In The $$$MONEY$$$

Discussion in 'Men's Economics' started by Michael Scally MD, Aug 14, 2011.

  1. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Asset price bubbles are an important example of human group decision making gone awry, but the behavioral and neural underpinnings of bubble dynamics remain mysterious.

    In multisubject markets determined by 11–23 subjects, with 2–3 subjects simultaneously scanned using functional MRI, we show how behavior and brain activity interact during bubbles.

    Nucleus accumbens (NAcc) activity tracks the price bubble and predicts future price changes. Traders who buy more aggressively based on NAcc signals earn less.

    High-earning traders have early warning signals in the anterior insular cortex before prices reach a peak, and sell coincidently with that signal, precipitating the crash.

    These experiments could help understand other cases in which human groups badly miscompute the value of actions or events.

    Smith A, Lohrenz T, King J, Montague PR, Camerer CF. Irrational exuberance and neural crash warning signals during endogenous experimental market bubbles. Proceedings of the National Academy of Sciences.

    Groups of humans routinely misassign value to complex future events, especially in settings involving the exchange of resources. If properly structured, experimental markets can act as excellent probes of human group-level valuation mechanisms during pathological overvaluations—price bubbles. The connection between the behavioral and neural underpinnings of such phenomena has been absent, in part due to a lack of enabling technology. We used a multisubject functional MRI paradigm to measure neural activity in human subjects participating in experimental asset markets in which endogenous price bubbles formed and crashed. Although many ideas exist about how and why such bubbles may form and how to identify them, our experiment provided a window on the connection between neural responses and behavioral acts (buying and selling) that created the bubbles. We show that aggregate neural activity in the nucleus accumbens (NAcc) tracks the price bubble and that NAcc activity aggregated within a market predicts future price changes and crashes. Furthermore, the lowest-earning subjects express a stronger tendency to buy as a function of measured NAcc activity. Conversely, we report a signal in the anterior insular cortex in the highest earners that precedes the impending price peak, is associated with a higher propensity to sell in high earners, and that may represent a neural early warning signal in these subjects. Such markets could be a model system to understand neural and behavior mechanisms in other settings where emergent group-level activity exhibits mistaken belief or valuation.
    Millard Baker likes this.
  2. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  3. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    The Mystery of Lofty Stock Market Elevations

    So nothing I’ve come up with is a slam-dunk explanation for the continuing high level of valuations. I suspect that the real answers lie largely in the realm of sociology and social psychology — in phenomena like irrational exuberance, which, eventually, has always faded before. If the mood changes again, stock market investments may disappoint us.
  4. Voltrader

    Voltrader Member

  5. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  6. Voltrader

    Voltrader Member

    I thi
    I think you will enjoy it. It changed how I manage money in this market.
  7. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  8. Voltrader

    Voltrader Member

    @Michael Scally MD I knew several guys who stayed short through late 2012-13 and they just couldn't except the market run and wouldn't stop shorting it. I was in this camp but learned it was not about my opinion and valuations. It doesn't matter if this is a fed fueled rally it is still a rally and those who fought this because they married themselves to their beliefs have taken a bath.

    Funny thing is though could Dent be right? It is out there but???? BTW if we go to 6000 why would it stop there? That could be catastrophic. From a psychological and social aspect we are not their yet.....there has to be an event that will have everybody remove their hands from their ears. Unfortunately currently we rather wait in lines for iphones and such so as long as this persist so does the Fed balance sheet. Plus this period has been a great period for the "1%" crowd they are not quite ready to give that up.

    Honestly I try not to have much of an opinion. I have done well on these 2-3% dips and taking the money and run but I do not hold much to upside for long periods. I just follow the paper Doc and when I am wrong don't hold it, cut it and move on. Nothing is real right now so let's stop pretending it is and just go with the flow. I will say this though I am hyper vigilant when it comes to looking for the sign in the shift. There is a tell and when that comes I will be ready and short. I have 8 screens looking for that tell. This year it has worked for catching the dips but still no tell for a real correction.

    Dent that is how he writes books and such by making wild predictions. I can't knock him he has notched out a living some how doing this lol!!!! I agree he is FOS and just taking a shot. If he is right that makes him relevant for another decade or so HA.
  9. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Profits Without Prosperity

    Five years after the official end of the Great Recession, corporate profits are high, and the stock market is booming. Yet most Americans are not sharing in the recovery. While the top 0.1% of income recipients—which include most of the highest-ranking corporate executives—reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. Corporate profitability is not translating into widespread economic prosperity.

