Does anyone know how to go about applying this idea to stock markets? How do you find advantages from you counter party knowledge?

If you are bullish, you should be able to come up with a good bear case. If you can't come up with a really good one, you shouldn't be handling your own money.

Government privatisations can look extremely good value and you can often understand why they are willing to take the bad side of the deal.

i agree in the most general sense... but i think it's really overthinking in the daily real world... different investor have different styles and different objectives.

i do think that "things that seem too good to be true" usually have a big negative issue attached to them (or they're just based on very aggressive forecasts)

along a similar vein, a friend of mine knew nothing about quant screeing of stocks but then really got into it.... he started screening for 20 different types of good info. he took a 12k stock universe down to 5-10 names but of course they all had problems that weren't easily quanitifiable in a database (accounting issues, litigation issues, going concern issues etc.).. instead he needed to take 5 attributes and combine them into a screen....

i don't really think that fidelity buying 2MM shares of IBM should really spend any time wondering why T Rowe Price and another big insitution are selling them a million shares each.....

similar to the trade market... cleveland/minnesota love for wiggins is probably good trade for both teams. cleveland wants to win right now. minnesota builds for a future and got rid of a player who asked to be traded... in theory there didn't have to be winner/loser in that trade.

sorry that rambled but i hope it made general point.

agree but there's always a good case for a bear market. maybe that's your point though.

Not just "market." Any investment at all. If you think that VZ is underpriced and cannot tell why, you ought not be buying it.

What if you're a genius capable of impeccably empathizing with every position and arguing it's merits both bearish and bullish to the death? The only winning move becomes not to play.

Then you aren't a genius. Complexity of thought is not the same thing as paralysis.

The problem with this theory is that often times the people who have the other side of your trade are idiots. Believe it or not, the world is full of them. Since robots haven't driven the value of unintelligent labor to zero yet and the inheritance tax is < 100% said idiots still sometimes end up with meaningful amounts of money. They rarely keep it, but in the process of separating them from said money you're just wasting neurons trying to figure out why a given idiot is doing what he's doing.

It's just like cards - you'll never really be able to explain why your opponents do the things they do at the table.

Good posts so far, thanks

Every time I think I have a grasp on what I "should" do I look up counter arguments and then. . .

This has been my reality minus the genius part (as has been noted)

Like the song says, choosing not to decide is still a choice tho and I don't think sitting on cash is a good idea. I'm just loading up on global index etfs right now but feel like an idiot buying at a peak

There is nothing wrong with sitting on cash. Some of the world's best investors sit on cash when there's nothing else to do but read.

Read up on value averaging. Then do value averaging.

Very few if any sit on cash. Warren Buffett made his fortune by being 99% in equities at all times (and charging obscene amounts of money for his investment advice). To sit in cash is saying you accept -6% real return as a good investment.

As for the thread, every stock is very similar everyone thinks they are getting the best of it. But compared to cash if you invested $1 in 1802 you would have $755,000 in real return in 2006 or $0.06 in real return if you held $.

Today it might be better not even to have any cash or investments, but to live on Obamaacre, SSDI, welfare, and dollar loans. As Joe Biden said I own no stocks, I have the ability to tax people that own stocks and work. So a government union job might be the way to go.

My god. The things you say sometimes really do make for a great laugh. Thanks steelhouse.

I'm trying to identify investment opportunities related to supply and demand. Ideally I'd like to buy dips caused by investors needing to sell for reasons unrelated to company performance. I've been trying to identify these situations for a while. The few I've come up with may b obvious.

many investors are retiring and need to sell shares
insiders and angel/vc investors are exiting following a lockup period
Credit dries up and speculators exit
Misinformation and sensationalism (see news)
Foreign withdrawal for fear of asset freeze (war, sanctions etc)

What else am I missing?

[i didn't include competition for capital like rising fed rates, vc/private cycles, consumption, because they seem more complex (but I did include retiree draw down). I'm not sure how to interpret these factors.]

These three videos are all you need. Any other theory is strictly speculation and gambling. If people didn't have to stare at stock prices all day long they would think about investing in a totally different way. You are buying a piece of a business....period.


Great 7 minute clip

https://www.youtube.com/watch?v=Z4gl...-XkFhHHTaEJ-xz



First 1.25 of this 3 minute clip.

https://www.youtube.com/watch?v=yaXmmaEs-hU



One minute clip

https://www.youtube.com/watch?v=4f0c...aEJ-xz&index=4

Seems like a legit strat for a self-owned insurance company. Why pay out claims when you can tell your customers to FOAD instead, and then plunder your own company by charging obscene amount of money for managing the premiums.

That works.

I was about to say, that first paragraph is how I feel when playing cards nowadays.

******s gonna ******. Button clickers gonna click.

There was a guy who would lay 2-1 on a coin flip. 70 IQs would know its even money so I passed. Phil Helmuth once bet that if he dealt out AK offsuit vs AK suted the former would win more often. Those who bet against him violated neither The FTOI nor the spawn dart- Rita Kazak lemma.

With the AKs it's sort of self explanatory why Phil was doing what he was doing. He was wrong, but the "logic" is easy to follow.

I've made a good bit of money in the markets, and there's only one class of trades where I think I know why my counter parties took the positions they did. The rest of the time I've thought (and in some cases could prove) they were making a bad bet, but had only foggy notions as to why.

Even foggy notions will often be enough to protect you from the ringers. But the less foggy the better.