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Whiplash: How to Survive Our Faster Future by Joi Ito, Jeff Howe

3D printing, air gap, Albert Michelson, AlphaGo, Amazon Web Services, artificial general intelligence, basic income, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Swan, Bletchley Park, blockchain, Burning Man, business logic, buy low sell high, Claude Shannon: information theory, cloud computing, commons-based peer production, Computer Numeric Control, conceptual framework, CRISPR, crowdsourcing, cryptocurrency, data acquisition, deep learning, DeepMind, Demis Hassabis, digital rights, disruptive innovation, Donald Trump, double helix, Edward Snowden, Elon Musk, Ferguson, Missouri, fiat currency, financial innovation, Flash crash, Ford Model T, frictionless, game design, Gerolamo Cardano, informal economy, information security, interchangeable parts, Internet Archive, Internet of things, Isaac Newton, Jeff Bezos, John Harrison: Longitude, Joi Ito, Khan Academy, Kickstarter, Mark Zuckerberg, microbiome, move 37, Nate Silver, Network effects, neurotypical, Oculus Rift, off-the-grid, One Laptop per Child (OLPC), PalmPilot, pattern recognition, peer-to-peer, pirate software, power law, pre–internet, prisoner's dilemma, Productivity paradox, quantum cryptography, race to the bottom, RAND corporation, random walk, Ray Kurzweil, Ronald Coase, Ross Ulbricht, Satoshi Nakamoto, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley startup, Simon Singh, Singularitarianism, Skype, slashdot, smart contracts, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, supply-chain management, synthetic biology, technological singularity, technoutopianism, TED Talk, The Nature of the Firm, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Two Sigma, universal basic income, unpaid internship, uranium enrichment, urban planning, warehouse automation, warehouse robotics, Wayback Machine, WikiLeaks, Yochai Benkler

For a country like the United States and for the companies that have grown up here, it feels like a backslide, a reversion to a more seat-of-your-pants time in our economic history. And maybe it is. But it is also critical to surviving and thriving in an age where safety in innovation is no longer a virtue and where taking chances is critical to keeping companies, and economies, afloat. PS: Buy Low, Sell High How do you make money investing? Buy low, sell high. I once asked a Japanese government fund manager investing in stocks how he picked his investments. He said, “I invest in big companies, the ones without risk.” I had to explain to him that everything has risk and that what you needed to understand was what the risks were and their probabilities so that you could assess the value of the stock.

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People often tease the admissions of some of the top universities in Japan as a trailing indicator of where an industry is going. The “buy low, sell high” version of higher education is to try to find emerging fields where you have an unfair advantage and a passion. It might be risky, but you’re much more likely to find yourself at the top of an emerging field with less competition, and in the worst case, you still end up doing something you enjoy. In addition to “buy low, sell high,” another important lesson from venture investing is that when the cost of innovation becomes very low, trying to reduce losses is less important than trying to amplify your wins.

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We often say, “The information is in the price.” The company may be in better shape than when I first invested, but people may be underestimating the risks and overestimating the opportunity. The stock could be overpriced. In other words, use the information that you have to understand risk, take risk, but buy low, sell high. Understanding the risk allows you to more accurately value the risk—and there is always risk. People who want to take over projects when they are doing really well and stick around until they are disasters are people who are “buying high and selling low.” Students who start studying a field that is peaking as they enter college are often faced with extreme competition for jobs and a declining industry by the time they graduate.

How to Predict the Unpredictable by William Poundstone

accounting loophole / creative accounting, Albert Einstein, Bernie Madoff, Brownian motion, business cycle, butter production in bangladesh, buy and hold, buy low sell high, call centre, centre right, Claude Shannon: information theory, computer age, crowdsourcing, Daniel Kahneman / Amos Tversky, Edward Thorp, Firefox, fixed income, forensic accounting, high net worth, index card, index fund, Jim Simons, John von Neumann, market bubble, money market fund, pattern recognition, Paul Samuelson, Ponzi scheme, power law, prediction markets, proprietary trading, random walk, Richard Thaler, risk-adjusted returns, Robert Shiller, Rubik’s Cube, statistical model, Steven Pinker, subprime mortgage crisis, transaction costs

That would have earned a return of 6.70 percent, beating the stock market by 0.47 percentage points a year. If that doesn’t sound like anything special, take a look at the chart below. It shows the (hypothetical!) growth of a $1,000 portfolio invested since 1881. A buy-and-hold investment in the S&P stocks would have grown to an inflation-adjusted $2,932,724. A buy-low, sell-high portfolio, with PE limit values of 13 and 28, would have grown to $5,239,915. The return is only half the story. Look at how smooth the upper line is, compared to buy-and-hold, over the past twenty years. A PE-directed investor would have sold out of stocks in January 1997, sparing herself a couple of agonizing crashes.

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Then you would have sold out of the market in January 1997, before the dot-com crash. In retrospect these actions look almost psychic. These three timely moves would have avoided horrific losses, thereby beating the market handsomely over a 132-year period. But notice that a trader who began using the buy-low, sell-high system in the mid-1930s could have spent an entire investing lifetime without ever getting a trading signal or benefiting from the system in any way! On the other hand, had you been in the market in 1997, or 1929, you would have appreciated the system’s guidance. There is a more powerful way to make use of PEs.

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In this case, the highest returns — 14, 15, or 16 to buy and 24 or 25 to sell — form a bull’s-eye, surrounded by other high returns. A dart thrower’s reasonable aiming point might be 15/24. It returned 7.93 percent in this period, beating the S&P 500 by 1.70 percentage points a year. These thresholds are less extreme than those of the simpler buy-low, sell-high system because you’re not necessarily trading at them. When there is momentum, the trailing limit trick can often hitch a ride. This also has the effect of producing a few more trades. That helps ensure that the system will produce an advantage in the investor’s lifetime. Let me now justify the trailing stop value of 6 percent.

The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit From Price Declines by Alexander Elder

Atul Gawande, backtesting, Bear Stearns, Boeing 747, buy and hold, buy low sell high, Checklist Manifesto, double helix, impulse control, low interest rates, paper trading, short selling, systematic trading, The Wealth of Nations by Adam Smith, uptick rule

Grading every entry and exit as well as every trade will train you to adopt a demanding and disciplined attitude towards your work. As a private trader, you have no supervisor. To win, you must become your own manager, and that’s what trade ratings help you accomplish. TWO TYPES OF TRADING There are two key approaches to buying. One is value buying: “buy low, sell high.” The other is momentum buying: “buy high, sell even higher.” A value buyer identifies value and tries to buy near or below it. He aims to sell when prices become overvalued. I put two exponential moving averages on every chart and call the space between them the value zone. My software draws a channel parallel to the daily chart’s slow moving average that encloses about 95% of all prices for the past three months.

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A long-term trend trader can use channels to measure the quality of trades. 3. A trade capturing over 30% of a channel earns an “A.” 4. A trade capturing less than 20% of a channel earns a “D.” Question 29—Buying Find the incorrect statement about buying:1. The principle of value buying is “buy low, sell high.” 2. The principle of momentum buying is “buy high, sell even higher.” 3. The upper channel line identifies the level of depression and the lower channel line the level of mania in the markets. 4. Momentum trading works well in runaway trends. Question 30—Value Figure 3.30 Please match the following descriptions with the letters on the chart:1.

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The channel was $7.89 tall at the time of the trade. The trade covered 34% of the channel, earning an A grade. It pays to concentrate on points and percentages, and not count money while in a trade. Question 33—Value Buying vs. Momentum Buying Answers 1. B and D 2. A, C, and E The principle of value buying is “buy low, sell high.” The principle of momentum buying is “buy high, sell even higher.” Value buying means going long when prices pull back to or below value. Buying on a breakout above an important earlier peak is a prime example of momentum buying. Notice several additional buying opportunities besides those marked with letters on this chart.

Big Mistakes: The Best Investors and Their Worst Investments by Michael Batnick

activist fund / activist shareholder / activist investor, Airbnb, Albert Einstein, AOL-Time Warner, asset allocation, Bear Stearns, behavioural economics, bitcoin, Bretton Woods, buy and hold, buy low sell high, Carl Icahn, cognitive bias, cognitive dissonance, Credit Default Swap, cryptocurrency, Daniel Kahneman / Amos Tversky, endowment effect, financial engineering, financial innovation, fixed income, global macro, hindsight bias, index fund, initial coin offering, invention of the wheel, Isaac Newton, Jim Simons, John Bogle, John Meriwether, Kickstarter, Long Term Capital Management, loss aversion, low interest rates, Market Wizards by Jack D. Schwager, mega-rich, merger arbitrage, multilevel marketing, Myron Scholes, Paul Samuelson, Pershing Square Capital Management, quantitative easing, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, Robert Shiller, short squeeze, Snapchat, Stephen Hawking, Steve Jobs, Steve Wozniak, stocks for the long run, subprime mortgage crisis, transcontinental railway, two and twenty, value at risk, Vanguard fund, Y Combinator

“Legacy of Benjamin Graham: The Original Adjunct Professor,” Heilbrunn Center for Graham and Dodd Investing, Columbia Business School, February 1, 2013. CHAPTER 2 Jesse Livermore Manage Your Risk Jesse Livermore was a larger‐than‐life, full‐blooded character who happened to embody every great trading maxim of the time. —Paul Tudor Jones “Buy low, sell high.” “Nobody ever went broke taking a profit.” “Buy when there's blood in the streets.” We often use these axioms to justify why we bought, sold, or held onto an investment. The problem with rules of thumb, specifically when it comes to investing, is that they mask complexity. There are far too many variables and crosscurrents pushing and pulling on the price of a security to boil everything down to a cute little phrase.

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Jesse Livermore is the most famous, maybe the first famous, market speculator. The lesson that investors should learn from Livermore is how dangerous rules of thumb can be. If you catch yourself saying “buy when there is blood in the streets,” it's a good idea to remember that the man who basically invented market phrases couldn't even stick to them. Buy low, sell high sounds great, and the idea is, but like many things, it's easy to say, hard to do. Jesse Livermore, or JL, as his friends knew him, was born and raised on a farm in Acton, Massachusetts, in 1877. At 14, he left home for the big city—Boston—where he quickly got a job at Paine Webber as a board boy, earning $6 a week.

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On the real stock exchange, the ticker was only the communication medium, and the real price being quoted on the floor exchange could be very different.4 In May 1901, JL would experience his first large loss as a professional speculator, this time from the short side. Shorting is the opposite of buying, and this suited Livermore, a natural skeptic, perfectly. Rather than buy low, sell high, the short seller is attempting to sell high, buy back low and pocket the difference. On a Monday before the market opened, Livermore put in orders to short 1,000 shares of U.S. Steel at $100 and 1,000 shares of Santa Fe Railroad at $80. He had used up his entire capital and was levered 4:1.

