The Exceptional Wealth Accumulation Ideas and Thinking Thread

doctorj · 10 July 2009

It seems there are a few consistent messages in this thread:
1/ Don't confuse the survivorship bias of others with a strategy or wisdom
2/ Building exceptional wealth is more often than not luck, keeping it and growing it steadily is skill

tech/a · 10 July 2009

doctorj said:
It seems there are a few consistent messages in this thread:
1/ Don't confuse the survivorship bias of others with a strategy or wisdom
2/ Building exceptional wealth is more often than not luck, keeping it and growing it steadily is skill

Your perception---one which fits well with you.

There are others.
People will take from the thread that which they find useful in their own situation. Most will not benifit at all.

moreld · 10 July 2009

wayneL said:
No comments on my post #245?
"Sell to the classes, eat with the masses - Sell to the masses, eat with the classes."
OK we can all immediately think of examples where the opposite is true. But as a general principle... discuss?

wayneL - I really liked your friends strategy, thanks for sharing. In general I think that type of creative thinking is what delivers exceptional wealth.

Isn't your above quote simply "buy low - sell high"? The idea being the masses are always late to the party and end up holding the bursting bubble or at best get a very low return. While the classes (smart money) bought early, so if you sold to them you where selling low.

Maybe the quote it is a prompt to be a contrary thinker. The masses are most often ultimately wrong so you need to be doing the opposite to them.

ducati916 · 10 July 2009

nunthewiser said:
you are wrong

the future as far as investment is concerned is as predictable and open as far as you let it be

now i dont profess to be a swami into the greast unknown but my line of thought will open a lot more doors than any one eyed view you seem to have aquired

There always has to be one total muppet on each thread.

Obviously you have probably cottoned onto the fact that I hold your post in rather low esteem. This is simply due to the lack of any logical argument as to why you feel I am wrong, and any argument as to why you feel that investment is as predictable etc

I'm not holding my breath.

jog on
duc

nunthewiser · 10 July 2009

LOL

"muppet"

good luck watching the world pass you by darl

have a niceday

Timmy · 10 July 2009

ducati916 said:
There always has to be one total muppet on each thread.

Calling someone else a muppet could be construed as psychological projection on your part.

I found nun's posts to this thread very practical and positive. And, with respect Duc, a lot of your posts I found to make as much sense as the Swedish Chef does. But maybe its just me, have to be room for another muppet on this thread, right?

Anyway, he's a bogan, not a muppet.

brty · 10 July 2009

Duc,

Yes, I do believe that markets/investments are random.

I always believed that so called 'random events' were totally independent of each other, like rolls of an equally weighted dice, no memory involved.

In markets I believe that the actions of participants are visible to others, so that some/many participants actions are based on what happened before. In other words a memory.

I think there is a discrepancy right there between 'random events' and 'markets'.

By the way, I am yet to see any proof that anything is random, and think the concept is floored.

brty

ducati916 · 11 July 2009

brty said:
Duc,

I always believed that so called 'random events' were totally independent of each other, like rolls of an equally weighted dice, no memory involved.

In markets I believe that the actions of participants are visible to others, so that some/many participants actions are based on what happened before. In other words a memory.

I think there is a discrepancy right there between 'random events' and 'markets'.

By the way, I am yet to see any proof that anything is random, and think the concept is floored.

brty

brty

You are referring to a random walk in a price series. And you are quite correct, each price would require independence to provide a random series. Stock prices are not independent, so they do trend for periods.

However markets [as opposed to a price series] are random in that who can predict the next big winner or loser.

A new product may launch next week and turn out to be the next MSFT or whatever. Where will the next secular bull market be?

As yet, no-one can predict the future. The future unfolds and by definition is random. Some might argue that the future is influenced by human action, and is as predictable as human action. This is definitely something that I would consider reasonable, as there are theories that already work on this premise.

The other thread that is mulling economists currently, would be one example of this train of thought.

jog on
duc

ducati916 · 11 July 2009

Timmy said:
Calling someone else a muppet could be construed as psychological projection on your part.

I found nun's posts to this thread very practical and positive. And, with respect Duc, a lot of your posts I found to make as much sense as the Swedish Chef does. But maybe its just me, have to be room for another muppet on this thread, right?

Anyway, he's a bogan, not a muppet.

