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| Jun 1, 2019 | » | 01. Firm Foundations and Castles in the Air
2 min; updated Mar 12, 2022
Random walk: future steps or directions cannot be predicted on the basis of past history. Thus, short-run changes in stock prices are unpredictable. Investing as a Way of Life TodayDifference between speculations and investments: time period and predictability of the return. To stay even, your returns must match inflation (averaged 4% from 1962 to 2018). | ||||||||||||||||||||||||
| Jun 1, 2019 | » | 02. The Madness of the Crowds
3 min; updated Sep 5, 2022
The Tulip Bulb CrazeVirus causes colored stripes in tulip petals. The Dutch valued such bulbs. Prices rose (just when one thought they couldn’t go higher). Let the tulipmania begin. Note: And that’s where FOMO comes in. You can’t argue with the results. You just want to dip your toes and get out. I watched Bitcoin keep climbing, until I got into the game with $50… Tulip bulbs options. 20 for a bulb currently worth 100. If the price moved to 200, the option holder exercises his right: buys at 100 and simultaneously sells at 200, making a profit of 80. ... | ||||||||||||||||||||||||
| Jun 1, 2019 | » | 03. Speculative Bubbles from the Sixties into the Nineties
3 min; updated Mar 12, 2022
The Sanity of InstitutionsGrowth, Tronics and SynergyGrowth companies such as IBM and Texas Instruments sold at price-earnings multiples of more than 80. Questioning the propriety of such valuations became almost heretical. Companies plastered “tronics” in their name. The tronics boom came back to earth in 1962. Synergy Generates Energy: The Conglomerate Boom
Buzzwords: market matrices, core technology fulcrums, modular building blocks, nucleus theory of growth. ... | ||||||||||||||||||||||||
| Jun 1, 2019 | » | 04. The Explosive Bubbles of the Early 2000s
5 min; updated Mar 12, 2022
Dotcom crash took away $8tn (yearly output of Germany, France, England, Italy, Spain, the Netherlands, and Russia) of market value. The Internet BubbleThe internet had 2 bubble qualities: some new technology & some new business opportunity. A Broad-Scale High-Tech BubbleCisco and JDS Uniphase, producers of the backbone of the Internet, sold at +100 P/E. As usual, companies changed their names to include “dot.com”, “dotnet”, and “Internet”.
PalmPilot (maker of PDAs) was at one point valued at 2x its parent company, 3Com. ... |
With regard to beating inflation, that implies all the money that’s in people’s bank accounts is depreciating, as opposed to maintaining value. Consequently, money in the bank should be for short-term use - an emergency fund and that’s it(?)
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