The Great Convergence: Information Technology and the New Globalization by Richard Baldwin

"World Economic Forum" Davos, 3D printing, additive manufacturing, Admiral Zheng, agricultural Revolution, air freight, Amazon Mechanical Turk, Berlin Wall, bilateral investment treaty, Branko Milanovic, buy low sell high, call centre, Columbian Exchange, commoditize, commodity super cycle, David Ricardo: comparative advantage, deindustrialization, domestication of the camel, Edward Glaeser, endogenous growth, Erik Brynjolfsson, export processing zone, financial intermediation, George Gilder, global supply chain, global value chain, Henri Poincaré, imperial preference, industrial cluster, industrial robot, intangible asset, invention of agriculture, invention of the telegraph, investor state dispute settlement, Isaac Newton, Islamic Golden Age, James Dyson, Kickstarter, knowledge economy, knowledge worker, Lao Tzu, low skilled workers, market fragmentation, mass immigration, Metcalfe’s law, New Economic Geography, out of africa, paper trading, Paul Samuelson, Pax Mongolica, profit motive, rent-seeking, reshoring, Richard Florida, rising living standards, Robert Metcalfe, Robert Solow, Second Machine Age, Simon Kuznets, Skype, Snapchat, Stephen Hawking, tacit knowledge, telepresence, telerobotics, The Wealth of Nations by Adam Smith, trade liberalization, trade route, Washington Consensus

This is the fundamental reason that nations trade, and it explains why nations export what they do. It is also the root reason why trade can be win-win for all nations regardless of their overall level of competitiveness. Put simply, all nations can gain since trade is what could be called a “two-way, buy-low-sell-high deal.” This can be illustrated with the case of Swiss-Italian smuggling in the 1950s. Just after World War II, few European currencies were “convertible”—that is, they were basically worthless outside their own nation. A French or U.S. bank, for instance, would not exchange Italian lira into dollars or French francs.

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But oddly enough, the Italians also won. The Italians got 100 kilos of cigarettes for the price of 75 kilos of rice, which means they effectively paid just 7.5 million lira for the 100 kilos of cigarettes instead of the full local price of 10 million liras. It is in this sense that the smuggling can be thought of as a buy-low-sell-high opportunity for both the Swiss and the Italians. The logic is absolutely bulletproof as curious readers can verify for themselves by changing around the numbers in Table 6. The same conclusion holds for any situation where the relative price of cigarettes and rice differ in the two nations—even if Switzerland ends up as the importer of cigarettes.

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The same conclusion holds for any situation where the relative price of cigarettes and rice differ in the two nations—even if Switzerland ends up as the importer of cigarettes. Trade is just legalized smuggling, so the basic two-way gain from smuggling is also the basic reason that all nations gain from trade. That is to say, any time relative prices differ across nations, trade creates a two-way, buy-low-sell-high opportunity. Backing this up one stage—using costs of production to explain national prices—this logic means that all nations can gain whenever their production-cost profiles differ. Impact on National Production Patterns From this smuggling example it is clear that trade is a type of arbitrage and that it tends to narrow the preexisting differences in relative prices.

Learn Algorithmic Trading by Sebastien Donadio

active measures, algorithmic trading, automated trading system, backtesting, Bayesian statistics, behavioural economics, buy and hold, buy low sell high, cryptocurrency, data science, deep learning, DevOps, en.wikipedia.org, fixed income, Flash crash, Guido van Rossum, latency arbitrage, locking in a profit, market fundamentalism, market microstructure, martingale, natural language processing, OpenAI, p-value, paper trading, performance metric, prediction markets, proprietary trading, quantitative trading / quantitative finance, random walk, risk tolerance, risk-adjusted returns, Sharpe ratio, short selling, sorting algorithm, statistical arbitrage, statistical model, stochastic process, survivorship bias, transaction costs, type inference, WebSocket, zero-sum game

Long positions make money when market prices are higher than the price of the position, and lose money when market prices are lower than the price of the position. Short positions, conversely, make money when market prices go down from the price of the position and lose money when market prices go up from the price of the position, hence, the well-known ideas of buy low, sell high, and buy high, sell higher, and so on. Multiple buy executions, or multiple sell executions for different amounts and prices, cause the overall position price to be the volume weighted average of the execution prices and quantities. This is called the Volume Weighted Average Price (VWAP) of the position.

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Our first algorithmic trading (buy when the price is low, and sell when the price is high) You may now feel that you are impatient to make money, and you may also be thinking When can you start doing so? We have talked about what we will address in this book. In this section, we will start building our first trading strategy, called buy low, sell high. Building a trading strategy takes time and goes through numerous steps: You need an original idea. This part will use a well-known money-making strategy: we buy an asset with a price lower than the one we will use to sell it. For the purpose of illustrating this idea, we will be using Google stock.

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A signal can use a large variety of inputs. These inputs may be market information, news, or a social networking website. Any combination of data can be a signal. From the section entitled Our first algorithmic trading (buy when the price is low, and sell when the price is high), for the buy low sell high example, we will calculate the difference in the adjusted close between two consecutive days. If the value of the adjusted close is negative, this means the price on the previous day was higher than the price the following day, so we can buy since the price is lower now. If this value is positive, this means that we can sell because the price is higher.

Side Hustle: From Idea to Income in 27 Days by Chris Guillebeau

Airbnb, buy low sell high, content marketing, inventory management, Lyft, passive income, ride hailing / ride sharing, Salesforce, sharing economy, side hustle, side project, Silicon Valley, Silicon Valley startup, subscription business, TaskRabbit, the scientific method, Uber for X, uber lyft

Technically, he has customers, since there are real people buying his products—but he has no idea who they are, and in most cases they have no idea who he is, either. This hustle exists because of an inefficient market. The items he buys (typically computers and electronic equipment) sell at different prices from different vendors. Trevor’s goal is to buy low, sell high—or at least sell for a bit higher than what he paid. If there were no differences in the price of the items Trevor purchases to resell, he wouldn’t be able to make a profit. The skills required to be successful in this kind of business are different from those required for more traditional product and service businesses.

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Each year after that, he’s either doubled or tripled that figure, to the point where it now brings in more than $100,000 a year exclusively from his hustle. Naturally, he still travels, and because he never touches most of his inventory (all of his orders are shipped out by Amazon.com), the hustle keeps humming along—even while he’s sipping champagne at thirty thousand feet. BUY LOW, SELL HIGH In the classic Oregon Trail game, a wagon full of pioneers sets out to travel from Independence, Missouri, to the West Coast wilderness. Along the way, they’re beset with numerous obstacles: disease, attack from bandits, environmental hardships. The goal of the game is to soldier through the challenges and eventually arrive at a faraway settlement with as many members of your party as you can.

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Most players try to ration their supplies as best they can and try to make their money last the whole journey to Willamette Valley. But what many don’t realize is that you can buy and sell from the merchants you encounter, and naturally the price is different from place to place. Smart players will follow the classic advice for picking stocks: buy low, sell high. Trevor’s side hustle is a real-life Oregon Trail. He attempts to buy low and sell high. Sometimes he hits the jackpot with a big profit margin. Other times, he gets stuck with an item that doesn’t resell—basically a natural risk of the business. But by constantly experimenting with his inventory and prices, he’s able to continuously eke out consistent profits, along with all those points and miles he uses to travel in style with his family.

Nerds on Wall Street: Math, Machines and Wired Markets by David J. Leinweber

"World Economic Forum" Davos, AI winter, Alan Greenspan, algorithmic trading, AOL-Time Warner, Apollo 11, asset allocation, banking crisis, barriers to entry, Bear Stearns, Big bang: deregulation of the City of London, Bob Litterman, book value, business cycle, butter production in bangladesh, butterfly effect, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Charles Babbage, citizen journalism, collateralized debt obligation, Cornelius Vanderbilt, corporate governance, Craig Reynolds: boids flock, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Danny Hillis, demand response, disintermediation, distributed generation, diversification, diversified portfolio, electricity market, Emanuel Derman, en.wikipedia.org, experimental economics, fake news, financial engineering, financial innovation, fixed income, Ford Model T, Gordon Gekko, Hans Moravec, Herman Kahn, implied volatility, index arbitrage, index fund, information retrieval, intangible asset, Internet Archive, Ivan Sutherland, Jim Simons, John Bogle, John Nash: game theory, Kenneth Arrow, load shedding, Long Term Capital Management, machine readable, machine translation, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, market fragmentation, market microstructure, Mars Rover, Metcalfe’s law, military-industrial complex, moral hazard, mutually assured destruction, Myron Scholes, natural language processing, negative equity, Network effects, optical character recognition, paper trading, passive investing, pez dispenser, phenotype, prediction markets, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Reminiscences of a Stock Operator, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Metcalfe, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, semantic web, Sharpe ratio, short selling, short squeeze, Silicon Valley, Small Order Execution System, smart grid, smart meter, social web, South Sea Bubble, statistical arbitrage, statistical model, Steve Jobs, Steven Levy, stock buybacks, Tacoma Narrows Bridge, the scientific method, The Wisdom of Crowds, time value of money, tontine, too big to fail, transaction costs, Turing machine, two and twenty, Upton Sinclair, value at risk, value engineering, Vernor Vinge, Wayback Machine, yield curve, Yogi Berra, your tax dollars at work

The biggest piece of the real cost of trading is in the market impact, the price movement caused by the trade itself. Here’s how market impact works. A typical market quote will be along lines of “1,000 shares offered to buy at $50, 1,000 shares to sell at $50.25.” Anyone can buy or sell at those prices in the advertised quantities. This is how specialists and market makers make a living: buy low, sell high. Market impact comes into play when you want to trade in quantities larger than the quoted size. By the inexorable laws of supply and demand, larger buy orders will generally happen at higher prices, and larger sells at lower prices. For our example, a skilled (or lucky) trader trying to buy 50,000 shares would buy the first 1,000 at the quoted $50, and might be able to find the next 49,000 at the same price, or close to it.

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Arbitrage and Predictive Strategies Some quantitative strategies work by pure arbitrage, essentially finding the 4.9-cent nickels in the market before anyone else does. Examples are commodities, such as gold, that trade at the same time on multiple markets around the world. Arbitrageurs move in to equalize the disparities between markets when they arise, buying on the low-priced side and selling on the high-priced side. “Buy low, sell high” is what keeps markets together. Those participants with the lowest transaction costs jump in first, and the physics of supply and demand brings prices back in line. Being an arbitrageur is nice work if you can get it, but it is largely a game for only the largest players. Another level of quantitative strategy 190 Nerds on Wall Str eet involves making some kind of a prediction.

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But that would conflict with maximizing volume to accommodate temporary imbalances between the flow of buyers and sellers. If a specialist or market maker had a way of anticipating which stocks might have that kind of volatility, he could “roll into a ball” and stay flat in those names, while keeping the buy low/sell high process in high gear on the others. This is why John Mulheren was counting messages on stock message boards. His unmatched market sense told him that if there was a huge spike in overnight message traffic about a stock, it was a good bet that something volatile might happen the next trading day, and at the very least, it was worth a deeper look before commencing his usual aggressive market making.

