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you have similar thoughts as howard marks..risk cycle... this is exactly we all do..
Risk-taking cycle
Marks outlines in an amazing manner a cycle in our attitude in risk-taking, which I produce verbatim below.
If only we can carefully identify where in the cycle we lie at any given point in time, investment decision making would become much easier.
When economic growth is slow or negative and markets are weak, most people worry about losing money and disregard the risk of missing opportunities. Only a few stout-hearted contrarians are capable of imagining that improvement is possible.
Then the economy shows some signs of life, and corporate earnings begin to move up rather than down.
Sooner or later economic growth takes hold visibly and earnings show surprising gains.
This excess of reality over expectations causes security prices to start moving up.
Because of those gains – along with the improving economic and corporate news – the average investor realizes that improvement is actually underway. Confidence rises. Investors feel richer and smarter, forget their prior bad experience, and extrapolate the recent progress.
Skepticism and caution abate; optimism and aggressiveness take their place.
Anyone who’s been sitting out the dance experiences the pain of watching from the sidelines as assets appreciate. The bystanders feel regret and are gradually sucked in.
The longer this process goes on, the more enthusiasm for investments rises and resistance subsides. People worry less about losing money and more about missing opportunities.
Risk aversion evaporates and investors behave more aggressively. People begin to have difficulty imagining how losses could ever occur.
Financial institutions, subject to same influences, become willing to provide increased financing. In the words of Citibank’s Chuck prince, when the music’s playing, they see no choice but to dance. Thus they compete for market share by reducing the return they demand and by willing to finance riskier deals.
Easier financing – along with the recent gains – encourages investors to make greater use of leverage. Borrowed capital increase their buying power, and they move to put it to work.
Leveraged investors report the greatest gains, consistent with the old Las Vegas maxim: “the more you bet, the more you win when you win.” This causes others to emulate them.
The market takes on the appearance of a perpetual-motion machine. Appreciation accelerates, possibly leading to a mania or bubble. Everyone concludes that things can only get better forever. They forget about the risk of losing money and fixate on not missing opportunities. Leveraged buyers become convinced that the things they buy with borrowed money are certain to appreciate at a rate above their borrowing cost.
Eventually things get as good as they can get, the last skeptic capitulates, and the last potential buyer buys.
That’s the way the cycle of attitudes towards risk ascends. The skeptic in times of moderation becomes a true believer at the top.
Then the down cycle begins…
Once the last potential buyer has bought, there’s nobody left to take prices higher.
A few unemotional, disciplined and foresighted investors conclude that things have gone too far and a correction is in the cards.
Economic activity and corporate earnings turn down, or they begin to fall short of people’s irrationally expanded expectations.
The error of those expectations becomes obvious, causing security prices to start declining. Perhaps someone is daring enough to point out publicly that the emperor of limitless growth has no clothes. Sometimes there’s a catalyzing event. Or sometimes (see early 2000) security prices begin to fall of their own accord, simply because they had moved too high.
The first price declines cause investors to rethink their analysis, conclusions, commitment to the market and risk tolerance. It becomes clear that appreciation will not go on ad infinitum. “I’d buy at any price” is replaced by “how can I know what the right price is?”
Weak economic news takes the place of positive reports.
The average investor realizes that things are getting worse.
Interest in investing declines. Selling replaces buying.
Investors who sat out the dance – or who just underweighted the depreciating assets – are lionized for their wisdom, and holders start to feel stupid.
Giddy enthusiasm is replaced by sober skepticism. Risk tolerance declines and risk aversion is on the upswing. People switch from worrying about missing opportunity to worrying about losing money.
Financial institutions become less willing to extend credit to investors. At the extremes, investors receive margin calls.
Investors who borrowed to buy are heavily penalized, and the media report on leveraged entities’ spectacular meltdowns. Forced selling in response to margin calls and covenant violations causes price declines to accelerate.
Eventually we hear some familiar refrains: “I wouldn’t buy at any price,” “There’s no negative case that can’t be exceeded on the downside,” and “I don’t care if I ever make another penny in the market; I just don’t want to lose any more.”