Timmy

Referring to the highlighted section, a psychological projection you say?

My initial reaction to your post is that you haven't the faintest idea what you are talking about. However, let's just assume for the moment that you do, in point of fact have a vague notion.

You are through your statement, in effect making a diagnosis of my psychological state. I assume that you are medically qualified to do so, you have access to my medical notes?

But by all means continue and prove me wrong, because yes, you too can join the muppets.

jog on
duc

motorway · 11 July 2009

ducati916 said:
brty

However markets [as opposed to a price series] are random in that who can predict the next big winner or loser.

A new product may launch next week and turn out to be the next MSFT or whatever. Where will the next secular bull market be?

jog on
duc

---> and not even the developers of this know anything about it ?

Problem of adverse selection ( Or information is really valuable )

Do any people have any useful information ?

If so do they act on it ?

The future unfolds but not from random nothings
But particular somethings...Maybe known at first by the very few..

But they still have to act on their knowledge

Only what becomes scarce can become of exceptional value..

So be careful ( adverse selection ) of what is easy to obtain.

When a trading opportunity is presented to a group of traders, Those who accept are on average less smart

So the next bull market most likely will occur
In what is becoming harder to obtain

As those more informed act ( Life cycle---> early adopters to laggards
S-Curve Dynamics )

And because this is process
The Exceptional Ideas unfold over time

How long was MSFT a Growth Stock
Did you have to Buy it on day one ?

For very good reasons
It takes Time

motorway

ducati916 · 11 July 2009

motorway said:
---> and not even the developers of this know anything about it ?

Do any people have any useful information ?

If so do they act on it ?

The future unfolds but not from random nothings
But particular somethings...Maybe known at first by the very few..

But they still have to act on their knowledge

Only what becomes scarce can become of exceptional value..

So be careful ( adverse selection ) of what is easy to obtain.

So the next bull market most likely will occur
In what is becoming harder to obtain

As those more informed act ( Life cycle---> early adopters to laggards
S-Curve Dynamics )

And because this is process
The Exceptional Ideas unfold over time

How long was MSFT a Growth Stock
Did you have to Buy it on day one ?

For very good reasons
It takes Time

motorway

motorway

Herein we encounter a pernicious version of survivorship bias, in that looking back in hindsight, we think we could have spotted MSFT in the early days of 1982 at $0.10/share or slightly higher, and stayed with it to the $100/share.

Difficult to do.

As to known by a discreet few. They don't know anymore than we know, they by being insiders are highly invested, and stand to profit commensurately if it turns out well, or lose a lot if it doesn't. This tends to generate the illusion that they knew more than we did, not at all, they just were joined with their company.

There is however a way of using past historical data, in real time, to predict future outcomes, however it is fraught with difficulty and of course comes without a 100% guarantee.

Bubbles.

Bubbles inflate for a multitude of reasons [to date] and collapse. Betting on the collapse via short positions [in the best outcome] can return up to 100%. This is not a strategy that I'd personally try, but, if you are dead set on trying to predict the future, this due to the signal, can get you in near the top.

jog on
duc

ducati916 · 11 July 2009

Only what becomes scarce can become of exceptional value..

Value.

A very slippery construct.

Value, and the method of determination, viz. a valuation, are subjective, and as such are not necessarily subject to increases or decreases, due to objective measurements.

Thus we could use the current state of affairs with the increase in Base Money supply as a case in point. Base Money has increased exponentially, yet perversely, it's value has also risen.

This is because the subjective factors driving actions of economic agents currently seek the fungability of money in preference to XYZ.

It is this phenomena that drives the debate surrounding inflation/deflation currently, and which [is likely] will predominate moving into the future. The answer of course is vital, as if you knew the answer unequivocably, you could make your fortune.

jog on
duc

Trembling Hand · 11 July 2009

ducati916 said:
Herein we encounter a pernicious version of survivorship bias, in that looking back in hindsight, we think we could have spotted MSFT in the early days of 1982 at $0.10/share or slightly higher, and stayed with it to the $100/share.

Difficult to do.

ducati916 said:
A new product may launch next week and turn out to be the next MSFT or whatever. Where will the next secular bull market be?

Ducie Ducie Ducie

So if the next MSFT is floated tomorrow do you need to be at ground zero to win?

If the next bull market does start on Monday with a life changing technology do you really have to be a shareholder of the technological discoverer? Do you actually have to participate in the sector?