A Wealth of Common Sense: Why Simplicity Trumps Complexity in Any Investment Plan by Ben Carlson

Albert Einstein, asset allocation, backtesting, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, book value, business cycle, buy and hold, buy low sell high, commodity super cycle, corporate governance, delayed gratification, discounted cash flows, diversification, diversified portfolio, do what you love, endowment effect, family office, financial independence, fixed income, Gordon Gekko, high net worth, index fund, John Bogle, junk bonds, loss aversion, market bubble, medical residency, Occam's razor, paper trading, passive investing, Ponzi scheme, price anchoring, Reminiscences of a Stock Operator, Richard Thaler, risk tolerance, Robert Shiller, robo advisor, South Sea Bubble, sovereign wealth fund, stocks for the long run, technology bubble, Ted Nelson, transaction costs, Vanguard fund, Vilfredo Pareto

It's all about harnessing the power of thinking long-term, cutting down on unforced errors, and having the patience to allow compound interest to work in your favor. The question is: How does one go about this? Here is some standard investment advice that is both simple and effective: Think and act for the long term. Ignore the noise. Buy low, sell high. Keep your emotions in check. Don't put all of your eggs in one basket. Stay the course. These are all great pieces of advice. The question is how. How do I know what long term even means for me? How do I buy low and sell high? How do I keep my emotions out of the equation? How do I diversify my portfolio correctly?

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Studies on the timing of when to perform a systematic rebalance give varying results, but the main finding of a Vanguard study showed the act of rebalancing itself, no matter the interval (quarterly, semiannually, annually, etc.) was the key to investor success.9 You're automating a contrarian approach in this way as you buy the relative losers and sell the relative winners. Everyone knows the phrase buy low, sell high, but most don't understand how to actually put it into practice. Rebalancing is a systematic approach of buying low and selling high, every time you do it. Some investors prefer a rebalance every time their asset allocation drifts away from the target weights. Others pick a specific date or time frame.

The Wealth Dragon Way: The Why, the When and the How to Become Infinitely Wealthy by John Lee

8-hour work day, Abraham Maslow, Albert Einstein, barriers to entry, Bernie Madoff, butterfly effect, buy low sell high, California gold rush, Donald Trump, financial independence, gentrification, high net worth, high-speed rail, intangible asset, Kickstarter, low interest rates, Mark Zuckerberg, Maslow's hierarchy, multilevel marketing, negative equity, passive income, payday loans, reality distortion field, self-driving car, Snapchat, Stephen Hawking, Steve Jobs, stocks for the long run, stocks for the long term, Tony Hsieh, Y2K

I often suggest to my students that they go and watch a fruit and veg seller in action. Go down to a local market and watch them sell. The successful ones make a huge fortune. It's a lucrative business, and a great one to learn in. Alan Sugar started out working for a greengrocer! Business is business. Sugar says it's simple: Buy low, sell high. It's when people start to complicate that process and deviate from it that they tend to fail. If you've lost focus, go back to basics; go watch the market stall owners. It's like in the movie Rocky III when Apollo Creed tells Rocky he's lost his edge; he takes Rocky back to basics at his old gym, where he sees young fighters who are hungry for success, with the “eye of the tiger” in their expressions.

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A foolproof guide to losing weight. Okay, we didn't invent either formula; they've been around forever, but the fact is they are foolproof insofar as they definitely work. What's the catch? Human intervention! Value investing (and all we are doing here is applying value investing to property) is simple: Buy low, sell high. But people fail because they let their emotions get in the way: for example, they'll get a big tip about a stock and buy it despite the fact that it is overvalued, then become distraught when the tip doesn't pay off. Similarly, in the property market people get seduced by pretty houses and spend too much, then balk as the market dips a bit and they slip into negative equity.

A Man for All Markets by Edward O. Thorp

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", 3Com Palm IPO, Alan Greenspan, Albert Einstein, asset allocation, Bear Stearns, beat the dealer, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, book value, Brownian motion, buy and hold, buy low sell high, caloric restriction, caloric restriction, carried interest, Chuck Templeton: OpenTable:, Claude Shannon: information theory, cognitive dissonance, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Edward Thorp, Erdős number, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, Garrett Hardin, George Santayana, German hyperinflation, Glass-Steagall Act, Henri Poincaré, high net worth, High speed trading, index arbitrage, index fund, interest rate swap, invisible hand, Jarndyce and Jarndyce, Jeff Bezos, John Bogle, John Meriwether, John Nash: game theory, junk bonds, Kenneth Arrow, Livingstone, I presume, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, Mason jar, merger arbitrage, Michael Milken, Murray Gell-Mann, Myron Scholes, NetJets, Norbert Wiener, PalmPilot, passive investing, Paul Erdős, Paul Samuelson, Pluto: dwarf planet, Ponzi scheme, power law, price anchoring, publish or perish, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, RFID, Richard Feynman, risk-adjusted returns, Robert Shiller, rolodex, Sharpe ratio, short selling, Silicon Valley, Stanford marshmallow experiment, statistical arbitrage, stem cell, stock buybacks, stocks for the long run, survivorship bias, tail risk, The Myth of the Rational Market, The Predators' Ball, the rule of 72, The Wisdom of Crowds, too big to fail, Tragedy of the Commons, uptick rule, Upton Sinclair, value at risk, Vanguard fund, Vilfredo Pareto, Works Progress Administration

Zucker, adapted for ebook Cover design: Pete Garceau Cover photograph: © Leigh Wiener v4.1 ep Contents Cover Title Page Copyright Preface Foreword Chapter 1: Loving to Learn Chapter 2: Science Is My Playground Chapter 3: Physics and Mathematics Chapter 4: Las Vegas Chapter 5: Conquering Blackjack Chapter 6: The Day of the Lamb Chapter 7: Card Counting for Everyone Chapter 8: Players Versus Casinos Chapter 9: A Computer That Predicts Roulette Chapter 10: An Edge at Other Gambling Games Chapter 11: Wall Street: The Greatest Casino on Earth Chapter 12: Bridge with Buffett Chapter 13: Going into Partnership Chapter 14: Front-Running the Quantitative Revolution Chapter 15: Rise… Chapter 16: …And Fall Chapter 17: Period of Adjustment Chapter 18: Swindles and Hazards Chapter 19: Buying Low, Selling High Chapter 20: Backing the Truck Up to the Banks Chapter 21: One Last Puff Chapter 22: Hedging Your Bets Chapter 23: How Rich Is Rich? Chapter 24: Compound Growth: The Eighth Wonder of the World Chapter 25: Beat Most Investors by Indexing Chapter 26: Can You Beat the Market?

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The reporters often don’t know whether a fluctuation is statistically common or rare. Then again, people tend to make the error of seeing patterns or explanations when there aren’t any, as we’ve seen from the history of gambling systems, the plethora of worthless pattern-based trading methods, and much of story-based investing. Chapter 19 * * * BUYING LOW, SELLING HIGH It’s the spring of 2000 and another warm sunny day in Newport Beach. From my home six hundred feet high on the hill I can see thirty miles across the Pacific Ocean to Wrigley’s twenty-six-mile-long Catalina Island, stretched across the horizon like a huge ship. To the left, sixty miles away, the top of the equally large San Clemente Island is just visible above the horizon.

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Investors who chase returns, buying asset classes on the way up and selling on the way down, have had poor historical results. The tech bubble that ended in 2000, the inflation in real estate prices that peaked in 2006, and the sharp drop in equity prices in 2008–09 were especially costly for them. On the other hand, the buy-low/sell-high investors, whom you might think of as “contrarian” or “value” investors, have tended to outperform by switching some funds between asset classes. The tables in appendix B show that stocks and commercial real estate have provided the best long-run results for investors. Interest rate investments have been roughly break-even after taxes and inflation, and only modestly positive for nontaxable investors.

Smarter Investing by Tim Hale

Albert Einstein, asset allocation, buy and hold, buy low sell high, capital asset pricing model, classic study, collapse of Lehman Brothers, corporate governance, credit crunch, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, fiat currency, financial engineering, financial independence, financial innovation, fixed income, full employment, Future Shock, implied volatility, index fund, information asymmetry, Isaac Newton, John Bogle, John Meriwether, Long Term Capital Management, low interest rates, managed futures, Northern Rock, passive investing, Ponzi scheme, purchasing power parity, quantitative easing, random walk, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, South Sea Bubble, technology bubble, the rule of 72, time value of money, transaction costs, Vanguard fund, women in the workforce, zero-sum game

Nothing sedates rationality like large doses of effortless money.’ Buy high, sell low – a recipe for wealth destruction Figure 5.1 shows how many people invest, allowing their emotions and lack of market knowledge to drive the type of wealth destruction that you saw in the research above. While most investors can understand the simple concept of buy low, sell high, the very nature of their behaviour results in exactly the opposite. Investors tend to be influenced by what is going on in the markets over the short term. This makes them vulnerable to what the industry refers to as being ‘whip-sawed’ as they move from last year’s bad performing investment to this year’s best performer.

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The rebalancing bonus represents the return benefit that is accrued by owning a basket of uncorrelated/low-correlated individual futures (agricultural products, oil, metals, etc.) with high standard deviation that is rebalanced regularly. Even if the net excess return on each individual futures contract is zero (implying no insurance premium), a reasonable excess return can potentially be generated by regular rebalancing of the basket (a buy-low-sell-high strategy). The contribution of each element is debated, with some arguing that the return is primarily due to the insurance premium (Gorton and Rouwenhorst, 2004) and others arguing for the rebalancing bonus (Erb and Harvey, 2006). It is likely that all these factors, in some proportion, contribute to the historical excess return evidenced.

Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen, Bryce Leung

Affordable Care Act / Obamacare, Airbnb, Apollo 13, asset allocation, barriers to entry, buy low sell high, call centre, car-free, Columbine, cuban missile crisis, Deng Xiaoping, digital nomad, do what you love, Elon Musk, fear of failure, financial independence, fixed income, follow your passion, Great Leap Forward, hedonic treadmill, income inequality, index fund, John Bogle, junk bonds, longitudinal study, low cost airline, Mark Zuckerberg, mortgage debt, Mr. Money Mustache, obamacare, offshore financial centre, passive income, Ponzi scheme, risk tolerance, risk/return, side hustle, Silicon Valley, single-payer health, Snapchat, Steve Jobs, subprime mortgage crisis, supply-chain management, the rule of 72, working poor, Y2K, Zipcar

You can’t sell things that have gone down. Secondly, rebalancing enforces good investor behavior. Like I said, you’re only allowed to sell assets that have gone up. On the flip side, you’re only allowed to buy assets that are sitting below target. In other words, you can only buy assets that have gone down. Buy low. Sell high. The definition of how to make money in the stock market. Finally, rebalancing forces you to ignore your two major investing emotions—greed and fear. And if it’s not obvious why overriding your emotions is important, let’s see what happens in a crash situation. During the 2008 crisis, every few days there would be another stomach-churning five-to-seven-hundred-point drop in the stock market.

