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  • The price of the machine would be a term of a supply and a demand process. Unless something really posessed you to buy something worth 3k for 5k ;)

    If I buy it for $5,000, the chances are you will buy it for $5,500 or $6,000.
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

    Comment


    • Originally posted by Doktor View Post
      The price of the machine would be a term of a supply and a demand process. Unless something really posessed you to buy something worth 3k for 5k ;)

      If I buy it for $5,000, the chances are you will buy it for $5,500 or $6,000.
      It is also a capital good which makes other goods so you would have to consider returns available in the market and what you could get with the machine, in an environment such as today some might be tempted to finance their equipment to expand. When rates go up that present value of equipment implodes and other participants in their industry can out-compete them by cutting margins and buying equipment at new cheaper prices.
      Originally from Sochi, Russia.

      Comment


      • cyppok,

        Or exit the market altogether and simply wait. Notice the decline in money velocity. You could also take that cash and buy commodities or invest in processing/power facilities that are not very leverage-able. Ergo think Uranium processing or Nuclear power plants. {country level, billions of dollars}
        exiting the market is for the small players, people like you and me.

        big players work on volume, as they turn around millions of shares and like the liquidity that the market provides.

        note that for some countries, their big players think differently. ie the chinese are on a commodity/real estate buying binge right now, somewhat akin to the japanese in the 90s, because they're afraid of their rather more rickety market-- plus there's a special chinese obsession with owning land.
        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

        Comment


        • So let me get this right... 'Normal people' shouldn't be in the markets - leave that for the 'too big to fail' banks and pension funds that we subsidise. Instead we should be shut up in 'camps' where we can work for food? Perhaps you would volunteer to go to such a 'camp' but suppose I didn't wish to go? I assume that trading in such camps would be forbidden or we would be 're-educated' perhaps to understand we are but mere serfs. Forgive me I find it ironic that a so called 'liberal' can advocate a form of fascist society.

          Certainly it is true that 'big players' can afford to trade more by volume than say I alone can. Certainly it's true that they manipulate the markets for their own interests (like the gold slap down because they couldn't fulfill their orders) but isn't that why were supposed to have some market regulation and why nobody, individual or corporation, should be 'too big to fail' - and jail? The current 'crony capitalism' is undermining the basis of democracy itself.

          Comment


          • Originally posted by snapper View Post
            So let me get this right... 'Normal people' shouldn't be in the markets - leave that for the 'too big to fail' banks and pension funds that we subsidise. Instead we should be shut up in 'camps' where we can work for food? Perhaps you would volunteer to go to such a 'camp' but suppose I didn't wish to go? I assume that trading in such camps would be forbidden or we would be 're-educated' perhaps to understand we are but mere serfs. Forgive me I find it ironic that a so called 'liberal' can advocate a form of fascist society.
            He didn't say you can't play, he said you can't afford to play for a long period of time. Unless you know exactly what those big players will do next.

            Certainly it is true that 'big players' can afford to trade more by volume than say I alone can. Certainly it's true that they manipulate the markets for their own interests (like the gold slap down because they couldn't fulfill their orders) but isn't that why were supposed to have some market regulation and why nobody, individual or corporation, should be 'too big to fail' - and jail? The current 'crony capitalism' is undermining the basis of democracy itself.
            Too big to fail buy their get out of the jail cards. Vote for a person who wont accept it. Is there one on the ballot?
            No such thing as a good tax - Churchill

            To make mistakes is human. To blame someone else for your mistake, is strategic.

            Comment


            • Originally posted by snapper View Post
              So let me get this right... 'Normal people' shouldn't be in the markets - leave that for the 'too big to fail' banks and pension funds that we subsidise. Instead we should be shut up in 'camps' where we can work for food? Perhaps you would volunteer to go to such a 'camp' but suppose I didn't wish to go? I assume that trading in such camps would be forbidden or we would be 're-educated' perhaps to understand we are but mere serfs. Forgive me I find it ironic that a so called 'liberal' can advocate a form of fascist society.
              Oh come on, you know he's not saying anything of the sort.
              In the realm of spirit, seek clarity; in the material world, seek utility.

