patrick.net
An Antidote to Corporate Media
1,352,600 comments by 15,728 users - Ceffer, Misc, Patrick online now
A 200+ market cap Puts Alibaba at a similiar value as Exxon. That ain't right
2014 Sep 22, 5:04am 4,305 views 33 comments
Comments 1 - 33 of 33 Search these comments
indigenous
2014 Sep 22, 5:47am
Exactly, as demonstrated by Alibaba it is not the price.
It is subjective otherwise there would be no trade.
It is what people will pay money for.
E.G. it is interesting how demographics play a role in value and at what age people feel something is valuable. A young man couldn't give a rat's ass about health insurance an older man thinks about it a lot.
Peter P
2014 Sep 22, 5:50am
E.G. it is interesting how demographics play a role in value and at what age people feel something is valuable. A young man couldn't give a rat's ass about health insurance an older man thinks about it a lot.
Exactly. Most people don't understand the fact that trading is NOT a game about business or finance. It is a game about people.
indigenous
2014 Sep 22, 5:57am
Oh so it is not about graph patterns?
Reality is nothing more than what is agreed upon, what people will/do act upon.
Which is why it changes so much.
Which I suspect why something like the Elliot wave is dubious?
Peter P
2014 Sep 22, 6:02am
Oh so it is not about graph patterns?
Such patterns can often lead to the wrong conclusions. Things like support and resistance are more valid because they deal with the emotions of winners and losers.
Most useful techniques are used to evaluate the current state of the market (e.g. order flow, etc), not to *predict* where it is going in 6 months.
indigenous
2014 Sep 22, 6:06am
I seems to me that this sort of thing digresses from the core value.
indigenous
2014 Sep 22, 6:24am
Because it seems too much based on a model it ignores the dynamics behind a fat tail or a black swan.
Peter P
2014 Sep 22, 6:29am
Because it seems too much based on a model it ignores the dynamics behind a fat tail or a black swan.
You can gain some insight to the fat tails in the options implied volatility surface.
For example, individual stocks have fat tails on both upside and downside. Stock indices mostly have downside fat tails.
While the precise dynamic of black swan events cannot be predicted, you can sense which side of the fence it lies.
Order flow and price actions are as far away from a model as they can. It only tells you where the potential order imbalance can be.
indigenous
2014 Sep 22, 6:48am
Order flow and price actions are as far away from a model as they can.
But it is the price of the stock which is not the value in the market place (main street).
Peter P
2014 Sep 22, 6:50am
Order flow and price actions are as far away from a model as they can.
But it is the price of the stock which is not the value in the market place (main street).
The price of the stock is "supposedly" a reflection of present and future "value" of the company.
In the short term, it is all psychology, which makes it more interesting.
indigenous
2014 Sep 22, 6:58am
The price of the stock is "supposedly" a reflection of present and future "value" of the company.
In the short term, it is all psychology, which makes it more interesting.
E.G. I was looking at buying a call on Yahoo as a proxy on Alibaba. I decided to wait and see how Yahoo did Fri am. Alibaba shot up, and the insiders or smart ones dumped Yahoo and it went down. The real value of Alibaba as illustrated by Stockman is grossly overvalued. Yahoo actually has value only because of it's stock in Alibaba.
Peter P
2014 Sep 22, 7:10am
E.G. I was looking at buying a call on Yahoo as a proxy on Alibaba. I decided to wait and see how Yahoo did Fri am. Alibaba shot up, and the insiders or smart ones dumped Yahoo and it went down. The real value of Alibaba as illustrated by Stockman is grossly overvalued. Yahoo actually has value only because of it's stock in Alibaba.
In the short run, relationships like this do not materialize.
Besides, when too many retail investors know the trick it has become the trick of the other side.
indigenous
2014 Sep 22, 7:15am
Besides, when too many retail investors know the trick it has become the trick of the other side.
Closer to the truth me thinks, which I think is all the more reason to study value. The stock market is at a record high it has no where to go but down. Does Soros have the right idea or is it as some say a hedge? I think the prior.
Peter P
2014 Sep 22, 7:20am
Closer to the truth me thinks, which I think is all the more reason to study value. The stock market is at a record high it has no where to go but down. Does Soros have the right idea or is it as some say a hedge? I think the prior.
Not necessarily.
