Ask me anything about finance/investing - Page 5

And if the currency of a top20 gdp country is overvalued or undervalued by more than 30% of its 10y+ historical value it still doesn't mean a thing ? still 50/50 ?

Have you ever been investing on your own ?

On January 06 2010 20:16 Qyvs! wrote: And if the currency of a top20 gdp country is overvalued or undervalued by more than 30% of its 10y+ historical value it still doesn't mean a thing ? still 50/50 ? Have you ever been investing on your own ?

Do remember the dynamic external situation that was driving the polish economy/currency in the time period mentioned? Again, given the information known at the time of the trades I don't think anyone here could reasonably expect to beat the market. You're welcome to disagree with me.

Yes I used to invest on my own. Ethics restricts it now because I don't want to create a conflict of interests with the fund's investors.

Given the information known you don't expect anyone to beat the market @ that time ?
I've been personally investing for more than 7 years now stocks, bonds, currencies, real-estate and that was the best opportunity to invest money during that period of 7 years. I wish I had so much confidence as you do.

On January 06 2010 20:25 Sicks Macks wrote: I don't think anyone here could reasonably expect to beat the market.

is subtly (but significantly) different from:

On January 06 2010 20:43 Qyvs! wrote: Given the information known you don't expect anyone to beat the market @ that time ?

rephrased, it's not that I don't expect strategies to emerge that do beat the market, but given that you couldn't reasonably differentiate said strategies at the time of investment, it's essentially random.

How do you like finance?

I have my BBA and am going to start my CFA later this year. I'm looking at the sort of think your doing, I find it very interesting.

Any advise or info you think would be useful for me starting out in the industry?

"2000s was a decade from hell."
"No 2000s was a decade from sin, this decade is the decade from hell"
LOL

No wonder the crisis was born in the u.s
You're talking like you have 20years+ experience in the industry, while you received degree in political science and are 24 y/o with little experience =/ you're getting brainwashed dude.

Keyensian Predicts Soviets Economic Powerhouse:

Paul Samuelson is a Keyensian hero. MR had a very interesting write up on his old predictions. A brief wiki:

Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist. He was the first American to win the Nobel Prize in Economics. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in economic theory."1] Economic historian Randall E. Parker calls him the "Father of Modern Economics",[2] and The New York Times considered him to be the "foremost academic economist of the 20th century."3]

He was author of the largest-selling economics textbook of all time: Economics: An Introductory Analysis, first published in 1948. It was the first such book to explain the principles of Keynesian economics and how to think about economics, and is now in its 19th edition, having sold nearly 4 million copies in 40 languages. James Poterba, former head of MIT's Department of Economics, noted that by his book, Samuelson "leaves an immense legacy, as a researcher and a teacher, as one of the giants on whose shoulders every contemporary economist stands."1] In 1996 he was awarded the National Medal of Science, considered America's top science honor, where President Bill Clinton commended Samuelson for his "fundamental contributions to economic science" for over 60 years.[1]

He entered the University of Chicago at age 16, during the depths of the Great Depression, and received his PhD in economics from Harvard. After graduating, he became an assistant professor of economics at Massachusetts Institute of Technology (MIT) when he was 25 years of age and a full professor at age 32. In 1966, he was named Institute Professor, MIT's highest faculty honor.[1] He spent his career at MIT where he was instrumental in turning its Department of Economics into a world-renowned institution by attracting other noted economists to join the faculty, including Robert M. Solow, Paul Krugman, Franco Modigliani, Robert C. Merton and Joseph E. Stiglitz, all of whom went on to win Nobel Prizes.

He served as an advisor to Presidents John F. Kennedy and Lyndon B. Johnson, and was a consultant to the United States Treasury, the Bureau of the Budget and the President's Council of Economic Advisers. Samuelson wrote a weekly column for Newsweek magazine along with fellow Chicago School economist Milton Friedman, where they represented opposing sides: Samuelson took the liberal, Keynesian perspective, and Friedman represented the conservative, monetarist perspective.[4] Samuelson died on December 13, 2009, at the age of 94.

