55
votes
Accepted
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
Essentially, he means "one ignores history at their own peril".
We often hear people arguing that "the old rules no longer apply". Whether it be to valuations, borrowing, or any of the other common ...
- 6,440
33
votes
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
This refers to the faulty idea that the stock market will behave differently than it has in the past.
For example, in the late 1990s, internet stocks rose to ridiculous heights in price, to be ...
- 717
19
votes
Why do people who sell something on a marketplace ever allow the price to go down?
Just because one buyer was willing to pay $X doesn't necessarily mean other buyers will as well. Maybe that first buyer isn't interested in buying any more since he already has what he wants.
If you ...
- 1,187
16
votes
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
It's a statement that seems to be true about our tendency to believe we won't make the same mistake twice, even though we do, and that somehow what's occurring in the present is completely different, ...
- 10.1k
11
votes
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
There's an elephant in the room that no one is addressing:
Suckers.
Usually when there's a bubble, many people are fully aware that its a bubble. "This time its different" is a sales pitch to the ...
- 1,887
11
votes
Accepted
What do single quotation marks in the price of futures mean?
Cash bonds and futures based on U.S. Treasury securities do not trade in decimal format but in full percentage points, plus fractions of a 1/32 of par value.
(Source: Calculating U.S. Treasury ...
- 17.2k
8
votes
Accepted
Why do market makers sometimes quote absurd bid and ask prices rather than remove their quotes?
These "absurd bid and ask prices" are called "stub quotes".
A stub quote is an offer to buy or sell a stock at a price so far away from the prevailing market that it is not ...
- 17.2k
7
votes
Accepted
Calculating Bond Yield from Quote
There are a lot of things wrong in here:
WSJ does not seem to display the quotes properly. According to the website, Tullett Prebon is the source. Tullett is a very reputable broker with high quality ...
- 2,987
6
votes
"Break even" price on call options is lower than current stock price?
If those are the respective real time quotes then yes, you could do a Discount Arbitrage (buy call, exercise call to acquire stock, and sell stock. To avoid slippage, you'd buy a Synthetic Put via a ...
- 77k
6
votes
Accepted
What are the risks of placing limit orders on illiquid securities without knowing the Level 2 quotes?
A buy limit order is an order to purchase a security at or below a specified price. That guarantees that you pay no more than your limit price.
The only downside risk that you face is that your ...
- 77k
5
votes
Why do people who sell something on a marketplace ever allow the price to go down?
Pricing is a complex art, and there are a lot of non-intuitive aspects to it. Here's a real-world example that might help (examples use normal products, but the concepts are generally the same for ...
- 2,685
5
votes
Accepted
How does "Losers Average Losers" relate to dollar-cost averaging?
An investor with a long term outlook who believes his fundamental analysis is correct will systematically dollar cost average because at the onset, he has 30-40 years until retirement. In addition, ...
- 77k
5
votes
How does the Robinhood app or any website know the price of Bitcoin at any given time?
They use the price that people last bought or sold at themselves, across multiple sources.
Usually a site will tell you where they get their reference prices from.
Bitcoin's price is not algorithmic, ...
- 20.2k
4
votes
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'?
A brief review of the financial collapses in the last 30 years will show that the following events take place in a fairly typical cycle:
An innovation or significant change in the inputs affecting ...
- 141
4
votes
Accepted
Why is the stock change calculated from the last day close instead of the current day open?
the stock change is intended to be a measure of how much the value of a stock changes over the course of a day.
No - it indicates the change from one day to the next (or more generally from one ...
- 142k
3
votes
Why do market makers sometimes quote absurd bid and ask prices rather than remove their quotes?
First, MM's are bound to provide quotes within specific parameters by contract. ONE of those parameters is time (95% of the time, i.e.).
Second, this could be just a bet (maybe someone sells market - ...
- 11.6k
3
votes
Accepted
How is a stock's opening and closing price determined if no shares were traded?
The rules regarding the types of trade(s) that constitute the data points of Open, High, Low, Close and Volume are well defined.
For securities listed on NYSE, NYSE Arca, NYSE American or Cboe, they ...
- 3,934
3
votes
Accepted
Can a VAT registered company produce a quote with a mix of VAT products and NON VAT installation?
I wonder if this a Tax fiddle?
Doubtful.
I used to employ 3rd parties who were not VAT registered in the UK to undertake work for my company (which was VAT registered).
The invoice from my company to ...
- 819
3
votes
How does "Losers Average Losers" relate to dollar-cost averaging?
"if you keep doubling-down on positions that are losing, eventually you'll blow all of your money on something that never recovers"
I partially disagree. If a big company, one that is not in trouble, ...
- 6,753
3
votes
Quotes for funds in my Fidelity-managed 401(k)?
Depending on how you define public...
Quicken can download 401(k) account data from Fidelity, including current share counts and values. Other financial apps may or may not be able to do this; haven't ...
- 51.6k
2
votes
What is the difference between quote data, trade data and pricing data in stock market?
A current quote has the bid and ask price, the price of the last trade, the size of the market at the bid and the ask, and net change.
A Summary Quotes provides a more comprehensive view. It usually ...
- 77k
2
votes
Accepted
How is the end-of-day NAV of a global mutual fund calculated, and is it consistent?
You are correct that differences in trading hours are a consideration in pricing mutual funds. Another example would is holidays in a foreign country which are not holidays in the US. In this case, ...
- 2,791
2
votes
Is the current stock price the last bid price or the last ask price, or what?
The answer by Chris in your link explains it. Just to repeat:
The current price is the price of the last trade
The last trade occurred at the bid or ask price
The buyer paid the ask price or the ...
- 77k
2
votes
Why do people who sell something on a marketplace ever allow the price to go down?
If a seller shouldn't offer to sell at a price lower than the highest price anyone has ever paid, doesn't it follow that a buyer shouldn't offer to buy at a price higher than the lowest price anyone ...
- 10.6k
2
votes
Do market makers (equities, equity options) continually adjust bid / ask quotes or only adjust after they receive orders?
The market maker controls the bid and ask price only if the security is illiquid and there are no orders on the order book within the MM's bid/ask range. Any trader who places an order at a better ...
- 77k
2
votes
How does the Robinhood app or any website know the price of Bitcoin at any given time?
For example, CNBC uses Coin Metrics as their data provider, which sources their data from
Over 30 of the world’s leading spot and derivatives crypto exchanges
The prices are based on the latest ...
- 8,557
1
vote
What exactly are Level 2 quotes, and how are they related to the limit order book and "market depth"?
Since no one has answered, I will provide an incomplete answer based on what I have learned since the question was asked.
When someone says "Level 2 quotes", do they mean (1), (2), or (3)? ...
- 17.2k
1
vote
Do market makers (equities, equity options) continually adjust bid / ask quotes or only adjust after they receive orders?
Short answer: Mostly, yes.
Long answer:
Orders will be updated frequently based on new information. How frequently depends on how frequently new information is arriving. Any new information to the ...
- 1,259
1
vote
What does TMUBMUSD10Y stand for? (U.S. 10 Year Treasury Note)
I suspect we won't be able to get an authoritative answer, but here is a guess:
T = treasury
MU = ?
BM = bond market
USD = US dollar
10Y = year
I'll make this a community wiki so others can update.
Only top scored, non community-wiki answers of a minimum length are eligible