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Hugh Hendry has been dead wrong about China for three years now and China has not collapsed as he predicted, loudly, verbally and widely.Albert Edwards has been bearish on everything for a long time. So if you are telling me he is bearish on China and bullish on everything else that would be different. But no, he is bearish on everything, including you, me and Mother Teresa.”-said Jim Rogers

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Let me tell you a story.

I once interviewed at a hedge fund that was making a major bet on its prediction that the housing bubble would implode.

Smart money, right?

However, that interview took place in early 2003, right before the Housing Index (^HGX) doubled. 

Likewise, a lot of folks were short Netflix (NFLX) last year as it crashed and burned from that $304.79 high hit on July 13, 2011.

However, many a bear’s butt was fried on the 73% rally the stock staged before it finally died out.

So when you have an investment thesis in your mind, ask yourself, “What makes now the right time to bet on this?”

Furthermore, if the S&P 500 (^GSPC) is skyrocketing, it is entirely likely that junky companies rally big-time.

Likewise, if the market’s in meltdown mode, even the best of the best can get smashed.

Apple (AAPL) closed out 2007 at $198.08. But in 2008, even in the face of enormous earnings beats and the halo of the iPhone’s unprecedented success, Apple finished the year at $85.35 — a drop of  57%!

You may be smart, but remember: Sometimes Mr. Market just does not give a damn about what you think.

wrote Michael Comeau at Minyanville

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Why are Muslims powerless?

Because we aren’t producing knowledge.

 

Why are Muslims powerless?
Because we aren’t diffusing knowledge.

 

Why are Muslims powerless?
Because we aren’t applying knowledge.

 

And, the future belongs to knowledge-based societies.

Interestingly, the combined annual GDP of 57 OIC-countries is under $2 trillion. America, just by herself, produces goods and services worth $12 trillion; China – $8 trillion, Japan – $3.8 trillion and Germany – $2.4 trillion (purchasing power parity basis).

Oil rich Saudi Arabia, UAE, Kuwait and Qatar collectively produce goods and services (mostly oil) worth $500 billion; Spain alone produces goods and services worth over $1 trillion; Catholic Poland – $489 billion and Buddhist Thailand – $545 billion. Muslim GDP, as a percentage of worlds GDP, is fast declining.

 

So, why are Muslims so powerless?

Answer: Lack of education!

All we do is shouting to Allah the whole day and blame everyone else for our multiple failures

wrote Dr. Farrukh Saleem in the Bangladeshi weekly Blitz

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Everybody wants an “absolute returns” strategy until the market rallies.

Everybody wants to “focus on risk management” until the market rallies.

Everybody believes in asset class diversification until the market rallies.

Everybody wants to “be tactical” until the market rallies.

Everybody wants to “keep some powder dry” until the market rallies.

Everybody wants to be risk-averse and flexible until the market rallies.

Everybody prioritizes return OF capital rather than return ON capital until the market rallies.

Everybody “sticks with quality” until the market rallies.

Everybody is happy earning an appropriate rate of return regardless of the index benchmark until the market rallies.

And then, when it does rally, whether for 3 months or 2 years, everybody is revealed to be full of shit.

Everybody is unmasked and shown for what they truly are: Performance-chasing children who grow resentful at the thought of anyone’s portfolio outpacing theirs, no matter how much risk is being assumed.  Screaming chimpanzees rattling the bars of their cages when the colors and lights start flashing.

“I know I said I wanted to treat this capital responsibly and tune out the noise – but why the hell don’t I own those hot stocks that keep going up everyday?”

Portfolio stewardship is great but that’s not what you want when the market rallies.  What you want is to beat that goddamn index when it goes up.  What you want is an ego stroke, you want bragging rights and you want to be in the game, not watching it.  It’s only partially about the money, it’s more about being right.

 

Do you need a 25% return in any given year?  No but if the market rallies 25% you damn well better get it.  If you don’t, the despondency sets in – and then you’re going to do something really stupid.

And that’s exactly how trends are taken that last step too far.

It’s how a rally amidst horrible news can feed on itself and be utterly detached from reality.

It’s how market participants learn the power of panic buying, the pain of short squeezes, the capriciousness of rebalancing impact and institutional window-dressing.

Because everybody is calm and responsible and prudent and logical.

Until the market rallies.

 

-Josh Brown wrote in The Reformed Broker

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“Big price changes occur when market participants are forced to reevaluate their prejudices, not necessarily because the world changes that much.”
– Hedge fund manager Colm O’Shea as quoted in Hedge Fund Market Wizards