Now on to the post:

http://www.marginalrevolution.com/

Soviet Growth & American Textbooks
Alex Tabarrok

In the 1961 edition of his famous textbook of economic principles, Paul Samuelson wrote that GNP in the Soviet Union was about half that in the United States but the Soviet Union was growing faster. As a result, one could comfortably forecast that Soviet GNP would exceed that of the United States by as early as 1984 or perhaps by as late as 1997 and in any event Soviet GNP would greatly catch-up to U.S. GNP. A poor forecast--but it gets worse because in subsequent editions Samuelson presented the same analysis again and again except the overtaking time was always pushed further into the future so by 1980 the dates were 2002 to 2012. In subsequent editions,



Samuelson provided no acknowledgment of his past failure to predict and little commentary beyond remarks about "bad weather" in the Soviet Union (see Levy and Peart for more details).

Among libertarians, this story has long been the subject of much informal amusement. But more recently my colleague David Levy and co-author Sandra Peart have discovered that the story is much more interesting and important than many people, including myself, had ever realized.

First, an even more off-course analysis can also be found in another mega-selling textbook, McConnell's Economics (still a huge seller today). Like Samuelson, McConnell estimated Soviet GNP as half that of the United States in 1963 but he showed that the Soviets were investing a much larger share of GNP and thus growing at rates "two to three times" higher than the U.S. Indeed, through at least ten (!) editions, the Soviets continued to grow faster than the U.S. and yet in McConnell's 1990 edition Soviet GNP was still half that of the United States!

A second case of being blinded by "liberal" ideology? If so, Levy and Peart throw another curve-ball because the very liberal even "leftist" texts of the time, notably those by Lorie Tarshis and Robert Heilbroner did not make the Samuelson-McConnell mistake.

Tarshis and Heilbroner were more liberal than Samuelson and McConnell but offered a more nuanced, descriptive and tentative account of the Soviet economy. Why? Levy and Peart argue that they were saved from error not by skepticism about the Soviet Union per se but rather by skepticism about the power of simple economic theories to fully describe the world in the absence of rich institutional detail.

To make their predictions, Samuelson and McConnell relied heavily on the production possibilities frontier (PPF), the idea that the fundamental tradeoff for any society was between "guns and butter." Thus, in the 1948 edition Samuelson wrote:

The Russians having no unemployment before the war, were already on their Production-possibilities curve. They had no choice but to substitute war goods for civilian production-with consequent privation.

Note that Samuelson assumes all countries and economic systems are efficient (the Russians are "on" the curve) only the choice of guns versus butter differs. When the war ended, the fundamental tradeoff became one between investment and consumption and since the Soviets invested a greater share of GNP they would naturally consume less but grow faster. Moreover, since the Soviet's had solved the unemployment problem they were, if anything, more efficient than the U.S. (here we see the Keynesian influence).

Levy and Peart conclude that although ideology may have played a role what arguably made a bigger difference was the blindness imposed by chosen tools. As they write:

We are all constrained by means of models: we gain insight in one dimension by blinding ourselves to events in other dimensions. Competition among models may be necessary to insure that the benefits of the models exceeds their cost.

(Applications to the financial crisis are apposite.)

Addendum: Bryan Caplan also comments. As Bryan notes, a very good economist can use PPFs and still get the story right.

I have some gold lying around, should I sell or hold on to it a bit longer ?
Visited couple of gold forums and most expect it to rise even more, but they are goldnuts anyway so I dunno ...

On January 07 2010 01:52 brandlor wrote: How do you like finance? I have my BBA and am going to start my CFA later this year. I'm looking at the sort of think your doing, I find it very interesting. Any advise or info you think would be useful for me starting out in the industry?

I love it. I've a already given advice to a few people ITT, and without knowing more about you or what you're applying for I can't really add much. Best of luck.

On January 07 2010 03:47 Qyvs! wrote: No wonder the crisis was born in the u.s You're talking like you have 20years+ experience in the industry, while you received degree in political science and are 24 y/o with little experience =/ you're getting brainwashed dude.

haha, ok.