The last believer loses faith in the market, selling accelerates, and prices reach their nadir. Everyone concludes that things can only get worse forever.
some speculating and some bs'ing as usual. new year's energy, it would rather go up than down to make all happy but where is the damn news?
good read here on wamu
http://www.zenpenny.com/services-page2/
Wow man congrats. When I break even, you'll be rolling all over the floor!
why down? yr end?
Google maps takes you to a neighborhood home of their corporate address. What a joke.
27420 Breakers Drive WESLEY CHAPEL 33544 United States
Wish I had followed you earlier. But will do going forward! Thanks!
And I made tons from people like you.
Yep, $3 million of trade in a day is big amount in wamu land as of today.
Newly field case has nothing to do with WMIH though.
So you're saying that there is no certainity of equity seeing something even in 3 years from now? What companies are those from 2008 which are not able to make a fair return on their NOL asset? TIA
lol, get a life
or Bop p FAN
good for you.
I'm not selling now as I'll wait for another year and half. But they way few people here have been talking - end of the year will bring glory to shareholder..will see. What happens if that does not happen? Change the timeframe? Like Catz said? - change the goal post?
Also, look at the posts of all these genius people here. They are all penny flippers. Look at their interests in stocks all the way back from few years..Most of the comments that they have made are in stocks which, either no longer trade or trade in the range of 0.0001222. For me, most people here don't know what they are talking about or they are intentionally saying things that they don't know about.
I think you're day dreaming. Do you think if by the end of Dec, WMIH would be 30 pps and nobody is watching but you few smart genius people? If this was the case, the pps would already be rising.
There are hundreds of investment firms who not only have financial analysts but tax advisors too..i.e. the whole package?
Do you think, except for you few geniuses, nobody is really caring about this 60x return-- ( 50 cents now and 30 dollars by the end of the year)...
Keep fooling yourself!
nice one for all the day dreaming scammers
your footnote is quite big in size..
NOTE: IF NO OFFER SHOWS UP BY THE 15 OF DECEMBER THEN ALL BETS ARE OFF. Then at that time I will go with option 2 which is having the OL converted into a NOL and the company will either grow via buying up other companies or the 2 YEAR wait to have a change in ownership is then in the works.
Hope is all you have!
Thanks, hopefully no more spams!
lol, basher
lol, go for a walk and dream big while you're walking and make plans with the money that you'll eventually earn, of course, disregard -if and when
yes, long shot but accurate is what counts
married to wmih?
and you missed nothing here
Whoever has insider info caused the drop. No News
buddhistmingle.com
Since you're in the penny land..worship the outcome, whatever it may be.
Man it should really suck.. Sorry for you and your family! Come to west coast! Beautiful out here. If you are alcoholic, thats even better, you wake up at 6 30 and market is open
when all these reckless names pop up on this message board- as user IDs..I want to shut down my computer!! Stop spamming people!
I heard that average traders look at message board for tips to succeed and so, fail to make any return. Is that so?
lol.. will see how I can play with www.buddhistmingle.com. you guessed right.
So, www.buddhistmingle.com is not owned by spark networks? I wonder why.
Thanks for finding that.
www.buddhistmingle.com
this is the test of ultimate patience check...wish i was in freshman in college when i started following WMIH 2 years ago and waiting another year to see the result and in my final year..was writing about my experience with WMIH and the board members..and the whole psychology within...i'd get good grades irrespective of the outcome.
I know that LOV owns christianmingle and jewish mingle. But who owns www.buddistmingle.com ? just wondering. Thanks.
Yes, I was bored but I remember the discussions that happened during Feb/March were quite interesting compared to what people are talking now. All non-sense stuffs. Well, kudos to you on your prediction!
Thanks Radium for this post. Now it makes sense after 6 months or so of your post. Lets see who gets re-elected.
Not sure about that. I checked with someone from Reuters and here's the reply.
Thanks. Upon checking, the latest research report we have on WMIH is dated 02/02/11.
I can get in touch with the team which generated the report and confirm with them if they can provide the underlying data.
Regards,
Michael Andrade
If I get that report, will share.