Tim:
If the vast majority of the traders behave
irrationally and deny the uncertainty through
conventional forecasting practices that make
their actions predictable by the small number
of traders able to behave rationally (i.e able
to understand and predict the irrationality),
then for the
Comment: I don't see this. That a class contains all
of a given group does not mean that the class term
is meaningless.
You are right. That a class contains all of a given
group does not mean that the class term is
meaningless, at least, not always.
My point was that there is no one out there
Sabri Oncu wrote:
My point was that there is no one out there who
exactly knows what the future will bring us, so in
that sense everybody, is a noise trader, meaning
that their decisions are guided by hueristics and
biases.
Put differently, there are no rational traders,
whatever rational means.
I was not referring to any particular paper.
I was referring to the increasingly common use
of the term noise traders as a designation of
all market participants not acting in accordance
with economic fundamentals. I think the locus
classicus of the term is a paper by Fisher
Black, but I'm
Sabri wrote
I knew that you were going to say this but noise
traders are the irrational ones and for their
existence, there has to be non-noise traders, that
is, the rational ones.
My claim is that all market participants are noise
traders, which makes the term meaningless.
Comment: I don't see
Title: RE: [PEN-L] mixed economic signals
-Original Message-
From: Sabri Oncu [mailto:[EMAIL PROTECTED]]
Sent: Tuesday, April 20, 2004 8:26 PM
To: [EMAIL PROTECTED]
Subject: Re: [PEN-L] mixed economic signals
Sabri Oncu writes:
I read that noise traders paper by Summers et al
Tom:
A speculative bubble exists whenever a market
is dominated by investors (noise traders in
the economics literature) with short time horizons
who have taken highly leveraged long positions.
I read that noise traders paper by Summers et al. It
is just one possible explanation and although
Title: RE: [PEN-L] mixed economic signals
On Saturday, April 17, 2004 2:11 PM, Michael Perelman wrote:
Will we have to take stagflation out of the closet again?
I think it's safe to keep our inflationary expectations in the closet. Even with skepticism about recent productivity gains
Title: RE: [PEN-L] mixed economic signals
if the Fed
does raise rates, it could pop the housing bubble.
Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
-Original Message-From: Dickens, Edwin
[mailto:[EMAIL PROTECTED]Sent: Monday, April 19, 2004 11:01
AMTo
I'm not as sure as you about the certainty of closeting inflation. If
you mean manufacturing costs, there certainly declining. If you include
resource costs, then the uncertainty creeps in. Water -- most of the
West is suffering from drought -- petroleum, some agricultural
commodities.
So let me get this straight...all these people that have been buying 1/2
million $$ condos/bungalows in the Bay area lately, have mortgages based
on variable rates? They expected interest rates to stay low forever? Was
it not possible to get a low fixed-rate mortgage? Or was it just about
Title: [pen-l] mixed economic signals
Scrap metal and other raw material prices top my list of resource costs that may raise the spectre of inflation. But much the same argument used to argue for a real estate bubble can be used to argue for commodity price bubbles, no? If so, then the risk
Dickens, Edwin
If so, then the risk of disinflation still
outweighs the risk of inflation, in the sense
that it's unclear that the economy can sustain
positive real short-term interest rates.
It's the free money, in real terms, that feeds
the carry trade underlying the run-up in
commodity
Consumer Sentiment Slides;
Industrial Production Slows
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
April 16, 2004 1:04 p.m.
U.S. consumer sentiment unexpectedly dropped in a mid-April reading,
suggesting that concerns about the war in Iraq have been outweighing
upbeat reports on the economy.
The
To: [EMAIL PROTECTED]
Cc:
Subject: [PEN-L] mixed economic signals
Consumer Sentiment Slides;
Industrial Production Slows
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
April 16, 2004 1:04 p.m.
U.S. consumer
Greenspan will not dare to raise interest rates before the election.
I see a large number of contradictions accumulating, indications of both inflation
and an economic slowdown. Will we have to take stagflation out of the closet again?
There's still some evidence of accumulating demand, but it
I'm puzzled by the supposed drop in "utility" production, which was
used as the reason for the drop in industrial production. First,
electricty production, as reported by the Edison Electric Institute on
a weekly basis, increased in March 2004 over March 2003
by a little more than 2 percent.
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