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., 101–5, 101–6 surviving a stock market crash, 100–104, 101–3, 108, 111, 114, 114, 116, 116, 195 taxes, 137, 140, 141–44, 142, 142 See also specific bonds brain blaming your brain, 56, 63–75, 68–69, 71–72, 74 budget and your brain, understanding the relationship between the two, 75–77, 76 poverty and your brain, understanding the relationship between the two, 5–6, 7, 9 Brandon’s story, 259 Branson, Richard, 24 Brickman, Philip, 63 buckets and backups, 203–18, 220 Bucket System, 204, 204–7, 206–7, 217, 220 budgeting, 70–77, 71–72, 74, 76 Buffett, Warren, 121, 272, 275 bullets vs. missiles, 213–14, 214 Burnett, Frances Hodgson, 14 buying low, selling high, 115, 176 buying vs. renting a house, 85–86, 88 California, 57, 107, 153, 154 Cambodia, 49, 189, 191, 195, 198 CampFi, 251 Canada/Canadians becoming wealthy, 186, 197, 200, 203–6, 230 middle class, 39, 43, 69, 94, 106, 107, 108, 108, 109, 111, 121, 129, 132–33, 132–33, 152–53, 181, 186, 201, 244 poverty, 7–8, 10, 16, 24, 27, 37, 39, 43, 50 CanadianTravelHacking.com, 197 capital gains harvesting, 149–52, 149–53, 155, 206–7, 210, 226 taxes and, 138, 139, 153–54, 263 See also stocks cardboard box dollhouse, author’s story about, 13 career choice vs. passion, 30 cars, 73, 75, 222–23, 234, 235–36 car-sharing services, 223, 256 cash-asset swap, 208–9, 208–10 Cash Cushion and Yield Shield, 173–87, 188, 298–302 backup plans, 210, 211, 212, 215, 218 bonds and, 178, 185 Bucket System, 204, 204–7, 206–7, 217 dark side of early retirement, the fear of uncertainty, 248, 249 financial independence (FI) and, 173, 186 4 Percent Rule, 164, 175–87, 178, 181–86 inflation and, 220, 221 interest income, 180, 187 raising the Yield Shield, 179–85, 181–85, 187 stock market, 174, 175–77, 180, 181 See also becoming wealthy catastrophe, expectation of, 35 CBC (Canadian Broadcasting Corporation), 250 Charlton, Rob and Robin, their story, 259 Chartered Public Accountant, 135, 155 Chase Sapphire Preferred (credit card), 196 Chautauqua retreat, 250–51 Chiang Mai, 195, 197 chickens, packaging of, 7 chi ku, 46, 47, 52, 156, 188 child-rearing.

I Will Teach You To Be Rich by Sethi, Ramit

Albert Einstein, asset allocation, buy and hold, buy low sell high, diversification, diversified portfolio, do what you love, geopolitical risk, index fund, John Bogle, late fees, low interest rates, money market fund, mortgage debt, mortgage tax deduction, Paradox of Choice, prediction markets, random walk, risk tolerance, Robert Shiller, shareholder value, Silicon Valley, survivorship bias, the rule of 72, Vanguard fund

You can hear the media scream “Global financial crisis!” only so many times before you decide to opt out altogether. And yet, a drop in the stock market is a good thing for young people. It means investments are essentially on sale, so we can buy stocks for less now and then let our money grow for decades. When people say “buy low, sell high,” this is what they’re talking about. Three Startling Stats About Young People and 401(k)s * * * Remember, a 401(k) is just a type of investment account—one that offers huge benefits that I’ll cover on page 78. Here’s what’s stunning: Of employees age twenty-five and under, Less than one-third participate in a 401(k); Less than 4 percent max out their contributions; And, astonishingly, only 16 percent contribute enough to get the full company match.

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In fact, I just made the largest investment of my life, moving $46,000 in my 401(k) from cash into a Fidelity index fund. Am I scared? You bet. $46,000 is a hell of a lot of money. But I’m taking my cues from Warren Buffett, the world’s richest man, who in 2004 gave this advice: “Be fearful when others are greedy and greedy when others are fearful.” Or, to put it in more familiar terms, “Buy low, sell high.” I think the market is low right now, so I’ve made a lump-sum investment. But buying low can be intimidating. Suppose the markets never go back up? Nobody wants to wrestle with a bear. I’m taking a risk by attacking the beast head on. Moves like this don’t bother me as much as they might bother other people (my wife, for example) because my risk tolerance is high.

Mathematics for Economics and Finance by Michael Harrison, Patrick Waldron

Brownian motion, buy low sell high, capital asset pricing model, compound rate of return, discrete time, incomplete markets, law of one price, market clearing, Myron Scholes, Pareto efficiency, risk tolerance, riskless arbitrage, short selling, stochastic process

The most powerful application is in the derivation of option-pricing formulae, since options can be shown to be identical to various synthetic portfolios made up of the underlying security and the riskfree security. The simple rule for figuring out how to exploit arbitrage opportunities is ‘buy low, sell high’. With interest rates and currencies, for example, this may be a non-trivial calculation. Exercise: If the interest rate for one-year deposits or loans is r1 per annum compounded annually, the interest rate for two-year deposits or loans is r2 per annum compounded annually and the forward interest rate for one year deposits or loans beginning in one year’s time is f12 per annum compounded annually, calculate the relationship that must hold between these three rates if there are to be no arbitrage opportunities.

The Intelligent Investor (Collins Business Essentials) by Benjamin Graham, Jason Zweig

3Com Palm IPO, accounting loophole / creative accounting, air freight, Alan Greenspan, Andrei Shleifer, AOL-Time Warner, asset allocation, book value, business cycle, buy and hold, buy low sell high, capital asset pricing model, corporate governance, corporate raider, Daniel Kahneman / Amos Tversky, diversified portfolio, dogs of the Dow, Eugene Fama: efficient market hypothesis, Everybody Ought to Be Rich, George Santayana, hiring and firing, index fund, intangible asset, Isaac Newton, John Bogle, junk bonds, Long Term Capital Management, low interest rates, market bubble, merger arbitrage, Michael Milken, money market fund, new economy, passive investing, price stability, Ralph Waldo Emerson, Richard Thaler, risk tolerance, Robert Shiller, Ronald Reagan, shareholder value, sharing economy, short selling, Silicon Valley, South Sea Bubble, Steve Jobs, stock buybacks, stocks for the long run, survivorship bias, the market place, the rule of 72, transaction costs, tulip mania, VA Linux, Vanguard fund, Y2K, Yogi Berra

(The popularity of something like the Dow theory may seem to create its own vindication, since it would make the market advance or decline by the very action of its followers when a buying or selling signal is given. A “stampede” of this kind is, of course, much more of a danger than an advantage to the public trader.) Buy-Low–Sell-High Approach We are convinced that the average investor cannot deal successfully with price movements by endeavoring to forecast them. Can he benefit from them after they have taken place—i.e., by buying after each major decline and selling out after each major advance? The fluctuations of the market over a period of many years prior to 1950 lent considerable encouragement to that idea.

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bull markets; and bargains; characteristics of; and convertible issues and warrants; and dealings with brokerage houses; death/end of; history and forecasting of; length of; and market fluctuations; and new offerings; and portfolio policy for aggressive investors Bunker Ramo Corp. Burlington Northern Railroad Burton-Dixie Corp. Bush, George W. business: buying the; definition of good; knowing your business principles: of Graham, “businessman’s investment,” BusinessWeek buy-low-sell-high approach “buy what you know,” buying back shares. See repurchase plans buzzwords, investing C.-T.-R. Co. Cable & Wireless California Public Employees’ Retirement System calls capital. See also capital gains; capitalization; return on invested capital (ROIC); specific company capital gains; and market fluctuations; and portfolio for aggressive investors; taxes on Capital One Financial Corp.

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See also per-share earnings; security analysis; type of report First Tennessee National Bank, Firsthand mutual funds Fischhoff, Baruch Fisher, Kenneth Fisher, Lawrence fixed-value investments. See also type of investment Fleet Boston Financial Corp. Florida real estate, collapse of fluctuations, market; and aggressive investors; and asset allocation; in bond prices; book value and; and brain; and buy-low-sell-high approach; and defensive investors; example of; and forecasting; and formula investment plans; as guide to investment decisions; history of (1871–1972); of investor’s portfolio; managers and; and margin of safety; and mispricing of stock; Morgan’s comments about; and Mr. Market parable; and other people’s mistakes; silver lining to; timing and pricing of; and valuation FMC Corp.

The Website Investor: The Guide to Buying an Online Website Business for Passive Income by Jeff Hunt

buy low sell high, content marketing, deal flow, Donald Trump, drop ship, frictionless, frictionless market, intangible asset, medical malpractice, Michael Milken, passive income, Ralph Waldo Emerson, Skype, software as a service

• I had unwittingly acquired some sites that were legal to operate but pushed the limits of my own personal ethics. • The website had lost most of its value, and I had no clue how to turn it around. I sold to avoid a total loss. Website flipping is often compared to real estate flipping. However, beyond the principle of “buy low, sell high,” the two have little in common. After a house is purchased and remodeled, it needs to be sold, or it becomes a liability. It is either tying up cash that could be used elsewhere, or it carries ongoing interest and tax expense. After a website is purchased and improved, it is a profitable asset, not a liability.

Mathematical Finance: Core Theory, Problems and Statistical Algorithms by Nikolai Dokuchaev

Black-Scholes formula, Brownian motion, buy and hold, buy low sell high, discrete time, electricity market, fixed income, implied volatility, incomplete markets, martingale, random walk, risk free rate, short selling, stochastic process, stochastic volatility, transaction costs, volatility smile, Wiener process, zero-coupon bond

Example 5.11 Merton’s type strategy is a strategy in a closed-loop form when γ(t)=µ(t)θ(t)X(t), where µ(t)>0 is a coefficient, X(t) is the wealth, is the so-called market price of the risk process. This strategy is important since it is optimal for certain optimal investment problems (including maximization of E ln X(T)). Example 5.12 (‘buy low, sell high’ rule). Let T=+∞. Consider a strategy when where C>0 is a constant, τ=min{t>0: S(t)=K}. Here K> S(0) is a ‘high’ price K>S(0), or the goal price. Let X(0)=S(0) and β(t)≡0, then X(τ)=S(τ)=K>X(0). This strategy has interesting mathematical features for the non-degenerate diffusion model (i.e., when σ(t)≥c>0 for some constant c>0).

