[extropy-chat] You're Fired
pharos at gmail.com
Tue Oct 17 22:32:24 UTC 2006
On 10/17/06, Robin Hanson wrote:
> Again, the question is how much information the prices contain, relative to the
> other methods one could use to fire CEOs. You have not addressed that issue.
> If the prices are more informed, then they will make better choices and should
> be preferred.
> Of course we could do even better if the prices were even more informed.
I thought I had addressed that issue.
"Market movements are unpredictable, meaningless and random".
Unpredictable, random price movements cannot be used to validate a
CEO's performance, except in a few outstanding examples, e.g. where
they turn round a failing company. But profits are probably a better
measure in that case, rather than share price level.
In a rising market, every CEO will claim they are obviously doing a great job.
In a falling market, every CEO has good excuses available.
After all, in a falling market you can't sack every CEO, can you?
> That is where you could help. Since you can see that the current
> prices are all wrong and you can tell in which direction they are wrong, you can make
> lots of money by buying low and selling high. And you will help make the prices more
> accurate in the process. Win win for all, surely. Do come back and thank us
> when you are rich.
Heh! :) The old 'If you're so clever, why aren't you rich?' question. :)
What part of "Market movements are unpredictable, meaningless and
random" don't you understand? I can't predict stock prices. Nobody
can. That's the point.
You won't get any get-rich-quick tips from me (or Warren Buffet, for
My advice is to invest in index tracking funds near the bottom of a
recession cycle and sell near the top of a rising market. Usually a 4
or 5 year cycle. Don't worry about about timing the exact top or
bottom. Just cash in near the top and wait till the recession cycle
takes prices down far enough to buy back in to the index fund again.
You won't become a dotcom millionaire, but you won't lose everything either.
You'll do quite nicely for very little cost or trouble.
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