Ya' don't say?!

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Gm "hopes" to make profit in 2011.

As do I (hope that I make a profit, that is). Any reasonable person could care less if GM makes another cent (and would likely prefer them to fail)...ummm...unless you hitched your horse to their carriage (sorry, mate)...but, then, I have to ask: why haven't you indexed? Here's the creator of the index fund on...well...index funds. This stuff isn't rocket surgery. Wanna listen to a dude who's prescience gains him some credibility? Check out Taleb in Black Swan or Fooled by Randomness. Note: podcasts w/ Taleb also available on econtalk.


HAHAHAHAHAHA...."A slump in sales forced GM to file for bankruptcy protection this week."
Subtext: "...and when we say 'slump,' we mean, 'damn, this has been like a drunk monkey taking the bar exam.'"

Say it with me, folks: Debacle. It really is atrocious that the BBC didn't say anything about the obvious tomfoolery and mismanagement that has been part and parcel of GM for...oh....years, nor the governmental coddling that allowed this sort of atrocity.

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I'm not so sure I like indexing that much.
If you want to invest money and not do any research, well, then, fine. But that's not really investing. That's playing every number on the roulette table.

But from a market discipline point of view increased indexing means fewer investors with large enough concentrations of wealth in particular corporations to have the incentive to monitor those firms.

Without monitoring the principal - agent problem gets exacerbated, and... Taleb is right. Black swans amongst us go unnoticed.

Another way to look at it is to say indexing completely washes stock prices of the informative power. (Hayek) A majority of stockholders were buy-and-hold, don't check the listings types. The second biggest group might have been mutual fund managers, looking to beef up their returns - or at least their transactions - before reports go out. I'd lump in any MSNBC/Jim Cramer/seminar attendee types trying to use special formulas and graphs with the mutual managers. They are speculators - paying attention only to stock prices, and not the values of the firms.
The percentage of shares left to Buffet style investors or other serious researchers becomes too small to have an effect on firm management.

Should indexing be allowed then? Well, sure, why not? But market forces will emerge no matter how hard we try to escape them, and perhaps the most recent turn of events merely demonstrates that the market doesn't like uninformed investors.
Nathan

I agree, though. I won't be weeping over the death of GM, Chrysler, or Ford (isn't it merely a matter of time?).

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