Nope, you just have to be in the game so as to catch a little of the flow on benefits. And be leveraged into the game at the right time.

As you have already stated you need to be leveraged with OPM, your example a HF, to milk what is a reasonable expectation of a move to use your skill(knowledge), again your example.

but jog on making it as complicated with whatever you like.

ducati916 · 11 July 2009

Trembling Hand said:
Ducie Ducie Ducie

So if the next MSFT is floated tomorrow do you need to be at ground zero to win?

If the next bull market does start on Monday with a life changing technology do you really have to be a shareholder of the technological discoverer? Do you actually have to participate in the sector?

Nope, you just have to be in the game so as to catch a little of the flow on benefits. And be leveraged into the game at the right time.

As you have already stated you need to be leveraged with OPM, your example a HF, to milk what is a reasonable expectation of a move to use your skill(knowledge), again your example.

but jog on making it as complicated with whatever you like.

TH

The MSFT example was in context of prediction and the future. You categorically seem to have missed the point. However in response to your query: no we don't have to be in on the entire ride to profit, rather basic really, I'm surprised you felt the requirement to state something so trivial.

As to your second point. Yes, possibly you do, unless of course the product/service is duplicated sector wide like the dot.com bubble.

As to your last comment, you obviously find the entire process it would seem, entirely simple and uncomplicated. Very beneficial for yourself no doubt. You would then I assume not mind indicating to the rest of us, or only to myself, the next big thing that is currently underway - I wouldn't expect to get in on the ground floor after all.

jog on
duc

tech/a · 11 July 2009

Duc.

Is it really that hard?

Nett short currently IS the next big thing.
We have many stocks and many indexes all showing the same signs of weakness.(They are technical signs Duc) They were shown clearly at the beginning of its recent down turn and are very similar to those which you dismissed as utter nonsense when I opened a thread years ago "Perhaps this isn't the top" I presented evidence there which played out.
Presented evidence for the 6880 correction The 3200 wave 3 end wave 4 and now the final wave 5 in this pattern.

All appropriately scoffed at.

If it was all about being right Duc
Then there wouldn't be any Millionaire Muppet's----But there are.
Every academic would be way in front of the Muppet's---they aren't.

But you are right if we unequivocally knew an out come we would benefit.

Life's not like that it often shows ambiguity---so we must become experts in anticipation.
Masters in taking quick and decisive action and patron saints of patience as life plays out with no regard to our own time constraints.

If I find a very busy highway and walk on to it--- pretty soon I'll be hit.
Most Muppets can grasp this.
We dont need to know how its made---where its going----why it was made,--who made it,---what it cost to build---wether it was profitable to build---or what it was built of.
Just that we WILL at sometime be hit.

Trembling Hand · 11 July 2009

ducati916 said:
As to your last comment, you obviously find the entire process it would seem, entirely simple and uncomplicated.

I know you don't have to make it so complicated that you have to think the only path to success is by being on the next big thing.

Its not hard to see when we are moving from an asset inflation/risk taking phase to asset deflation/risk averse phase. And getting on board in some measure. In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing. Either way you don't have to pick winners. You just have to be in the game and avoid hanging onto the losers too long and adding to your winners (more carriages ). Doubly so as you leverage up.

But don't take my word for it. Take your own that you don't have to be right just in the game and know when you were wrong.

ducati916 said:
Judged purely on the numbers generated by MD, the experiment must be judged a failure, no question.

However, as tech-a suggested way back when... a simple exit criteria could turn these numbers around very quickly, so an easy lesson to be absorbed.

However, the initial argument that I promulgated was the absence of a stop-loss. In it's current form, as previously stated, that must be judged a failure.

However, again, there are some easy lessons learned, that allow a "no stop" rule, that does not result in the above numbers.

Jump on,

TH

ducati916 · 11 July 2009

tech/a said:
Duc.

Is it really that hard?

Nett short currently IS the next big thing.
We have many stocks and many indexes all showing the same signs of weakness.(They are technical signs Duc) They were shown clearly at the beginning of its recent down turn and are very similar to those which you dismissed as utter nonsense when I opened a thread years ago "Perhaps this isn't the top" I presented evidence there which played out.
Presented evidence for the 6880 correction The 3200 wave 3 end wave 4 and now the final wave 5 in this pattern.