On January 07 2010 05:40 anarki wrote: I have some gold lying around, should I sell or hold on to it a bit longer ? Visited couple of gold forums and most expect it to rise even more, but they are goldnuts anyway so I dunno ...

I inherently don't like investing in non-productive assets that don't give income. So ummm, I don't like gold. I think there are more productive inflation hedges, and it's an inherently speculative market.

On January 07 2010 08:56 Sicks Macks wrote: Show nested quote + On January 07 2010 01:52 brandlor wrote: How do you like finance? I have my BBA and am going to start my CFA later this year. I'm looking at the sort of think your doing, I find it very interesting. Any advise or info you think would be useful for me starting out in the industry? I love it. I've a already given advice to a few people ITT, and without knowing more about you or what you're applying for I can't really add much. Best of luck.

I kinda figured that was the case but I was rushed for time and didn't get a chance to get through the whole thread. I thought it was a good opportunity to ask some questions about that sort of industry.

Ill get through the whole thread and might re-post another question.

Thanks

"If I give you $10k, can you double it for me??"

On January 07 2010 12:20 Oxy wrote: "If I give you $10k, can you double it for me??"

LOL'ed IRL

On January 07 2010 03:47 Qyvs! wrote: No wonder the crisis was born in the u.s You're talking like you have 20years+ experience in the industry, while you received degree in political science and are 24 y/o with little experience =/ you're getting brainwashed dude.

What the hell is wrong with you? I sincerely hope that you get banned for that comment.

Sicks Macks has gone out of his way to provide content of value and he's been extremely mannered in all of his posts, not to mention that everything he has said has been 100% spot on IMO. And just because you disagree with him you make personal and national insults?

-I'm currently on my first year on top3 business school of my country, i'm 19 and don't need to rely on myself for next 4 years; how would you recomend (is there any difference?) a foreigner (I live in Chile) to start learning about finance and business?. I consider myself quite knowledgeable at economics but clueless in regards to finance stuff.

On January 07 2010 13:38 TenBagger wrote: Show nested quote + On January 07 2010 03:47 Qyvs! wrote: No wonder the crisis was born in the u.s You're talking like you have 20years+ experience in the industry, while you received degree in political science and are 24 y/o with little experience =/ you're getting brainwashed dude. What the hell is wrong with you? I sincerely hope that you get banned for that comment. Sicks Macks has gone out of his way to provide content of value and he's been extremely mannered in all of his posts, not to mention that everything he has said has been 100% spot on IMO. And just because you disagree with him you make personal and national insults?

much appreciated.

On January 07 2010 13:40 GoTuNk wrote: -I'm currently on my first year on top3 business school of my country, i'm 19 and don't need to rely on myself for next 4 years; how would you recomend (is there any difference?) a foreigner (I live in Chile) to start learning about finance and business?. I consider myself quite knowledgeable at economics but clueless in regards to finance stuff.

hmmm, I actually don't know Chile that well, but an internship during the summers with your country's premier bank or asset managers never hurts. As for international resources, the CFA program is administered (and respected) globally and has a pretty great curriculum. I don't think they actually give you a charter until you get a qualifying job in financial analysis (may be wrong on that), but the curriculum itself is a great intro into the financial analysis. That said, if you're already in business school you'll learn plenty about finance if you take finance courses.

Ok, read the thread and your right, answered lots of useful questions.

Since I don't come from an Ivey league school although I come from one of the top Canadian business schools I will have to take the long way around. i currently work for the Canadian devisions of one the world largest banks so I can work my way up that way.

Like you said eirlier I can go through IB to get to PE or HF and such. What do you find is the usual age and exp level of these people?

Should I be looking 3-5 years to climb the latter ( i guess it depends how high were talking) or 10+? Or is it more of a 'Depends how smart you are and who you impress' answer?

(Sorry for any spelling mistakes. Our browsers are glichy and IT is trying to fix it)