Re:Temporary suspension of Zoom Technologies, Inc [pdf]
by pas on Sunday March 29, 2020 @09:04AM
(#22718654)
So who should determine the value? Accountants? The general public? A committee? An algorithm? Investors have skin in the game (I hate Talebisms, but this one is actually on point here), even if they are just a bunch of spoiled rich kids/dads.
And yes, we know how herd mentality takes over fast. That's why there are circuit breakers and rules and incentives.
And yes, TLSA "crashes" every other week, and bounces back the next day. (Of course if a 5% swing is a crash then everything crashes all the time. But MSNBC et al. have to make content somehow, those 24 hours ain't gonna fill themselves, so ... everything is crashing then.)
> The way to win in the stock market is to properly model that joke.
Yes, there are - by definition - infinite levels of the meta game, and modeling some of them (and just lower/upper bounding them in a residual) makes sense too, but there is usually a signal in the noise too. (Not the kind of post-hoc Nostradamus "yes we know something is going to happen because VIX increased by two points, and now it's COVID time" bullshit, but the WeWork/Uber finally hit the fan, and so on kind.)
> The idea that the stock market is a bunch of rational, informed experts setting valuations on things will get you nowhere, and it doesn't function that way, and doesn't behave according to that model.
Agreed. I hope I never claimed that it's all "fully rational". All we have is bounded rationality anyway (because of time and resource constraints), and of course it's not a group wise scholars with sophisticated MCMC models :)
The SEC is just the embodiment of the good old "reality" outside the game. There's no point in letting the markets get into pathological states just to see who would win the game.
And yes, we know how herd mentality takes over fast. That's why there are circuit breakers and rules and incentives.
And yes, TLSA "crashes" every other week, and bounces back the next day. (Of course if a 5% swing is a crash then everything crashes all the time. But MSNBC et al. have to make content somehow, those 24 hours ain't gonna fill themselves, so ... everything is crashing then.)
> The way to win in the stock market is to properly model that joke.
Yes, there are - by definition - infinite levels of the meta game, and modeling some of them (and just lower/upper bounding them in a residual) makes sense too, but there is usually a signal in the noise too. (Not the kind of post-hoc Nostradamus "yes we know something is going to happen because VIX increased by two points, and now it's COVID time" bullshit, but the WeWork/Uber finally hit the fan, and so on kind.)
> The idea that the stock market is a bunch of rational, informed experts setting valuations on things will get you nowhere, and it doesn't function that way, and doesn't behave according to that model.
Agreed. I hope I never claimed that it's all "fully rational". All we have is bounded rationality anyway (because of time and resource constraints), and of course it's not a group wise scholars with sophisticated MCMC models :)
The SEC is just the embodiment of the good old "reality" outside the game. There's no point in letting the markets get into pathological states just to see who would win the game.