The Gone Fishin' Portfolio: Get Wise, Get Wealthy...and Get on With Your Life by Alexander Green

Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, backtesting, behavioural economics, borderless world, buy and hold, buy low sell high, cognitive dissonance, diversification, diversified portfolio, Elliott wave, endowment effect, Everybody Ought to Be Rich, financial independence, fixed income, framing effect, hedonic treadmill, high net worth, hindsight bias, impulse control, index fund, interest rate swap, Johann Wolfgang von Goethe, John Bogle, junk bonds, Long Term Capital Management, means of production, mental accounting, Michael Milken, money market fund, Paul Samuelson, Ponzi scheme, risk tolerance, risk-adjusted returns, short selling, statistical model, stocks for the long run, sunk-cost fallacy, transaction costs, Vanguard fund, yield curve

After all, when you look backward, it’s glaringly obvious when you should have been in the market and when you should have been out. Look forward, however, and it gets a whole lot tougher. All you see is a blank slate. Market timers often concede their timing won’t be perfect, but even missing some of the decline is better than enduring the whole thing, right? Wrong. To successfully time the market requires you to buy low, sell high, and then buy low again (while covering all spreads, trading costs, and taxes on capital gains). Fail, and you’ll get left behind while the equity train rumbles on. FIGURE 5.2 Hypothetical Growth ($10K invested in the S&P 500 from January 1978 to December 2007) Note: This example does not include dividend reinvestment or tax implications.

Long Game: How Long-Term Thinker Shorthb by Dorie Clark

3D printing, autonomous vehicles, Big Tech, Blue Ocean Strategy, buy low sell high, cognitive load, corporate social responsibility, COVID-19, crowdsourcing, delayed gratification, digital nomad, driverless car, Elon Musk, fail fast, Google X / Alphabet X, hedonic treadmill, Jeff Bezos, knowledge worker, lake wobegon effect, Lean Startup, lockdown, minimum viable product, passive income, pre–internet, rolodex, self-driving car, side project, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, solopreneur, Stanford marshmallow experiment, Steven Levy, the strength of weak ties, Walter Mischel, zero-sum game

Noticing what truly made her happy—and where others naturally gravitated to her—helped Rebecca realize she wanted to become an executive coach. A year later, she launched her own firm. Constance Dierickx, who started her career as a stockbroker at Merrill Lynch, also followed her curiosity: why did people make such irrational decisions about their money? We all know the mantra: buy low, sell high. And yet smart people would consistently do the opposite, selling in a panic or becoming greedy when the market was obviously frothy. “I began spending hours every week in a bookstore, going back and forth between the decision science and psychology books,” she told me. She knew she enjoyed the deep relationships with her clients at the firm, but kept coming back to her interest in decision-making.

Survival of the Richest: Escape Fantasies of the Tech Billionaires by Douglas Rushkoff

"World Economic Forum" Davos, 4chan, A Declaration of the Independence of Cyberspace, agricultural Revolution, Airbnb, Alan Greenspan, Amazon Mechanical Turk, Amazon Web Services, Andrew Keen, AOL-Time Warner, artificial general intelligence, augmented reality, autonomous vehicles, basic income, behavioural economics, Big Tech, biodiversity loss, Biosphere 2, bitcoin, blockchain, Boston Dynamics, Burning Man, buy low sell high, Californian Ideology, carbon credits, carbon footprint, circular economy, clean water, cognitive dissonance, Colonization of Mars, coronavirus, COVID-19, creative destruction, Credit Default Swap, CRISPR, data science, David Graeber, DeepMind, degrowth, Demis Hassabis, deplatforming, digital capitalism, digital map, disinformation, Donald Trump, Elon Musk, en.wikipedia.org, energy transition, Ethereum, ethereum blockchain, European colonialism, Evgeny Morozov, Extinction Rebellion, Fairphone, fake news, Filter Bubble, game design, gamification, gig economy, Gini coefficient, global pandemic, Google bus, green new deal, Greta Thunberg, Haight Ashbury, hockey-stick growth, Howard Rheingold, if you build it, they will come, impact investing, income inequality, independent contractor, Jane Jacobs, Jeff Bezos, Jeffrey Epstein, job automation, John Nash: game theory, John Perry Barlow, Joseph Schumpeter, Just-in-time delivery, liberal capitalism, Mark Zuckerberg, Marshall McLuhan, mass immigration, megaproject, meme stock, mental accounting, Michael Milken, microplastics / micro fibres, military-industrial complex, Minecraft, mirror neurons, move fast and break things, Naomi Klein, New Urbanism, Norbert Wiener, Oculus Rift, One Laptop per Child (OLPC), operational security, Patri Friedman, pattern recognition, Peter Thiel, planetary scale, Plato's cave, Ponzi scheme, profit motive, QAnon, RAND corporation, Ray Kurzweil, rent-seeking, Richard Thaler, ride hailing / ride sharing, Robinhood: mobile stock trading app, Sam Altman, Shoshana Zuboff, Silicon Valley, Silicon Valley billionaire, SimCity, Singularitarianism, Skinner box, Snapchat, sovereign wealth fund, Stephen Hawking, Steve Bannon, Steve Jobs, Steven Levy, Steven Pinker, Stewart Brand, surveillance capitalism, tech billionaire, tech bro, technological solutionism, technoutopianism, Ted Nelson, TED Talk, the medium is the message, theory of mind, TikTok, Torches of Freedom, Tragedy of the Commons, universal basic income, urban renewal, warehouse robotics, We are as Gods, WeWork, Whole Earth Catalog, work culture , working poor

It turns out that Steve Case’s team had been looking for months for a way to spend his high-priced shares—an exit strategy—while there was still time. Instead of investing in digital innovation, he hired investment bank Salomon Smith Barney to find an acquisition target. This was not any sort of new media strategy. It was plain old buy-low-sell-high horse trading, amplified by the massive bubble of digital finance. As Ted Turner later explained it in characteristic hyperbole, “the Time Warner–AOL merger should pass into history like the Vietnam War and the Iraq and Afghanistan wars. It’s one of the biggest disasters that have occurred to our country.”

Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence by Jerry Kaplan

Affordable Care Act / Obamacare, Amazon Web Services, asset allocation, autonomous vehicles, bank run, bitcoin, Bob Noyce, Brian Krebs, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, combinatorial explosion, computer vision, Computing Machinery and Intelligence, corporate governance, crowdsourcing, driverless car, drop ship, Easter island, en.wikipedia.org, Erik Brynjolfsson, estate planning, Fairchild Semiconductor, Flash crash, Gini coefficient, Goldman Sachs: Vampire Squid, haute couture, hiring and firing, income inequality, index card, industrial robot, information asymmetry, invention of agriculture, Jaron Lanier, Jeff Bezos, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kiva Systems, Larry Ellison, Loebner Prize, Mark Zuckerberg, mortgage debt, natural language processing, Nick Bostrom, Own Your Own Home, pattern recognition, Satoshi Nakamoto, school choice, Schrödinger's Cat, Second Machine Age, self-driving car, sentiment analysis, short squeeze, Silicon Valley, Silicon Valley startup, Skype, software as a service, The Chicago School, The Future of Employment, Turing test, Vitalik Buterin, Watson beat the top human players on Jeopardy!, winner-take-all economy, women in the workforce, working poor, Works Progress Administration

., 182–85 social status, 117 software-as-a-service (SAAS), 43 solar power, 44 song identification, 39 sound recognition, 39, 42–43 Sousa, John Phillip, 208 “The Menace of Mechanical Music,” 192–93 space exploration, ix, 114, 116, 207 sports, 114–15, 161–63 Sputnik, ix SRI International, 27 Standard & Poor’s, 178 standard of living, 165–66 Stanford Artificial Intelligence Lab, x–xi, 27, 35, 38, 51, 52–53, 72, 85 Stanford Legal Informatics course, 148–49 Star Trek (TV series), x, 16 stockholders, 14–15, 58, 174–78 family members vs. diverse base of, 177, 178, 181–82 restricted vesting and, 184. See also assets ownership stock markets: “buy low, sell high” maxim, 53, 54 computer-programmed trading decisions, 52, 53–58, 61–63, 74, 90, 91, 95, 97, 98, 106 fundamental analysis approach to, 62 putative purpose of, 58 sharp drop (2010) in, 8–9, 61–63 strawberry pickers, 143 structural programming, 20–21 structural unemployment, 137 student loans, job mortgage loans vs., 156 Super Bowl, 161–62, 186 Supreme Court, U.S., 90, 215n9 surgery, 6, 35 surveillance, 9, 64–75, 91 swarm robotics, 44 Symantec, 27 symbolic systems, 21–22, 25, 29 predefinition of symbols, 24 synthesizer (music), 194 synthetic intellects, 5–11, 20, 197–209 Amazon building of, 103–6, 134–35 as artificial people, 90, 198 assets ownership and, 90–91, 199–200 capabilities of, 5, 6, 70, 134, 141, 146–48, 151, 199–201 competitive advantage of, 106, 161–62, 186, 187 corporation parallels with, 90, 91, 199–200 crime capability of, 87–89 danger potential of, 7–11, 40, 72–75, 199–208 IBM’s Watson as, 26, 30, 31, 36, 150, 198 individuality of, 88 legal personhood of, 90–91, 199–200 machine learning programs and, 87 moral agency of, 80–92, 105–6, 199–200, 205–6 realism of, 197 remote control of, 12 taxes, 170, 175, 177, 180–81 incentives, 14, 15, 154, 167, 183 taxi services, 16 technological revolution, 29–30.

Rigged Money: Beating Wall Street at Its Own Game by Lee Munson

affirmative action, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, call centre, Credit Default Swap, diversification, diversified portfolio, estate planning, fear index, fiat currency, financial engineering, financial innovation, fixed income, Flash crash, follow your passion, German hyperinflation, Glass-Steagall Act, global macro, High speed trading, housing crisis, index fund, joint-stock company, junk bonds, managed futures, Market Wizards by Jack D. Schwager, Michael Milken, military-industrial complex, money market fund, moral hazard, Myron Scholes, National best bid and offer, off-the-grid, passive investing, Ponzi scheme, power law, price discovery process, proprietary trading, random walk, Reminiscences of a Stock Operator, risk tolerance, risk-adjusted returns, risk/return, Savings and loan crisis, short squeeze, stocks for the long run, stocks for the long term, too big to fail, trade route, Vanguard fund, walking around money

Some people just want to accumulate wealth and hold onto stocks forever, but even the desire for endless fortune doesn’t mean an endless holding period. Would you still want to own shares of a typewriter company? Of course the basic assumption of buying and holding a stock is a better bet than the old adage of buy low sell high. The concept we are exploring here is buy and never sell. Who would want to sell a company that is supposed to make profits over the long haul? Plus, how would you know when to sell? If you hold a stock forever, it shouldn’t matter when you buy it since it will be a one-time transaction. This would be fine if most corporations made money in large amounts forever and paid out the profits to you.