              Leibniz

              Comment


              • Originally posted by astralis View Post
                a new CCC would have been a great idea, IMO, but it's something ideologues on both sides hate.
                http://www.worldaffairsboard.com/ame...ass-jaw-2.html

                from above: "exiting the market is for the small players, people like you and me."

                I am not a 'big player' but I do well enough and add between 20-25% value per year to my portfolio. I pay tax on my profits and employ a professional advisor and an accountant. Is this a bad thing? Sure I take losses sometimes - you ride horses and expect to be thrown occasionally - but I accept that risk and try to learn from it and hedge better. I see no reason why anyone with even $5000 to invest shouldn't be able to do so without the 'too big to fails' (that failed) manipulating the markets for their own ends.

                Comment


                • Astralis when I talk about exiting a market its not just the stock, bond, etc. markets I talk about.

                  I seriously did look at chocolate tamperers and candy machines the prices for lower volume starter up aspects are high not just by design but because there is financing available. If rates go up that financing does not just go down but prices and those whom bought before get hit.

                  Markets for machine shop tools and other aspects get skewed a lot by financing especially with passage of time and anchoring psychology of temporary foreverness. Ergo people assume things stay as they are in a low rate environment, and when it changes they will assume the change into forever as well its part of our adapting mechanism.

                  Liquidity and staying power gives you advantage to ride out the cycle, there are turnaround advantages and niches for small players. But if you keep low rates for long periods of time you also lower variance of small participants to angle their entries and competitive entry. The problem with this is that when adjustment does happen the discrepency is longer and wider both in time and change that it takes to make up.

                  Imagine food processing companies being tied down by their banks and credit lines to de-leverage all at the same time. They all would lower volume to loose less money and push prices up as if not just by design but credit requirements. New entrants are moated out by FDA regulations and equipment constraints both size and capital requirements. Both the consumer and the firms in question will suffer more for a longer period of time because of excessive credit extension to build overcapacity during the good times. What is interesting is any new entrant would be less leveraged than older firms and have more flexibility on both pricing, margins, equipment, location, and supplier/retailer relationships.
                  Originally from Sochi, Russia.

                  Comment


                  • Originally posted by snapper View Post
                    So let me get this right... 'Normal people' shouldn't be in the markets - leave that for the 'too big to fail' banks and pension funds that we subsidise. Instead we should be shut up in 'camps' where we can work for food? Perhaps you would volunteer to go to such a 'camp' but suppose I didn't wish to go? I assume that trading in such camps would be forbidden or we would be 're-educated' perhaps to understand we are but mere serfs. Forgive me I find it ironic that a so called 'liberal' can advocate a form of fascist society.

                    Certainly it is true that 'big players' can afford to trade more by volume than say I alone can. Certainly it's true that they manipulate the markets for their own interests (like the gold slap down because they couldn't fulfill their orders) but isn't that why were supposed to have some market regulation and why nobody, individual or corporation, should be 'too big to fail' - and jail? The current 'crony capitalism' is undermining the basis of democracy itself.
                    For someone who throws hissy fits and makes all sorts of claims about name calling & ad hominems any time somebody dares to point out the gaping holes in your arguments you are quite the accomplished distorter & name caller. Time to get back in the game methinks.
                    sigpic

                    Win nervously lose tragically - Reds C C

                    Comment


                    • "In our view, QE was initially used to prevent a Great Depression, successfully in the US, but of late the impact of the policy is observed more in asset prices with less noted effect in economic data. Historically the Federal Reserve has been described as removing the punch bowl when tightening policy. We suggest that a more appropriate analogy, presently, would be that akin to methadone.

                      The economy and equity market became addicted to easy credit between 2003-07, the heroin, and when the shadow banking system and securitisation roundabout stalled, the economic patient couldn’t go ‘cold turkey’ and as such the central banks medics prescribed methadone in the form of QE.

