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Denbury Resources Inc. Message Board

  • harehau harehau Apr 18, 2013 1:31 PM Flag

    rinehart and rogoff

    Headline below. Supposedly, social media is all a twitter, or maybe it's tweeter. Another example of the energy we expend on stuff that is theory to begin with. Your 15 minutes of fame finding an excel error. Guess it's a line in the obituary. We need more people building things that can be sold to the emerging world. We need to get back to the basics. Find a company that pays a 4% div and can grow at 8%+ for the next 10 years and stick with it.

    Did Harvard Economists Make an Excel Error that Led to Economic Austerity?

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    • Many investors have sat out the entire stock market boom since 2009 because of their terror of another black swan event -- another crash, Weimar-style inflation or something else. I must confess I have at times been surprised by the sheer scale of the rally, which probably owes more to the Fed than anything else, but there is a gulf between being sensibly cautious about valuations and being blankly terrified that the markets are going to blow up.
      You can see the black swan fallacy most mathematically in the market for financial derivatives. Logically, if you think the world underestimates the effect and likelihood of big outlying events -- like crashes, or terrorist attacks -- you would buy lots of options on stocks and other assets. These are leveraged bets on big events. Every black swan should make options investors big money. The reality, however, is that most of the time the people who buy these options lose out. Outliers happen less often than they expect. The real money is to be made selling options to the "black swan" crowd. Indeed there is a small subset of mutual funds, such as Natixis's Gateway fund, which have made solid returns over many decades by doing just that.
      The cult of the black swan is getting worse. I've been ruminating all week about the role played by our
      increasingly cynical and stupid media world, from 24/7 cable to Facebook. They sell false drama: Everything now is "breaking news," even when it isn't breaking, or news at all. They cynically play on our heartstrings and manipulate our emotions (one news outlet, no joke, put out a tweet entitled "Your Daily Cry.") A commentator in a major newspaper declared that the bombers were "messing with the wrong city." A for-profit sports franchise owned by a Floridian hedge fund billionaire, which markets to Bostonians, urged us all to "'B' Strong. Bah.
      When it comes to finance and markets, investors need to pay less attention to black swans and more
      attention to the normal white ones. Over time,

 
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