All appropriately scoffed at.

If it was all about being right Duc
Then there wouldn't be any Millionaire Muppet's----But there are.
Every academic would be way in front of the Muppet's---they aren't.

But you are right if we unequivocally knew an out come we would benefit.

Life's not like that it often shows ambiguity---so we must become experts in anticipation.
Masters in taking quick and decisive action and patron saints of patience as life plays out with no regard to our own time constraints.

If I find a very busy highway and walk on to it--- pretty soon I'll be hit.
Most Muppets can grasp this.
We dont need to know how its made---where its going----why it was made,--who made it,---what it cost to build---wether it was profitable to build---or what it was built of.
Just that we WILL at sometime be hit.

tech/a

First of all, technical signs are 50/50 outcomes. So you may well be correct in that SHORT is the place to be. Only in hindsight will the answer be known.

They were shown clearly at the beginning of its recent down turn and are very similar to those which you dismissed as utter nonsense when I opened a thread years ago

What are you waffling about? In 2006 when the commodities boom was booming and all and sundry were waffling on about BHP, I presented a series of arguments on this forum in relation to those valuations. You are obviously confusing me with someone else.

You obviously can't read. I'm arguing the point that being right is not necessary, that randomness [luck] plays a huge part in any analysis. The analysis may, in point of fact be absolutely correct, yet, you still lose money.

Again, with your highway example you confuse the role that statistics has to play by the dint of utilising an inappropriate analogy. Cars, highway, individual sum the variables involved, thus a case could be built for Gaussian distributions. Financial markets do not correlate to Gaussian distributions.

jog on
duc

ducati916 · 11 July 2009

Trembling Hand said:
I know you don't have to make it so complicated that you have to think the only path to success is by being on the next big thing.

Its not hard to see when we are moving from an asset inflation/risk taking phase to asset deflation/risk averse phase.

And getting on board in some measure. In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing.

Either way you don't have to pick winners. You just have to be in the game and avoid hanging onto the losers too long and adding to your winners (more carriages ). Doubly so as you leverage up.

But don't take my word for it. Take your own that you don't have to be right just in the game and know when you were wrong.

Jump on,

TH

TH

Some analysis. Nice.

Your initial analysis of asset inflation/risk taking phase to asset deflation/risk averse phase. certainly describes what has happened. Is that still your current analysis going forward?

If it is, I totally disagree with your position, however, be as that may. What then is your thinking in how to capitalise on your analysis?

In these periods growth flows from a sector out to the general economy as a whole whether it be techno change, demographic change or just good old fashion money printing

So in a deflation/risk averse phase, growth flows from a sector out to the general economy?

What does that actually mean?

What sector?
What growth?
To the general economy?

jog on
duc

tech/a · 11 July 2009

Duc.

Do you trade/invest in anything?

Or do you just have a massive interest in analysis?

If so what,why and for how long?
If not what,when and for how long?

ducati916 · 11 July 2009

tech/a said:
Duc.

Do you trade/invest in anything?

Or do you just have a massive interest in analysis?

If so what,why and for how long?
If not what,when and for how long?

tech/a

I've known you through the various forums for what, almost nine years now. Yes analysis in all of it's forms interests me, as I find it challenging.

However in answer to your question, I am in the financial markets 100% and have been ever since you first encountered me on Reef early 2001.

It is tragic that you would think otherwise. As I have replied on many occasions I am an arbitrageur, although I started out as a directional stocktrader [as you are aware]

jog on
duc

The Exceptional Wealth Accumulation Ideas and Thinking Thread

doctorj

Hatchet Moderator

tech/a

No Ordinary Duck

moreld

ducati916

nunthewiser

Timmy

white swans need love too

brty

ducati916

ducati916

motorway

ducati916

ducati916

Trembling Hand

Can be found on the bid

ducati916

tech/a

No Ordinary Duck

Trembling Hand

Can be found on the bid

ducati916

ducati916

tech/a

No Ordinary Duck

ducati916

Similar threads

The Exceptional Wealth Accumulation Ideas and Thinking Thread

Hatchet Moderator

No Ordinary Duck

white swans need love too

Can be found on the bid

No Ordinary Duck

Can be found on the bid

No Ordinary Duck

Similar threads

Privacy & Transparency

Privacy & Transparency