    The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees.

    The buyback wave has gotten so big, in fact, that even shareholders—the presumed beneficiaries of all this corporate largesse—are getting worried. “It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies,” Laurence Fink, the chairman and CEO of BlackRock, the world’s largest asset manager, wrote in an open letter to corporate America in March. “Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks.”

    Why are such massive resources being devoted to stock repurchases? Corporate executives give several reasons, which I will discuss later. But none of them has close to the explanatory power of this simple truth: Stock-based instruments make up the majority of their pay, and in the short term buybacks drive up stock prices. In 2012 the 500 highest-paid executives named in proxy statements of U.S. public companies received, on average, $30.3 million each; 42% of their compensation came from stock options and 41% from stock awards. By increasing the demand for a company’s shares, open-market buybacks automatically lift its stock price, even if only temporarily, and can enable the company to hit quarterly earnings per share (EPS) targets.

    As a result, the very people we rely on to make investments in the productive capabilities that will increase our shared prosperity are instead devoting most of their companies’ profits to uses that will increase their own prosperity—with unsurprising results. Even when adjusted for inflation, the compensation of top U.S. executives has doubled or tripled since the first half of the 1990s, when it was already widely viewed as excessive. Meanwhile, overall U.S. economic performance has faltered.

    If the U.S. is to achieve growth that distributes income equitably and provides stable employment, government and business leaders must take steps to bring both stock buybacks and executive pay under control. The nation’s economic health depends on it.
    Millard Baker likes this.
  10. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Millard Baker likes this.
  11. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Stocks and Bonds: Risks and Returns

    This course will present an overview of stocks and bonds, with a focus on the finance fundamentals behind these instruments. We’ll start out with an overview of the bond market, paying special attention to corporate and municipal bonds. Next, we’ll review interest rates and their impact on the valuation of treasury bonds. Then we’ll take a look at the fundamentals of the stock market, and finally we’ll dive into an analysis of how to make smart decisions as an investor.

    Since the course is self-paced, you can take as much time as you need. Short lecture videos introduce the concepts in manageable chunks. Following each video are practice exercises to help cement your understanding of the key concepts. Finally, a recorded panel discussion featuring a Nobel Prize-winning economist will allow us to delve into the finer details of asset management.

    Whether you’re an experienced shareholder, a novice investor, or simply interested in how our financial markets work, join us as we study the financial principles behind stocks and bonds.
  12. Voltrader

    Voltrader Member

    I f only one can learn how to make smart decisions as a investor. I spent 6 weeks ten years ago at Wharton for something similar. NIce certificate though.
  13. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    FierceBiotech's 2014 Fierce 15

    These new companies are getting started with what I call the biotech redux generation, very experienced executives who were able to take advantage of the most recent wave of acquisitions to make a deal and are now coming back to start new companies like Editas (Avila's Katrine Bosley) and Cidara (Jeff Stein). Experienced drug developers with some excellent contacts in both the scientific world as well as the venture crowd make for some of the savviest new players in the business.
    strongsafety41 likes this.
  14. LW64

    LW64 Member

    Does this qualify as a tell for the market turning?

    With QE winding down, the only things holding the market up are horseshit and toothpicks.
    Michael Scally MD likes this.
  15. Voltrader

    Voltrader Member

    I actually look at the Alibaba IPO as the signal. Throw in a death cross it could get choppy. Its dismal in Europe and when it gets dismal in the Old World what happens???? China is cornering/hoarding physical gold it is refreshing to see that there is physical gold but it is all ending up in Chinese hands....that I don't find comforting. Yes things are coming together to break the fabricated web of the banksters. It doesn't matter the banksters are getting short themselves here.
  16. LW64

    LW64 Member

    After 'When?', the main question is: Will it be a Big One or a little one?
  17. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  18. Voltrader

    Voltrader Member

    There you go Ching-ching made my year.
  19. flenser

    flenser Member Supporter

    They haven't got mine yet : )
    Voltrader likes this.
  20. Voltrader

    Voltrader Member

    Let's hope they don't come knock on your door for it someday.:eek: