4 ms·
These price targets are ridiculous. If S&P actually knows where prices are going, why aren't they running the world's largest hedge fund?
by Eliezer 15y ago
These price targets are ridiculous. If S&P actually knows where prices are going, why aren't they running the world's largest hedge fund?
- ewanmcteagle 15y agoYou must ask this question of every single piece of stock advice ever given freely or sold. If you knew about future price movements with some degree of accuracy, the least profitable thing you could do would be to tell others.
- kurumo 15y agoThat is not entirely correct. If you have already acquired credibility (somehow, doesn't matter how for the purposes of this exercise), your estimate or advice can (and frequently does) become a self-fulfilling prophecy. Knowing that a significant number of investors will follow your advice gives you information which can be used in the market. It then stands to reason that the most profitable thing you could do would be to give this advice to the maximum possible number of people.
- extension 15y agoNo particular reason the advice has to be accurate.
- sliverstorm 15y agoaccurate advice is more likely to come true, thus bolstering your credibility.
- extension 15y agoBut the advice comes true because you gave it. This is the inherent flaw with the market at issue here -- it selects for consistency, but not accuracy per se.
- mkramlich 15y agoI have a theory about how a lot of Wall Street secretly works: the best way to predict the future is to make it happen the way you want.
- baguasquirrel 15y agoWell that's not much different from how we play right? Make the future happen, literally. But they ultimately have to face what we will face. The markets may not buy. All that real estate stock for example.
- JonnieCache 15y agoI don't think that's much of a secret. It's written into the maths as far as I can see.
- Estragon 15y agoI think these moves are S&P's aattempt to come back from the massive hit their credibility took from rating toxic MBS as AAA. They're trying to prove they still have some market utility by making some predictions.