sessions, and not offering them access to key executives as they prepare earnings forecasts. This situation represents a change in the fundamental culture of the investment industry, and in the tacit understanding that recommendations are as objective as the analyst can make them. Another reason that many analysts are reluctant to issue sell recommendations is that an increasing number of them are employed by firms that underwrite securities, and these firms do not want their analysts to do anything that might jeopardize this lucrative side of the business. Analysts affiliated with investment banks give significantly more favorable recommendations on firms for which their employer is the co- or lead underwriter than do unaffiliated analysts, even though their earnings forecasts are not usually stronger.17 Those who know the ropes realize that today’s hold recommendation is more like the sell recommendation of yesteryear. According to James Grant, a well-known market commentator, “Honesty was never a profit center on Wall Street, but the brokers used to keep up appearances. Now they have stopped pretending. More than ever, securities research, as it is called, is a branch of sales. Investor, beware.”18 Analysts’ recommendations have been transformed by something analogous to grade inflation in our schools: C used to be an average grade, yet now it is considered as bordering on failure. Many of us know that such inflation happens, and we try to correct for it in interpreting our children’s grades. Similarly, in the market we factor inflation into analysts’ recommendations. But not everyone is going to make adequate corrections for analysts’ newly hyperbolic language, and so the general effect of their changed standards will be to encourage the higher valuation of stocks. Moreover, it is not just a change in the units of measurement that infects analysts’ reports. Even their quantitative forecasts of earnings growth show an upward bias. According to a study by Steven Sharpe of the Federal Reserve Board, analysts’ expectations of growth in the S&P 500 earnings per share exceeded actual growth in sixteen of the eighteen years between 1979 and 1996. The average difference between the projected and actual growth rate of earnings was 9 percentage points. The analysts breezed through both the steep recession of 1980–81 and the recession of 1990–91 making forecasts of earnings growth in the 10% range.19 This bias in analysts’ forecasts is a characteristic of their one-year forecasts; they are usually more sober in predicting the next earnings announcement just before it is released. Analysts tend to comply with firms’ wishes to see positive earnings surprises each quarter, by issuing estimates that fall slightly short of the actual number. Firms may, just before making earnings announcements, talk with analysts whose forecasts are on the high side, urging them down, while neglecting to talk with analysts whose forecasts are on the low side, thereby creating a downward bias in the average earnings forecast without being blatantly untruthful.20 Casual evaluation of analysts’ forecasts by clients would most naturally take the form of comparing the latest earnings announcement with the latest forecast, and therefore analysts do not sharply overestimate earnings just before they are announced, which would be an obvious embarrassment to them. Analysts’ upward bias comes to the fore in predicting the vague, undifferentiated future, not immediate quarterly or yearly outcomes. And it is expectations for the vague, undifferentiated future, even far beyond one-year forecasts, that lie behind the high market valuations we see. Analysts have few worries about being uniformly optimistic regarding the distant future; they have concluded that such generalized optimism is simply good for business. Certainly they perceive that their fellow analysts are demonstrating such longrun optimism, and there is, after all, safety in numbers. Glibly and routinely offering “great-outlook-for-the-U.S.” patter to the investing public, they perhaps give little thought to its accuracy.
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Los desesperados publican que lo inventó el rey que rabió, porque todo son en el rabias y mas rabias, disgustos y mas disgustos, pezares y mas pezares; si el que compra algunas partidas vé que baxan, rabia de haver comprado; si suben, rabia de que no compró mas; si compra, suben, vende, gana y buelan aun á mas alto precio del que ha vendido; rabia de que vendió por menor precio: si no compra ni vende y ván subiendo, rabia de que haviendo tenido impulsos de comprar, no llegó á lograr los impulsos; si van baxando, rabia de que, haviendo tenido amagos de vender, no se resolvió á gozar los amagos; si le dan algun consejo y acierta, rabia de que no se lo dieron antes; si yerra, rabia de que se lo dieron; con que todo son inquietudes, todo arrepentimientos, tododelirios, luchando siempre lo insufrible con lo feliz, lo indomito con lo tranquilo y lo rabioso con lo deleytable.
