Friedrich Nietzsche on truth

Sometimes people don't want to hear the truth because they don't want their illusions destroyed. 

~ Friedrich Nietzsche

 

Evan Lorenz on the retail investor-dominated stock market

Opendoor Technology, Inc. accounted for almost 10% of all U.S. stock market activity last week with 1.8 million shares traded in a single session.  On Monday, Opendoor postponed a special meeting to vote on a reverse split following a share price spurt to $2.05 from a low of $0.51 on June 25.  This marked a sharp turnaround for the unprofitable home-flipper, which had been warned by Nasdaq, Inc. about a possible delisting in May for failing to maintain a stock price above the $1 mark.

Here is just one of the many sightings from a market dominated by small investors.  Retail traders now account for 20.5% of equity trading, more than the combined participation of fundamental traders (14.6%) and banks (5.6%), according to Bianco Research, LLC.

[...]

At the same time, we are in the 98th percentile of all periods since 1990 for penny-stock trading, the 96th percentile for stocks valued at 10 times sales or more and the 85th percentile for unprofitable stocks, according to Goldman Sachs. 

~ Evan Lorenz, "Notes from the Joe and Jane market," Grant's Interest Rate Observer, August 1, 2024

Fred Hickey on the risk of tariffs to investors

Tariff hikes are a major risk [for investors].  The average effective U.S. tariff rate is currently around 15%.  The last time U.S. tariffs were this high was in the mid-1930s, during the Great Depression.  Many believe that the Smoot-Hawley tariffs (signed into law on June 17, 1930) were a major contributing factor for that extended depression.

~ Fred Hickey 

 

Howard Marks on investing errors

The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological.

~ Howard Marks

 

Marko Papic on how Canadians are reacting to Trump's trade war

I want you to pay attention to this giant Canadian flag behind me on the BC legislative building in Victoria, British Columbia, the capitol of the province.  It's indicative of the kind of nationalism that's sprung up, not just in Canada, but in other places as well in the world as a reaction to the realization that the Trump administration is no longer representing this magnanimous American one can rely on.  Rather, most of these countries have to do some painful structural reforms.

What that means for Canada in particular is the upcoming legislative bill called The One Canadian Economy Bill, which, for the first time in Canadian history, is going to bring down trade barriers between provinces and spur more... left-right trade rather than north-south, which Canada has been doing for most of its existence, effectively depending on American demand. 

~ Marko Papic, Twitter/X post, July 25, 2025

 

Mark Hulbert: "Individual investors are impulse buyers"

Individual investors are impulse buyers.  The median investor, often drawn to a stock because it’s in the news, spends just six minutes of research before buying that stock, according to a new study by finance professors Toomas Laarits and Jeffrey Wurgler at New York University’s Stern School of Business.  And the bulk of that already-short research time is devoted to perusing a price chart of the stock’s recent performance—and often just the current day’s trading session... 

The new research shows how far some individuals deviate from the assumption that economists make about investors behaving rationally.  While it may not be surprising to learn that many investors act impulsively, the study shows how little time many spend on research before buying a stock and what these investors pay attention to in that short window.

[...]

The professors reached their conclusions by studying a database of what’s known as “clickstream data.”  This database contained the complete browser history of a broadly representative group of several hundred individual investors, enabling the researchers to determine the webpages each investor visited, in what order and for how long before making a trade.  The professors analyzed more than eight million clicks and 60,000 hours of internet use.

While it’s possible an investor’s information about a stock might have come from sources other than the internet, Wurgler said he thinks this is unlikely, for two reasons.  First, because the internet provides free and near-real-time access to almost all relevant stock-picking variables, it is “the obvious venue for stock research for individual investors.” 

Second, “if an investor were nevertheless relying heavily on unobserved information, we might not expect a sudden burst of [internet] research on that stock prior to the trade, but it turns out that is often what we observe.”

~ Mark Hulbert, "Guess How Much Time Many Investors Spend on Researching Stock Buys?," The Wall Street Journal, May 3, 2025

 

Ayn Rand on the businessman and bureaucrat

If a businessman makes a mistake, he suffers the consequences.  If a bureaucrat makes a mistake, you suffer the consequences. 

~ Ayn Rand