Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Broadcom (BRCM) -- Ignore unavailable to you. Want to Upgrade?

To: Black-Scholes who wrote (1482)	5/2/1999 8:32:00 PM
From: md1derful	Respond to of 6531

Sorry man..up 110% last year and 80% this year..o thank you CHARTS!! And at this point they say load up on brcm..and you know I'm right!!!

To: Black-Scholes who wrote (1482)	5/3/1999 12:58:00 AM
From: Oblomov	Respond to of 6531

"Long-ago proven": I challenge you to prove any of the three forms of EMH. They have not been proved. That is why it is still called the Efficient Market Hypothesis. I'm certain that EMH has applications, but they are limited. The random walk structure is too simplistic to accurately model price changes. Economists know this, but EMH is their way of throwing up their arms in frustration at not having a better quantitative model. If EMH is true, then why do all of the investment banks employ quantitative analysts? Do you think they sit around and calculate weightings for stocks in the S&P 500 index? Or plug numbers into a Black-Scholes spreadsheet? As Doyne Farmer, et al have observed, short-run market price changes exhibit the properties of a high-order differential system. This is not to say that price changes may be easily predicted. On the contrary. Technical analysis is limited in its scope as well. The reason that economists regard it as disreputable has more to do with the current vogue status that econometrics enjoys, than with any failure of TA methodology. The more qualitative position taken by economists such as Charles Kindleberger, who wrote brilliantly on the effect of emotional excesses on markets, is viewed as being hopelessly out -of-date. After all, if an emotion can't be quantified, then we can't determine a correlation! Therefore, correlation = 0. There are obviously some traders who perform better than others in the long run, even though they have no greater amount of information. This may be due to a superior ability to recognize patterns and synthesize ideas quickly... but, this would fly in the face of EMH. The weak form of EMH states that profiting solely from price patterns is impossible, since they will be universally exploited. Even Robert Malkiel is in the hedge fund business now. Do you think his firm just dumps the partners' money into an index fund? Myron Sholes' hypothesis (that the spreads between the US long bond other global debt would narrow this last summer and thereby "revert to the mean") turned out to be a disastrous gamble. Hmmm... once again, we see those pesky, irrelevant emotions encroaching on our pristine theories. That should mean something. AA

To: Black-Scholes who wrote (1482)	5/3/1999 10:03:00 PM
From: Bobby	Read Replies (3) \| Respond to of 6531

I have taken enough courses in finance to know that things like the MM theory of capital structure are great in the classroom or in an investment banking scenario but fall short in real world apps. Also, all my finance profs told us that the markets were overvalued and yet lamented the fact that they didn't have any money in the market. They all debunked technical analysis (weak form of market efficiency) but the problem is that TA is self perpetuating and it is perilous to ignore it. BTW - I have taken these courses at a top 5 school so please don't try to trash my education. One can profit from investing in a company like broadcom because the story hasn't reached "Money" magazine subscribers. Once it does or Broadcom shows signs of slowing down, it is time to get out. In the meantime using FA,TA, black magic are all valid forms of assessing how Broadcom will perform in 3-6 months. I never buy a stock on the basis of TA but have seen the power of momentum investors jumping on a stock purely on the basis of TA. As long as they do it to a stock that I own, I have no complaints. However, knowing that these guys can get out based on TA is very important for me.