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oakpacific
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March 28, 2013, 03:14:54 PM |
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Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.
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myself (OP)
Legendary
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Activity: 938
Merit: 1000
chaos is fun...…damental :)
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March 28, 2013, 03:24:14 PM |
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Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.
i do wait the same but so far mtgox and the lag, and api eat development time
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Los desesperados publican que lo inventó el rey que rabió, porque todo son en el rabias y mas rabias, disgustos y mas disgustos, pezares y mas pezares; si el que compra algunas partidas vé que baxan, rabia de haver comprado; si suben, rabia de que no compró mas; si compra, suben, vende, gana y buelan aun á mas alto precio del que ha vendido; rabia de que vendió por menor precio: si no compra ni vende y ván subiendo, rabia de que haviendo tenido impulsos de comprar, no llegó á lograr los impulsos; si van baxando, rabia de que, haviendo tenido amagos de vender, no se resolvió á gozar los amagos; si le dan algun consejo y acierta, rabia de que no se lo dieron antes; si yerra, rabia de que se lo dieron; con que todo son inquietudes, todo arrepentimientos, tododelirios, luchando siempre lo insufrible con lo feliz, lo indomito con lo tranquilo y lo rabioso con lo deleytable.
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oakpacific
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March 28, 2013, 03:26:40 PM |
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Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.
i do wait the same but so far mtgox and the lag, and api eat development time I understand, so I am waiting, patiently, and meanwhile trying to get this irrational exuberance to work for me.
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sunnankar
Legendary
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Activity: 1031
Merit: 1000
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March 28, 2013, 03:31:59 PM |
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Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.
What about MPEx? Have had tens of thousands of contracts in March.
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myself (OP)
Legendary
Offline
Activity: 938
Merit: 1000
chaos is fun...…damental :)
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March 28, 2013, 03:35:26 PM |
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Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.
What about MPEx? Have had tens of thousands of contracts in March. mpex dont pay in USD
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Los desesperados publican que lo inventó el rey que rabió, porque todo son en el rabias y mas rabias, disgustos y mas disgustos, pezares y mas pezares; si el que compra algunas partidas vé que baxan, rabia de haver comprado; si suben, rabia de que no compró mas; si compra, suben, vende, gana y buelan aun á mas alto precio del que ha vendido; rabia de que vendió por menor precio: si no compra ni vende y ván subiendo, rabia de que haviendo tenido impulsos de comprar, no llegó á lograr los impulsos; si van baxando, rabia de que, haviendo tenido amagos de vender, no se resolvió á gozar los amagos; si le dan algun consejo y acierta, rabia de que no se lo dieron antes; si yerra, rabia de que se lo dieron; con que todo son inquietudes, todo arrepentimientos, tododelirios, luchando siempre lo insufrible con lo feliz, lo indomito con lo tranquilo y lo rabioso con lo deleytable.
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oakpacific
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March 28, 2013, 03:41:47 PM |
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Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.
What about MPEx? Have had tens of thousands of contracts in March. I am fine with 30 BTC registration fee or operators being a jackass or incredibly complicated fine-print, but I am not fine if I have to swallow all of them at the same time.
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Crazy
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March 28, 2013, 03:43:09 PM |
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but I am not fine if I have to swallow all of them at the same time.
That's what she said. OOOH
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Elon Krusky
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thezerg
Legendary
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Activity: 1246
Merit: 1010
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March 28, 2013, 05:26:20 PM |
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On the other hand, at that time it was a well known and highly publicized fact that if you added up all the projections of all the companies in some market, you'd end up with a total market size many orders of magnitude higher then the most optimistic projection for that market. That is, looking at an entire market, 95% of the companies had to fail. But people still invested b/c they thought that THEIR company would be the one to succeed.
Today's equivalent would be if LiteCoin, NVC, terracoin, and 20 others ALL were trading near 10000 USD and the summation of all these coins' market caps was 10x the size of the projected sum of the online payment, gambling and PM valuations 5 years from now.
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