On Smoking Cannabis, Cavemen, Giants and Predicting Stock Markets Written By: Eben Esterhuizen 2008-01-30 20:48:51
Once upon a time, in a land far far away, lived a hairy caveman. After a long hard day of hunting mammoths and avoiding saber-tooth tigers, he scratched his nose and it started raining. He didn't think much of it at first and ran back to his cave into the arms of his loving cavewoman. The next day he scratched his nose again and voila! It rained again. The caveman came to an important conclusion: "if" he scratches his nose, "then" it rains. Sometimes it worked, sometimes it didn't, but at least he had a way to cope with the randomness of nature and had assurance that he had some control over the arbitrary events of his life. He spent the rest of his days devising an intricate system to optimize the results of his nose-scratching activity. It was the birth of the "science" of prediction.
Post-Vacation Blues and the Current Market Written By: Eben Esterhuizen 2008-07-15 02:42:23 Photo: Petrick2008, Creative Commons, Flickr
Since coming back from my holiday last week I've made a point of walking past the New York Stock Exchange on my way to work. I sat on a bench and looked at the traders as they exited the building after the close, and every now and again I eavesdropped on their conversations.
Something is wrong.
I keep telling myself that it's all going to be OK, I keep telling myself that things are never as bad as the fear mongers proclaim, but I can't shake off the feeling that the situation is about to take a turn for the worse...
I still think the fact that John Thain got to look at the firm's books and still wanted the job means that there is probably no huge surprise write down coming. Remember, this guy grew up at Goldman as a mortgage trader and knows all the trader tricks for hiding losses in a mortgage/CDO trading book.
However the market is still pricing in more negative surprises, so that means MER cheap here. I've decided it will likely get cheaper so I'll be greedy. After putting my toe in the water and buying the first part of building a position on his announcement I've decided to hold off on adding more.
