Bitcoin Forum
April 01, 2020, 02:50:32 AM *
News: The virus is now s̴͜͠p̶̰͝r̷̰̅e̶̦̽a̵̼͂d̴͉̑ỉ̷̖n̸̙̏g̷̬͝ even online; practice social distancing!
 
   Home   Help Search Login Register More  
Pages: [1]
  Print  
Author Topic: Irrational exuberance  (Read 949 times)
myself
Legendary
*
Offline Offline

Activity: 938
Merit: 1000


chaos is fun...…damental :)


View Profile
March 28, 2013, 03:06:53 PM
 #1

When you get time you can read this http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/0767923634

Analysts’ Increasingly Optimistic Forecasts
Code:
According 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.

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.
AWARD-WINNING
CRYPTO CASINO
ASKGAMBLERS
PLAYERS CHOICE 2019
PROUD
PARTNER OF
1500+
GAMES
2 MIN
CASH-OUTS
24/7
SUPPORT
100s OF
FREE SPINS
PLAY NOW
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1585709432
Hero Member
*
Offline Offline

Posts: 1585709432

View Profile Personal Message (Offline)

Ignore
1585709432
Reply with quote  #2

1585709432
Report to moderator
1585709432
Hero Member
*
Offline Offline

Posts: 1585709432

View Profile Personal Message (Offline)

Ignore
1585709432
Reply with quote  #2

1585709432
Report to moderator
oakpacific
Hero Member
*****
Offline Offline

Activity: 784
Merit: 1000


View Profile
March 28, 2013, 03:14:54 PM
 #2

Waiting for you guys to implement options trading so we can get rid of this irrational exuberance.

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
myself
Legendary
*
Offline Offline

Activity: 938
Merit: 1000


chaos is fun...…damental :)


View Profile
March 28, 2013, 03:24:14 PM
 #3

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  Cry

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.
oakpacific
Hero Member
*****
Offline Offline

Activity: 784
Merit: 1000


View Profile
March 28, 2013, 03:26:40 PM
 #4

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  Cry

I understand, so I am waiting, patiently, and meanwhile trying to get this irrational exuberance to work for me.

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
sunnankar
Legendary
*
Offline Offline

Activity: 1031
Merit: 1000



View Profile WWW
March 28, 2013, 03:31:59 PM
 #5

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.

myself
Legendary
*
Offline Offline

Activity: 938
Merit: 1000


chaos is fun...…damental :)


View Profile
March 28, 2013, 03:35:26 PM
 #6

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

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.
oakpacific
Hero Member
*****
Offline Offline

Activity: 784
Merit: 1000


View Profile
March 28, 2013, 03:41:47 PM
 #7

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.

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
Crazy
Full Member
***
Offline Offline

Activity: 168
Merit: 100


View Profile
March 28, 2013, 03:43:09 PM
 #8

but I am not fine if I have to swallow all of them at the same time.
That's what she said.

OOOH
thezerg
Legendary
*
Offline Offline

Activity: 1246
Merit: 1000


View Profile
March 28, 2013, 05:26:20 PM
 #9

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.

Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!