                      Whilst it staves off the ill effects of withdrawal, the patient has become addicted to it, and we wonder whether the economy, or investment community, can face the return to a ‘normal’ environment, one without humbling trips to the pharmacy, to receive an injection of tax payer financed QE or economic-methadone."

                      Gerard Lane of Shore Capital.

                      Well we find out today is more 'methadone' will be dispensed.

                      Comment


                      • as snapper seems to have temporarily lost it, i'll address a few other folks in the time being.

                        doktor,

                        He didn't say you can't play, he said you can't afford to play for a long period of time.
                        this is precisely it. small players exit the market because they have very little margin for mistakes. if you have a $20K portfolio, a few bad stock picks or one rough period in the market, and your portfolio is down 10%...which will take a long time to recover, given how most people actually underperform the market. this is why we see swings in the market; panicking investors exiting the market or horde buying. this has become more true with the rise of electronic stock trading firms like Scottrade or Etrade, which caters to these small-time investors (which in the world of finance is pretty much anyone with less than 5-10 million).

                        if you have a $20 million or $200 million portfolio, you can diversify better plus you have a far larger margin for error.

                        by the way, note that most people can't even get a consistent 5% return-- and that includes professional market managers. -warren buffett-, pretty much the most famous stockpicker of them all, struggled to get a consistent 10-15% return. this is why i employ a dollar-cost averaging approach diversified across ETFs. you can beat the market occasionally; it approaches mathematical impossibility to beat it -consistently-.
                        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                        Comment


                        • Originally posted by snapper View Post
                          So let me get this right... 'Normal people' shouldn't be in the markets -
                          Well, you have to admit that folks not knowing what they are investing in, not understanding the market for what they invest in, and expecting willy-nilly profits to maintain unabated has caused a number of crashes, most recently the dot-com and housing bubbles, but going back the the Great Depression and the Tulip bubble centuries ago.

                          Comment


                          • Originally posted by astralis View Post
                            as snapper seems to have temporarily lost it, i'll address a few other folks in the time being.
                            Wasn't me that advocated the government open some form of work camps.


                            Originally posted by astralis View Post
                            this is precisely it. small players exit the market because they have very little margin for mistakes. if you have a $20K portfolio, a few bad stock picks or one rough period in the market, and your portfolio is down 10%...which will take a long time to recover, given how most people actually underperform the market. this is why we see swings in the market; panicking investors exiting the market or horde buying. this has become more true with the rise of electronic stock trading firms like Scottrade or Etrade, which caters to these small-time investors (which in the world of finance is pretty much anyone with less than 5-10 million).

                            if you have a $20 million or $200 million portfolio, you can diversify better plus you have a far larger margin for error.
                            In general I agree with 'strategy advice' as it were as to how you manage a massive portfolio compared to a small one. There are some things you miss though that can work to the advantage of the small trader. A person with a $200 million investment almost certainly has some fiduciary duty - the money he/she is investing belongs to other people. The main duty is not lose too much money that you can't recover it. Some people who manage this sort of money for example will not be allowed to invest in Government bonds that are not AAA rated so while most of it is parked safely so to speak they'll run around trying to find a better yield with a fraction. Similarly if you have $20m, even if it's ALL yours, you are not inclined to 'gamble' with much. Most will be placed as safely as you can, whether it bonds or companies in which you have done alot of research and trust the CEO. When you have less - and can afford to lose it - you can be more adventurous. If I have $20k I would be more likely to go 'all in' on a good short opportunity - like yesterdays US bonds. Maybe you leave $10k 'safe' and go for a $10k short yesterday... If you had the percentage of increase in the value of your investment would have risen more than the 'big players'. It didn't take a genius to work out that if Bernanke suggested 'tapering' may start soon that bonds would take a hammering.

                            Originally posted by astralis View Post
                            by the way, note that most people can't even get a consistent 5% return-- and that includes professional market managers. -warren buffett-, pretty much the most famous stockpicker of them all, struggled to get a consistent 10-15% return. this is why i employ a dollar-cost averaging approach diversified across ETFs. you can beat the market occasionally; it approaches mathematical impossibility to beat it -consistently-.
                            I did well last year due to two things mainly; gold and food futures which rose after a bad US harvest. It's quite likely I'll make a loss this year due to the fall of gold value despite continued high demand for physical. I think gold bottoms around $1,270, which is to say the excess paper GLD and SLV is lost and the paper has to start rising again as the premium for physical grows.

