Here is a great documentary on Quants. Those genius mathematicians that come up with financial products to be sold to investors. Some of the formulas they come up with are so complicated that the people that sell them don’t understand them.
The investors do not understand the consequences of these financial products as well. Well, heck even the Quants do not know the true extent of the consequences if these products react to unforeseen circumstances. Some of these products were responsible for causing the 2008 crash due to complicated credit default swaps and mortgage backed securities.
The truth is that the world economy is balancing on a very fine line, kinda like the man that recently tight roped walked across Niagra Falls. The momentum and direction is total slowdown and the reality is that things are getting worse.
So on Wednesday the Federal Reserve of the United States chairman Ben Bernake said that they will not do a full quantitative easing (extensive money printing or QE3), but instead continue short term treasuries purchases with “operation twist”.
The stock market reacted quite muted, then fell and on Friday bounced up a bit. The question is can the stock markets go higher from this level or can it maintain this level. In light of all the bad economic data out there and the fact that the summer months up to August and September are historically down months it would seem that the answer is a resounding “NO”.
NEW YORK (AP) — A former Goldman Sachs director accused of feeding confidential information to a corrupt hedge fund manager has been convicted of conspiracy and three counts of securities fraud.
A jury acquitted Rajat Gupta on two other securities fraud counts. Gupta’s adult daughters hugged and wept as the verdict was read. He showed no visible reaction.
I agree with Ben Stein here. The market is at the top for now, so buying stocks here would be stupid, I rather wait for a correction (mini-crash). Even after the mini-crash you still have to be careful though.
The earnings for tech have beaten lowered expectations. Let me repeat LOWERED expectations.
Of course when the expectations have been lowered , earnings is easier to beat. So you see Wall Street analyst lowered it, therefore this is really manipulated to give perception of a better economy.
Tech sector is reporting lower and lower year to year decline. Wall Street and mainstream media are promoting Apple’s earnings so to mask what is really going on in the growth of the tech sector and the economy.
The mini-crash has not come yet. Maybe in May or most likely July or August, the reason is that it is an election year. The Fed need to manipulate the market so that they can inject QE3 (print more money) into the market to make it rise and look nice, after the mini-crash before the election in November, 2012. So the giving the illusion that the economy is doing well into November so that Obama can get re-elected.