The Fix: How Bankers Lied, Cheated and Colluded to Rig the World's Most Important Number (Bloomberg) by Liam Vaughan, Gavin Finch

Alan Greenspan, asset allocation, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Sanders, Big bang: deregulation of the City of London, buy low sell high, call centre, central bank independence, collapse of Lehman Brothers, corporate governance, credit crunch, Credit Default Swap, eurozone crisis, fear of failure, financial deregulation, financial innovation, fixed income, interest rate derivative, interest rate swap, Kickstarter, light touch regulation, London Interbank Offered Rate, London Whale, low interest rates, mortgage debt, Neil Armstrong, Northern Rock, performance metric, Ponzi scheme, Ronald Reagan, social intelligence, sovereign wealth fund, subprime mortgage crisis, urban sprawl

From the minute he logged onto his Bloomberg terminal and the red light next to his name turned green, Hayes was on the phone quoting guaranteed bid and offer prices on the vast inventory of products he traded. Hayes prided himself on always being open for business no matter how choppy the markets.1 It was his calling card. Hayes likened this part of his job to owning a fruit and vegetable stall. Buy low, sell high and pocket the difference. But rather than apples and pears, he dealt in complex financial securities worth hundreds of millions of dollars. His profit came from the spread between how much he paid for a security and how much he sold it for. In volatile times, the spread widened, reflecting the increased risk that the market might move against him before he had the chance to trade out of his position. 22 THE FIX Making markets offered a steady stream of income, but it wasn’t where the big money came from.

The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit by Marina Krakovsky

Affordable Care Act / Obamacare, Airbnb, Al Roth, Ben Horowitz, Benchmark Capital, Black Swan, buy low sell high, Chuck Templeton: OpenTable:, Credit Default Swap, cross-subsidies, crowdsourcing, deal flow, disintermediation, diversified portfolio, experimental economics, George Akerlof, Goldman Sachs: Vampire Squid, income inequality, index fund, information asymmetry, Jean Tirole, Joan Didion, John Zimmer (Lyft cofounder), Kenneth Arrow, Lean Startup, Lyft, Marc Andreessen, Mark Zuckerberg, market microstructure, Martin Wolf, McMansion, Menlo Park, Metcalfe’s law, moral hazard, multi-sided market, Network effects, patent troll, Paul Graham, Peter Thiel, pez dispenser, power law, real-name policy, ride hailing / ride sharing, Robert Metcalfe, Sand Hill Road, search costs, seminal paper, sharing economy, Silicon Valley, social graph, supply-chain management, TaskRabbit, the long tail, The Market for Lemons, the strength of weak ties, too big to fail, trade route, transaction costs, two-sided market, Uber for X, uber lyft, ultimatum game, Y Combinator

It’s covered with caked-on mud and has a large rip in its sail, but Wolfe thinks he can sell it for much more than $20 because it’s the kind of toy Benjamin Franklin was writing about back in the 1770s—a true collector’s item. (“That’s what’s great about digging in barns in New York,” he tells us. “You find so much more earlier stuff than you do when we’re in Iowa.”) The Middleman Who Skips the Middleman * * * The show plays up the simple “buy low, sell high” logic of the picking business by displaying, in numbers on the screen, what Wolfe paid for each item and what the item’s worth. But these numbers ignore Wolfe’s less obvious costs. At the end of the pickers’ visit, the hoarder-collector’s daughter and son-in-law are happy, and Wolfe and Fritz look happy, too—but after picking through fourteen trailers, haggling over their picks, and packing their haul into the van, the picking partners are exhausted, and it’s not at all clear they really made a profit.

The Bitcoin Guidebook: How to Obtain, Invest, and Spend the World's First Decentralized Cryptocurrency by Ian Demartino

3D printing, AltaVista, altcoin, bitcoin, Bitcoin Ponzi scheme, blockchain, buy low sell high, capital controls, cloud computing, Cody Wilson, corporate governance, crowdsourcing, cryptocurrency, decentralized internet, distributed ledger, Dogecoin, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, Firefox, forensic accounting, global village, GnuPG, Google Earth, Haight Ashbury, initial coin offering, Jacob Appelbaum, Kevin Kelly, Kickstarter, litecoin, M-Pesa, Marc Andreessen, Marshall McLuhan, Oculus Rift, peer-to-peer, peer-to-peer lending, Ponzi scheme, prediction markets, printed gun, QR code, ransomware, Ross Ulbricht, Salesforce, Satoshi Nakamoto, self-driving car, selling pickaxes during a gold rush, Skype, smart contracts, Steven Levy, the medium is the message, underbanked, WikiLeaks, Zimmermann PGP

You don’t necessarily have to beat the likes of this man, but if you are serious about making a profit, you will have to match his level of dedication. On the other hand, Bitcoin is very volatile compared to nearly every other commodity—stocks, precious metals, currencies—so there is a lot of money to be made if you can ride the waves. Of course, if you are interested in day trading at all, you have by now heard the “buy low, sell high” principle that is and always will be the golden rule of investing, regardless of whether you are playing the long or the short game. Everyone knows this strategy, but day trading only works because most people don’t adhere to it. They want to adhere to it, they probably even think they adhere to it, but they don’t.

Throwing Rocks at the Google Bus: How Growth Became the Enemy of Prosperity by Douglas Rushkoff

activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, algorithmic trading, Amazon Mechanical Turk, Andrew Keen, bank run, banking crisis, barriers to entry, benefit corporation, bitcoin, blockchain, Burning Man, business process, buy and hold, buy low sell high, California gold rush, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, centralized clearinghouse, citizen journalism, clean water, cloud computing, collaborative economy, collective bargaining, colonial exploitation, Community Supported Agriculture, corporate personhood, corporate raider, creative destruction, crowdsourcing, cryptocurrency, data science, deep learning, disintermediation, diversified portfolio, Dutch auction, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, fiat currency, Firefox, Flash crash, full employment, future of work, gamification, Garrett Hardin, gentrification, gig economy, Gini coefficient, global supply chain, global village, Google bus, Howard Rheingold, IBM and the Holocaust, impulse control, income inequality, independent contractor, index fund, iterative process, Jaron Lanier, Jeff Bezos, jimmy wales, job automation, Joseph Schumpeter, Kickstarter, Large Hadron Collider, loss aversion, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, Marshall McLuhan, means of production, medical bankruptcy, minimum viable product, Mitch Kapor, Naomi Klein, Network effects, new economy, Norbert Wiener, Oculus Rift, passive investing, payday loans, peer-to-peer lending, Peter Thiel, post-industrial society, power law, profit motive, quantitative easing, race to the bottom, recommendation engine, reserve currency, RFID, Richard Stallman, ride hailing / ride sharing, Ronald Reagan, Russell Brand, Satoshi Nakamoto, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Snapchat, social graph, software patent, Steve Jobs, stock buybacks, TaskRabbit, the Cathedral and the Bazaar, The Future of Employment, the long tail, trade route, Tragedy of the Commons, transportation-network company, Turing test, Uber and Lyft, Uber for X, uber lyft, unpaid internship, Vitalik Buterin, warehouse robotics, Wayback Machine, Y Combinator, young professional, zero-sum game, Zipcar

So much for taking charge of our own finances.21 Fully aware of these liabilities, the financial services industry became less concerned about helping people invest for their own futures than about finding ways to make money off that very need: to game the system itself, all the while finding new ways to make investors feel they were getting in on it. This makes the typical pyramid scheme of the original stock market look honest by comparison. On the stock exchange, at least, those who get in early can win—albeit at the expense of those who come in later. That’s just the way investing works. You speculate on the future value of things—buy low, sell high. The patsy is the guy doing the opposite. In the 401(k) game, the patsy is anyone who follows the advice of the human resources department and surrenders a portion of his or her paycheck to the retirement planning industry, all under the pretense of personal responsibility. Extending this trend, digital trading platforms require individual investors to take even more responsibility for their own investments and correspondingly shoulder yet more risk.

Running Money by Andy Kessler

Alan Greenspan, Andy Kessler, Apple II, bioinformatics, Bob Noyce, British Empire, business intelligence, buy and hold, buy low sell high, call centre, Charles Babbage, Corn Laws, cotton gin, Douglas Engelbart, Fairchild Semiconductor, family office, flying shuttle, full employment, General Magic , George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, knowledge worker, Leonard Kleinrock, Long Term Capital Management, mail merge, Marc Andreessen, margin call, market bubble, Mary Meeker, Maui Hawaii, Menlo Park, Metcalfe’s law, Michael Milken, Mitch Kapor, Network effects, packet switching, pattern recognition, pets.com, railway mania, risk tolerance, Robert Metcalfe, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Suez canal 1869, Toyota Production System, TSMC, UUNET, zero-sum game

> > > Hedgies After a dozen years of working on Wall Street, I find myself running a hedge fund. I’m not even sure how that happened—I’ve either reached the top or the bottom of my profession. If I screw up, it certainly will be the basement. If that wasn’t enough, I am completely and utterly lost—clueless. About the only thing I really know is “Buy low, sell high.” But buy and sell what? There are thousands of different stocks and bonds and currencies and commodities. As an analyst on Wall Street, you just say Buy or Sell, but someone else actually does it. Your call is just a concept. Now it’s real money. Actually, it’s still someone else’s money, but I am now personally responsible for it.

The Pragmatic Programmer by Andrew Hunt, Dave Thomas

A Pattern Language, Broken windows theory, business logic, business process, buy low sell high, c2.com, combinatorial explosion, continuous integration, database schema, domain-specific language, don't repeat yourself, Donald Knuth, Ford Model T, Free Software Foundation, general-purpose programming language, George Santayana, Grace Hopper, higher-order functions, if you see hoof prints, think horses—not zebras, index card, Kaizen: continuous improvement, lateral thinking, loose coupling, Menlo Park, MVC pattern, off-by-one error, premature optimization, Ralph Waldo Emerson, revision control, Schrödinger's Cat, slashdot, sorting algorithm, speech recognition, systems thinking, the Cathedral and the Bazaar, traveling salesman, urban decay, Y2K

Technology exists along a spectrum from risky, potentially high-reward to low-risk, low-reward standards. It's not a good idea to invest all of your money in high-risk stocks that might collapse suddenly, nor should you invest all of it conservatively and miss out on possible opportunities. Don't put all your technical eggs in one basket. Buy low, sell high. Learning an emerging technology before it becomes popular can be just as hard as finding an undervalued stock, but the payoff can be just as rewarding. Learning Java when it first came out may have been risky, but it paid off handsomely for the early adopters who are now at the top of that field.

The Bogleheads' Guide to Investing by Taylor Larimore, Michael Leboeuf, Mel Lindauer

asset allocation, behavioural economics, book value, buy and hold, buy low sell high, corporate governance, correlation coefficient, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, endowment effect, estate planning, financial engineering, financial independence, financial innovation, high net worth, index fund, John Bogle, junk bonds, late fees, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, margin call, market bubble, mental accounting, money market fund, passive investing, Paul Samuelson, random walk, risk tolerance, risk/return, Sharpe ratio, statistical model, stocks for the long run, survivorship bias, the rule of 72, transaction costs, Vanguard fund, yield curve, zero-sum game

The earlier you start, the richer you become. Invest most or all of your money in index funds. Keep your costs of investing and taxes low. Don't try to time the market. Tune out the noise, rebalance your portfolio when necessary and stick with your plan. By doing those things, you will intelligently manage risk. You will buy low, sell high and have the power of compounding working in your favor. You will slowly but systematically build wealth and a nest egg for a comfortable retirement. With a little luck, you will have more money than you dreamed you would ever have. These time-tested techniques have worked for millions of other people and they can work for you, too.