                            Anyway seems Lord Ben doesn't read WAB or if he does may ignore astralis' advice; he may start 'tapering' QE later this year.



                            Given that US employment is still around 4.5m lower than it was in 2008 and that QE was justified on the grounds of creating employment clearly his priorities have changed. Perhaps he is worried by the over extended equities bubble that his policies have created? Well he's going to pop that now perhaps. He's now also sitting himself on alot of bonds which have fallen in value - unless of course he was one the 'big players' shorting the bond markets yesterday but I presume that would be illegal right? There again the Fed doesn't really need money does it? It has a magic pc! Mortgage rates got higher and may continue to do so. Let's hope that those who bought in the last year have fixed rate mortgages but house buying will slow and property prices stop rising so fast. The Chairman was also asked if he was going to leave the job in January and declined to answer which in my book is a yes. Let someone else clear up his mess a la Greenspan.

                            Originally posted by Captain Worley View Post
                            Well, you have to admit that folks not knowing what they are investing in, not understanding the market for what they invest in, and expecting willy-nilly profits to maintain unabated has caused a number of crashes, most recently the dot-com and housing bubbles, but going back the the Great Depression and the Tulip bubble centuries ago.
                            Such people of course shouldn't bother getting involved. If you know absolutely nothing pay someone that does and start learning fast is my advice. If I want to fly an airplane to somewhere I don't just jump in and hope I make it where I want to go.

                            Nor am I disputing that bubbles can occur 'naturally' - without the influence of Central Banks. Where alot of people have false expectations bubbles occur - the South Seas Bubble etc. However when a delusional bubble bursts it is now common practice to use fiscal and monetary stimulus methods which mis-allocate further resources into another bubble. These fiscal stimulus resources are raised by tax or by borrowing which harms the economy long term as it means less resources can be allocated as the market dictates - that actually produce a profit. The monetary stimulus - as in the QE - devalue the currency and actually help only the banks who then lend it out leaving more people in more debt. For these reasons the 'Austrian School' argues for 'sound money' (some argue for a return to the gold standard) and the abolition of Central Banks. I certainly go with sound money and unless central banks stop enabling fiscal irresponsibility and stop debasing the currency then arguably they have to go.
                            Attached Files

                            Comment


                            • snapper,

                              Wasn't me that advocated the government open some form of work camps.
                              you need to learn what the CCC was before talking about work camps. saying that i advocate "work camps", IE, arbeitslager, is fairly offensive, because it infers that i'm some sort of nazi. most people don't take kindly to such a comparison.

                              if he does may ignore astralis' advice; he may start 'tapering' QE later this year.
                              it's no different from what he was saying earlier; extraordinary measures should come to an end when extraordinary circumstances have passed. there's a world of difference if unemployment is 7% and rising and if unemployment is 7% and falling.

                              i've debated with you over the rest (including the use of that particular employment graph), so no need for me to repeat myself here.
                              There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                              Comment


                              • I am aware of the CCC camps were - lots of planting trees etc - food for work in uniform. Don't prisons do much the same?

                                Well it is different. In 2008 US unemployment started off at 5.1%, now it's around 7.5% and wasn't it Bernanke who had the goal of a 6.5% rate as one of his stated aims for QE? Of course the other thing that QE was supposed to do and which you and DOR said was so necessary not so long ago was 'liquidity'... Well your liquidity is going down the plug hole. On May 2nd the yield was 1.63% and today it broke through the 2.4% barrier. The equities markets are getting slaughtered too yet not so long ago you were trying to tell me that the equities markets were a signal of 'recovery' and that the US bond market was safe. How do you expect property prices to fare? Still confident there? Maybe King Ben will reverse course but if not this correction is going to be alot harder than if he'd never started this madness.

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