A Quote by William Poundstone

Samuelson spotted a mistake in Bacheliers work. Bachelier's model had failed to consider that stock prices cannot fall below zero. — © William Poundstone
Samuelson spotted a mistake in Bacheliers work. Bachelier's model had failed to consider that stock prices cannot fall below zero.
Stock prices are likely to be among the prices that are relatively vulnerable to purely social movements because there is no accepted theory by which to understand the worth of stocks....investors have no model or at best a very incomplete model of behavior of prices, dividend, or earnings, of speculative assets.
Too often, the public can fall into the trap of investing when stock prices are rising, not dropping.
The problem is, to have prices fall would work fine if we didn't have all these built in rigidities on downward prices, because then things don't adjust, and that's how we have recessions and depressions, is prices and costs don't adjust together and they get out of whack, and we end up with dislocations.
The key to house prices is the share of foreclosure or short sales in the total housing market. When that share rises, house prices will fall, because distressed properties sell for significantly less - currently around 25 percent below non-distressed houses.
If you expect to be a net saver during the next 5 years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
The social model of the Bolsheviks failed, as will any model that denies individual rights, intellectual freedom, and freedom of competing political parties. Without these freedoms and rights, there is no motivation for people to work. Such a system cannot be sustained, especially in light of the technological revolution of the information era.
I always had faith in the internet. I believed in it and thought it was obviously going to change the way the world worked. I really did not understand why others were selling their stock. As stock prices plunged, I just bought them, one after another, since I had the money. I guess I was rather lucky.
Fundamental analysis seeks to establish how underlying values are reflected in stock prices, whereas the theory of reflexivity shows how stock prices can influence underlying values
A zero itself is nothing, but without a zero you cannot count anything; therefore, a zero is something, yet zero.
There is no such thing as agflation. Rising commodity prices, or increases in any prices, do not cause inflation. Inflation is what causes prices to rise. Of course, in market economies, prices for individual goods and services rise and fall based on changes in supply and demand, but it is only through inflation that prices rise in aggregate.
The underlying strategy of the Fed is to tell people, "Do you want your money to lose value in the bank, or do you want to put it in the stock market?" They're trying to push money into the stock market, into hedge funds, to temporarily bid up prices. Then, all of a sudden, the Fed can raise interest rates, let the stock market prices collapse and the people will lose even more in the stock market than they would have by the negative interest rates in the bank. So it's a pro-Wall Street financial engineering gimmick.
Basically, what I do is place a stop, generally 10 to 20 percent below the current price, whenever I buy a stock. The exact level depends on my own analysis of a stock's trading pattern. If a stock violates this stop, I'm out.
[The masses] ... must turn their hopes toward a miracle. In the depths of their despair reason cannot be believed, truth must be false, and lies must be truth. "Higher bread prices," "lower bread prices," "unchanged bread prices" have all failed. The only hope lies in a kind of bread price which is none of these, which nobody has ever seen before, and which belies the evidence of one's reason.
A lot of share-buying, not bargain-seeking, is designed to prop stock prices up. Thirty to 40 years ago, it was very profitable to look at companies that were aggressively buying their own shares. They were motivated simply to buy below what it was worth.
There was a tale he had read once, long ago, as a small boy: the story of a traveler who had slipped down a cliff, with man-eating tigers above him and a lethal fall below him, who managed to stop his fall halfway down the side of the cliff, holding on for dear life. There was a clump of strawberries beside him, and certain death above him and below. What should he do? went the question. And the reply was, Eat the strawberries. The story had never made sense to him as a boy. It did now.
How we fall into grace. You can't work or earn your way into it. You just fall. It lies below, it lies beyond. It comes to you, unbidden.
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