Many, if not most, successful traders have fewer than 40% winning trades. They are chasing the fat tails, which do not come often. But when they are right, the few winning trades will more than pay for all the losing trades.
indigenous
2014 Sep 22, 7:24am
Many, if not most, successful traders have fewer than 40% winning trades. They are chasing the fat tails, which do not come often. But when they are right, the few winning trades will more than pay for all the losing trades.
Interesting, is that more successful than value investing?
Peter P
2014 Sep 22, 7:29am
Many, if not most, successful traders have fewer than 40% winning trades. They are chasing the fat tails, which do not come often. But when they are right, the few winning trades will more than pay for all the losing trades.
Interesting, is that more successful than value investing?
If you compare the sheer number of highly successful speculators ($500M+ NW) against that one Oracle of Omaha...
indigenous
2014 Sep 22, 7:31am
If you compare the sheer number of highly successful speculators ($500M+ NW) against that one Oracle of Omaha...
So there is something to making a living off of options trading?
Peter P
2014 Sep 22, 7:34am
If you compare the sheer number of highly successful speculators ($500M+ NW) against that one Oracle of Omaha...
So there is something to making a living off of options trading?
Still, the odds are not very good. Unless you are really passionate about trading, and are willing to lose money for months or years, there are probably easier options, no pun intended.
indigenous
2014 Sep 22, 7:46am
Still, the odds are not very good. Unless you are really passionate about trading, and are willing to lose money for months or years, there are probably easier options, no pun intende
Thus the value trading.
Peter P
2014 Sep 22, 7:52am
Still, the odds are not very good. Unless you are really passionate about trading, and are willing to lose money for months or years, there are probably easier options, no pun intende
Thus the value trading.
That has no chance of making a living (other than with OPM) at all.
Peter P
2014 Sep 22, 7:59am
That has no chance of making a living (other than with OPM) at all.
How so?
Time-frame and leverage problem.
You can *grow* your money over longer periods of time with value investing though.
Peter P
2014 Sep 22, 9:35am
What is your trading strategy?
What is your trading strategy?
I am still regrouping after a period of hiatus.
Heraclitusstudent
2014 Sep 22, 10:50am
200+ market cap Puts Alibaba at a similiar value as Exxon. That ain't right
Short it, you genius...
indigenous
2014 Sep 22, 11:04am
Short it, you genius...
The question would be whose central bank can last longer, but maybe a put on an index fund is not a bad idea. Yea Alibaba will probably be around for a while, do you think they are a 200+ billion cap?
Heraclitusstudent
2014 Sep 22, 11:52am
The question would be whose central bank can last longer, but maybe a put on an index fund is not a bad idea. Yea Alibaba will probably be around for a while, do you think they are a 200+ billion cap?
I mean if you really believe BABA is not worth its price, then by all means, put your money where your mouth is and sell a thousand shares short and brag about it here.
Otherwise I say talk is cheap.
indigenous
2014 Sep 22, 11:56am
Otherwise I say talk is cheap.
The charade could keep up for sometime, that doesn't mean they are not overpriced. It is a statement on QE, not that you bothered to read the article.
Stockman put this in perspective.
"This is just another version of Japan Inc.—a state-built house of debt, export mercantilism and fabulous over-investment that eventually came to a dead stop 20 years ago. And Japan at least had some rudiments of true capitalism such as law, contracts and some vestiges of market discipline."
"Folks, that is how a backward economy which was until recently run according to the precepts of Mao’s little red book managed to balloon its total credit outstanding from $1 trillion to $25 trillion in just 14 years after the turn of the century. That is how an orgy of construction resulted in more cement production in China during 2012-2013 than in the USA during the entire 20th century—-a time which witnessed the building of the New York subway, the Hoover Dam, the vast expanse of Army Corps of Engineers waterways, the Interstate Highway system, the sprawl of American suburbia and its 13 billion square feet of mall space, among countless others"
"It is also how China ended up with upwards of 70 million empty apartments, thousands of miles of bridges and roads that are virtually unused, notorious and proliferating ghost cities, and thousands of miles of hastily built high speed railways that are unsafe and mired in corruption. It is also the well-spring of a precarious system of local government finance that is based on little more than monumental speculation and inflation of the price of the lands which were seized by the state 65 years ago. And the list goes on and on."
http://davidstockmanscontracorner.com/they-do-ring-a-bell-at-the-top-alibaba-proves-wall-street-is-off-it-rocker/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+PM+Monday