The Buy Side: A Wall Street Trader's Tale of Spectacular Excess by Turney Duff

asset-backed security, Bear Stearns, Berlin Wall, buy low sell high, collateralized debt obligation, fixed income, Gordon Gekko, high net worth, proprietary trading, urban sprawl, white picket fence

At the last minute, I say, we decided we didn’t need to short any of those stocks. “Not a big deal,” she manages to say, but she sounds sick to her stomach. Whoever she leaked my orders to must be livid with her. They had to have gotten crushed. Undoubtedly, they paid a much higher price than where they shorted it in front of my fake orders. Trading 101: buy low, sell high. Ooops. Nothing worse than losing a few million dollars in the last minute of the year. Happy New Year, I tell Tracey, but she’s already hung up the phone. I know it’s going to be a happy one for me. EIGHT MONTHS later the city is blistering hot, concrete heat, brick heat. Opening the cab door is like opening the door of a pizza oven.

Rigged: The True Story of an Ivy League Kid Who Changed the World of Oil, From Wall Street to Dubai by Ben Mezrich

buy low sell high, carbon credits, Donald Trump, estate planning, Exxon Valdez, upwardly mobile

Because those meatheads are actually pretty impressive, when you think about ’em. Not one of them is making less than five hundred thousand dollars a year. A few are bringing down millions, and an even smaller few are bringing down tens of millions.” David whistled. It was hard to imagine a guy like Vitzi making that kind of money. David knew the basics of trading—buy low, sell high, and the reverse—but when it came to oil in all its forms, he was a neophyte. How did you judge supply and demand? How did you factor in all the variables, from the weather to wars in the Middle East to drunk captains driving oil freighters into the Alaskan shoreline? “It’s like that scene in The Matrix where all the numbers are floating down the screen,” Mendelson said, leaning back in his chair and lifting his bare feet up onto his desk.

Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio by Victor A. Canto

accounting loophole / creative accounting, airline deregulation, Alan Greenspan, Andrei Shleifer, asset allocation, Bretton Woods, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, commodity trading advisor, corporate governance, discounted cash flows, diversification, diversified portfolio, equity risk premium, financial engineering, fixed income, frictionless, global macro, high net worth, index fund, inflation targeting, invisible hand, John Meriwether, junk bonds, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low cost airline, low interest rates, market bubble, merger arbitrage, money market fund, new economy, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, Phillips curve, price mechanism, purchasing power parity, risk free rate, risk tolerance, risk-adjusted returns, risk/return, rolling blackouts, Ronald Reagan, Savings and loan crisis, selection bias, seminal paper, shareholder value, Sharpe ratio, short selling, statistical arbitrage, stocks for the long run, survivorship bias, systematic bias, Tax Reform Act of 1986, the market place, transaction costs, Y2K, yield curve, zero-sum game

There is nothing wrong with that at all, and if you select stocks this way you are sure to pick your share of winners. In fact, investors and managers must select this way when it gets down to the nitty-gritty of filling a portfolio. However, I caution that anyone who looks too narrowly in their investing life will all too often miss the big picture and the upsides that come with it. Buy low, sell high? Sure. But keep your eyes open, from the top on down. I have long held that any investor starting out should build an 80/20 portfolio consisting of 80 percent stocks and 20 percent bonds. In the long run, say thirty years, such an investor will almost undoubtedly beat out someone who began with, for example, a 60/40 split.

The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot, Richard L. Hudson

Alan Greenspan, Albert Einstein, asset allocation, Augustin-Louis Cauchy, behavioural economics, Benoit Mandelbrot, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black-Scholes formula, British Empire, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, carbon-based life, discounted cash flows, diversification, double helix, Edward Lorenz: Chaos theory, electricity market, Elliott wave, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, Fellow of the Royal Society, financial engineering, full employment, Georg Cantor, Henri Poincaré, implied volatility, index fund, informal economy, invisible hand, John Meriwether, John von Neumann, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market microstructure, Myron Scholes, new economy, paper trading, passive investing, Paul Lévy, Paul Samuelson, plutocrats, power law, price mechanism, quantitative trading / quantitative finance, Ralph Nelson Elliott, RAND corporation, random walk, risk free rate, risk tolerance, Robert Shiller, short selling, statistical arbitrage, statistical model, Steve Ballmer, stochastic volatility, transfer pricing, value at risk, Vilfredo Pareto, volatility smile

Another common financial ratio used by stock-pickers is market-to-book: That is, divide the stock price by the per-share value that the company’s accountants report in the financial reports, or “book.” Surprise: Companies with low ratios—that is, those that the stock market values less than does the company’s accountant—perform better over time than companies with high ratios. Of course, this is nothing more than the old Wall Street mantra, buy low, sell high. And again, by the standard theories, it should not work. Many more such anomalies have been reported in economics journals. But this kind of research came to fruition in an especially influential 1992 paper by Fama and French. They tried to create the economic equivalent of a double-blind drug trial, devising tests and controls to prevent any unintended bias from slipping into the results.

The King of Oil: The Secret Lives of Marc Rich by Daniel Ammann

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", accounting loophole / creative accounting, anti-communist, Ayatollah Khomeini, banking crisis, Berlin Wall, Boeing 747, book value, Boycotts of Israel, business intelligence, buy low sell high, energy security, family office, Johann Wolfgang von Goethe, Michael Milken, Mikhail Gorbachev, Nelson Mandela, oil shock, peak oil, purchasing power parity, Ronald Reagan, subprime mortgage crisis, Suez crisis 1956, trade liberalization, transaction costs, transfer pricing, Upton Sinclair, Yom Kippur War

One aspect of Marc Rich’s career that was virtually forgotten during the entire affair was his unique entrepreneurial success. For starters, he is more than just a profiteer and boycott breaker. It was not Rich’s alleged tax evasion that made him the twentieth century’s most dominant trader. When I asked how he had managed to achieve so much, he answered with the standard trader’s joke, “Buy low, sell high.” Then he added in a more serious tone, “The ingredients are hard work, hard work, and hard work—and good collaborators. Obviously a little bit of luck helps also.” These are surely important elements of success, but they cannot provide a good explanation for the sheer scale of his remarkable achievements.

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis by Kevin Rodgers

Alan Greenspan, algorithmic trading, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black-Scholes formula, buy and hold, buy low sell high, call centre, capital asset pricing model, collapse of Lehman Brothers, Credit Default Swap, currency peg, currency risk, diversification, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, fixed income, Flash crash, Francis Fukuyama: the end of history, Glass-Steagall Act, Hyman Minsky, implied volatility, index fund, interest rate derivative, interest rate swap, invisible hand, John Meriwether, latency arbitrage, law of one price, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, Minsky moment, money market fund, Myron Scholes, Northern Rock, Panopticon Jeremy Bentham, Ponzi scheme, prisoner's dilemma, proprietary trading, quantitative easing, race to the bottom, risk tolerance, risk-adjusted returns, Silicon Valley, systems thinking, technology bubble, The Myth of the Rational Market, The Wisdom of Crowds, Tobin tax, too big to fail, value at risk, vertical integration, Y2K, zero-coupon bond, zero-sum game

They went to the right schools and have nice cufflinks. Besides that? Nothing.’ The second type of business does require the bank to take risk. (We, in FX, were one of these; Loic was naturally keener on this model.) In these businesses, a bank will deal on its own account and attempt to make a profit by obeying the age-old adage of ‘buy low, sell high’. This is known as the ‘principal’ model. Most parts of a bank operate on this basis. The core activity of taking deposits and making loans is a principal business. If you borrow money from your bank, the bank is at risk. In part, that is because the money the bank itself has borrowed in order to lend it to you might have a different maturity to your loan, or it might have a floating interest rate versus your fixed one (or vice versa).

Capital Ideas Evolving by Peter L. Bernstein

Albert Einstein, algorithmic trading, Andrei Shleifer, asset allocation, behavioural economics, Black Monday: stock market crash in 1987, Bob Litterman, book value, business cycle, buy and hold, buy low sell high, capital asset pricing model, commodity trading advisor, computerized trading, creative destruction, currency risk, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, diversification, diversified portfolio, endowment effect, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, fixed income, high net worth, hiring and firing, index fund, invisible hand, Isaac Newton, John Meriwether, John von Neumann, Joseph Schumpeter, Kenneth Arrow, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, market bubble, mental accounting, money market fund, Myron Scholes, paper trading, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, price anchoring, price stability, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, seminal paper, Sharpe ratio, short selling, short squeeze, Silicon Valley, South Sea Bubble, statistical model, survivorship bias, systematic trading, tail risk, technology bubble, The Wealth of Nations by Adam Smith, transaction costs, yield curve, Yogi Berra, zero-sum game

As the 1995 report describes it, “Because of the importance of maintaining policy targets, the Investment Office closely monitors deviations of actual from target allocations in the Endowment. When markets rise and fall, the portfolio is rebalanced; that is, securities are bought and sold to maintain actual allocations at the policy targets. By adhering to policy targets, rebalancing imposes a disciplined ‘buy low, sell high’ strategy. . . . While rebalancing is conducted primarily to control risk, the process adds value to the extent the market exhibits excess volatility” (emphasis added). Swensen is an outspoken and eloquent enemy of market timing— the effort to buy low and sell high—which he insists is like chasing rainbows and doomed to failure.

The Idealist: Aaron Swartz and the Rise of Free Culture on the Internet by Justin Peters

4chan, Aaron Swartz, activist lawyer, Alan Greenspan, Any sufficiently advanced technology is indistinguishable from magic, Bayesian statistics, Brewster Kahle, buy low sell high, crowdsourcing, digital rights, disintermediation, don't be evil, Free Software Foundation, global village, Hacker Ethic, hypertext link, index card, informal economy, information retrieval, Internet Archive, invention of movable type, invention of writing, Isaac Newton, John Markoff, Joi Ito, Lean Startup, machine readable, military-industrial complex, moral panic, Open Library, Paul Buchheit, Paul Graham, profit motive, RAND corporation, Republic of Letters, Richard Stallman, selection bias, semantic web, Silicon Valley, social bookmarking, social web, Steve Jobs, Steven Levy, Stewart Brand, strikebreaker, subprime mortgage crisis, Twitter Arab Spring, Vannevar Bush, Whole Earth Catalog, Y Combinator

You’ll need to send enormous amounts to publishers like Reed Elsevier.22 Had they been invited to Cupramontana, Reed Elsevier and its fellow publishers would have disputed Swartz’s accusation that they were hoarding the world’s cultural heritage to benefit the rich at the expense of the poor—or, indeed, that anything was venal about their buy-low, sell-high business model. Reed Elsevier profited by publishing academic journals and selling them for a fee. Its digital activities were neither particularly nefarious nor unprecedented. The company was simply using the Internet to develop another distribution channel for its products. In 2003, the Downhill Battle activists had argued that the rise of the iTunes digital music store discouraged musicians and record companies from experimenting with new distribution models, ones that might better serve both musicians and consumers.

Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", Albert Einstein, anti-communist, asset allocation, Bear Stearns, beat the dealer, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black-Scholes formula, Bletchley Park, Brownian motion, buy and hold, buy low sell high, capital asset pricing model, Claude Shannon: information theory, computer age, correlation coefficient, diversified portfolio, Edward Thorp, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, Henry Singleton, high net worth, index fund, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, John Meriwether, John von Neumann, junk bonds, Kenneth Arrow, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Michael Milken, Myron Scholes, New Journalism, Norbert Wiener, offshore financial centre, Paul Samuelson, publish or perish, quantitative trading / quantitative finance, random walk, risk free rate, risk tolerance, risk-adjusted returns, Robert Shiller, Ronald Reagan, Rubik’s Cube, short selling, speech recognition, statistical arbitrage, Teledyne, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, traveling salesman, value at risk, zero-coupon bond, zero-sum game

By then the broad MIT community had heard stories of Shannon’s stock market acumen. So many people wanted to attend one talk that it had to be moved to one of MIT’s biggest halls. Shannon’s main subject was an incredible scheme for making money off the fluctuations in stocks. You can make money off stocks when they go up (buy low, sell high). You can make money when they go down (sell short). You just have to know which way prices are going to move. That, suggested Bachelier, Kendall, and Fama, is impossible. Shannon described a way to make money off a random walk. He asked the audience to consider a stock whose price jitters up and down randomly, with no overall upward or downward trend.

Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration by Ed Catmull, Amy Wallace

Albert Einstein, business climate, buy low sell high, complexity theory, fail fast, fear of failure, Golden Gate Park, iterative process, Ivan Sutherland, Johannes Kepler, Menlo Park, reality distortion field, rolodex, Rubik’s Cube, Sand Hill Road, Silicon Valley, Silicon Valley startup, Steve Jobs, Wall-E

While I was used to working within a budget, I had never been responsible for a profit-and-loss statement. I knew nothing about how to manage inventory, how to ensure quality, or any of the other things that a company purporting to sell products must master. Not knowing where else to turn, I remember buying a copy of Dick Levin’s Buy Low, Sell High, Collect Early, and Pay Late: The Manager’s Guide to Financial Survival, a popular business title at the time, and devouring it in one sitting. I read many such books as I set about trying to become a better, more effective manager. Most, I found, trafficked in a kind of simplicity that seemed harmful in that it offered false reassurance.

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, Andrew Wiles, automated trading system, backtesting, Bayesian statistics, Bear Stearns, beat the dealer, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, blockchain, book value, Brownian motion, butter production in bangladesh, buy and hold, buy low sell high, Cambridge Analytica, Carl Icahn, Claude Shannon: information theory, computer age, computerized trading, Credit Default Swap, Daniel Kahneman / Amos Tversky, data science, diversified portfolio, Donald Trump, Edward Thorp, Elon Musk, Emanuel Derman, endowment effect, financial engineering, Flash crash, George Gilder, Gordon Gekko, illegal immigration, index card, index fund, Isaac Newton, Jim Simons, John Meriwether, John Nash: game theory, John von Neumann, junk bonds, Loma Prieta earthquake, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, Mark Zuckerberg, Michael Milken, Monty Hall problem, More Guns, Less Crime, Myron Scholes, Naomi Klein, natural language processing, Neil Armstrong, obamacare, off-the-grid, p-value, pattern recognition, Peter Thiel, Ponzi scheme, prediction markets, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, Robert Mercer, Ronald Reagan, self-driving car, Sharpe ratio, Silicon Valley, sovereign wealth fund, speech recognition, statistical arbitrage, statistical model, Steve Bannon, Steve Jobs, stochastic process, the scientific method, Thomas Bayes, transaction costs, Turing machine, Two Sigma

He added more automation to the system and, by 1987, it was generating $50 million of annual profits. Team members didn’t know a thing about the stocks they traded and didn’t need to—their strategy was simply to wager on the re-emergence of historic relationships between shares, an extension of the age-old “buy low, sell high” investment adage, this time using computer programs and lightning-fast trades. New hires, including a former Columbia University computer-science professor named David Shaw and mathematician Robert Frey, improved profits. The Morgan Stanley traders became some of the first to embrace the strategy of statistical arbitrage, or stat arb.

California Burning: The Fall of Pacific Gas and Electric--And What It Means for America's Power Grid by Katherine Blunt

An Inconvenient Truth, benefit corporation, buy low sell high, California energy crisis, call centre, commoditize, confounding variable, coronavirus, corporate personhood, COVID-19, electricity market, Elon Musk, forensic accounting, Google Earth, high-speed rail, junk bonds, lock screen, market clearing, market design, off-the-grid, price stability, rolling blackouts, Silicon Valley, vertical integration

More so than the generators, the traders would become responsible for routing the movement of electricity between different hubs, where they could sell it at prices determined by local supply, demand, transmission costs, and a slew of other variables. At its simplest, trading is a game of arbitrage: buy low, sell high. The Power Exchange set up shop in an office suite about ten miles outside the heart of Los Angeles. Sladoje and his staff lined a small room with boxy desktop monitors and threaded power cords behind a row of desks. It had none of the frenzy of an open trading floor, but it would serve a similar clearinghouse function.

The Great Shark Hunt: Strange Tales From a Strange Time by Hunter S. Thompson

anti-communist, back-to-the-land, buy low sell high, complexity theory, computer age, cuban missile crisis, desegregation, Easter island, Electric Kool-Aid Acid Test, Fillmore Auditorium, San Francisco, Francisco Pizarro, Golden Gate Park, Haight Ashbury, job automation, land reform, Mason jar, military-industrial complex, New Journalism, non-fiction novel, Norman Mailer, Ronald Reagan, urban decay, urban renewal, urban sprawl

Joe Edwards' platform was against the developers, not the old-timers and ranchers -- and it was hard to see, from their arguments, how they could disagree in substance with anything we said. . . unless what they were really worried about was the very good chance that a win by Edwards would put an end to their options of selling out to the highest bidder. With Edwards, they said, would come horrors like Zoning and Ecology, which would cramp their fine Western style, the buy low, sell high ethic. . . free enterprise, as it were, and the few people who bothered to argue with them soon found that their nostalgic talk about "the good old days" and "the tradition of this peaceful valley" was only an awkward cover for their fears about "socialist-thinking newcomers." Whatever else the Edwards campaign may or may not have accomplished, we had croaked that stupid sentimental garbage about the "land-loving old-timers."

…

"Aspen," Colo, would no longer exist -- and the psychic alterations of this change would be massive in the world of commerce: Fat City Ski Fashions, the Fat City Slalom Cup, Fat City Music Festival, Fat City Institute for Humanistic Studies. . . etc. And the main advantage here is that changing the name of the town would have no major effect on the town itself, or on those people who came here because it's a good place to live. What effect the name-change might have on those who came here to buy low, sell high and then move on is fairly obvious. . . and eminently desirable. These swine should be fucked, broken and driven across the land. 3) Drug Sales must be controlled. My first act as Sheriff will be to install, on the courthouse lawn, a bastinado platform and a set of stocks -- in order to punish dishonest dope dealers in a proper public fashion.

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management by Alexander Elder

additive manufacturing, Atul Gawande, backtesting, behavioural economics, Benoit Mandelbrot, buy and hold, buy low sell high, Checklist Manifesto, computerized trading, deliberate practice, diversification, Elliott wave, endowment effect, fear index, loss aversion, mandelbrot fractal, margin call, offshore financial centre, paper trading, Ponzi scheme, price stability, psychological pricing, quantitative easing, random walk, Reminiscences of a Stock Operator, risk tolerance, short selling, South Sea Bubble, systematic trading, systems thinking, The Wisdom of Crowds, transaction costs, transfer pricing, traveling salesman, tulip mania, zero-sum game

Trend-following indicators are profitable when markets are moving but lead to whipsaws in trading ranges. Oscillators are profitable in trading ranges, but give premature and dangerous signals when the markets begin to trend. Traders say: “The trend is your friend,” and “Let your profits run.” They also say: “Buy low, sell high.” But why sell if the trend is up? And how high is high? Some traders try to average out the signals of trend-following indicators and oscillators, but those votes are easy to rig. Just as Republicans and Democrats in the United States keep redrawing electoral districts to create “safe” seats, traders keep selecting indicators that deliver the votes they want to see.

The Quants by Scott Patterson

Alan Greenspan, Albert Einstein, AOL-Time Warner, asset allocation, automated trading system, Bear Stearns, beat the dealer, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Blythe Masters, Bonfire of the Vanities, book value, Brownian motion, buttonwood tree, buy and hold, buy low sell high, capital asset pricing model, Carl Icahn, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Dr. Strangelove, Edward Thorp, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial engineering, Financial Modelers Manifesto, fixed income, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Haight Ashbury, I will remember that I didn’t make the world, and it doesn’t satisfy my equations, index fund, invention of the telegraph, invisible hand, Isaac Newton, Jim Simons, job automation, John Meriwether, John Nash: game theory, junk bonds, Kickstarter, law of one price, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, Mark Spitznagel, merger arbitrage, Michael Milken, military-industrial complex, money market fund, Myron Scholes, NetJets, new economy, offshore financial centre, old-boy network, Paul Lévy, Paul Samuelson, Ponzi scheme, proprietary trading, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Robert Mercer, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Savings and loan crisis, Sergey Aleynikov, short selling, short squeeze, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

He could also take a long (or short) position in the stock that hadn’t moved, which would protect him in case the other stock failed to shift back to its original price—if the historical spread remained, the long position would eventually rise. Much like Thorp’s delta hedging strategy, it was the old game of buy low, sell high, with a quant twist. After describing his ideas to his superiors, Bamberger was set up on Morgan’s equity desk in early 1983 with $500,000 and a small group of traders. He started making buckets of cash right out of the gate. By September, his group had $4 million worth of long and short positions.

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker

3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, Benchmark Capital, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business logic, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, data science, digital map, discounted cash flows, disintermediation, driverless car, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Free Software Foundation, gigafactory, growth hacking, Haber-Bosch Process, High speed trading, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Kevin Roose, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Max Levchin, Metcalfe’s law, multi-sided market, Network effects, new economy, PalmPilot, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Salesforce, Satoshi Nakamoto, search costs, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, social bookmarking, social contagion, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the long tail, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, winner-take-all economy, zero-sum game, Zipcar

In a case like this, wise governance may disenfranchise a specific group of stakeholders, such as arbitrageurs, in order to increase the overall health of the ecosystem. High-speed trading on the New York Stock Exchange offers another example. Firms like Goldman Sachs use supercomputers to determine when an order placed in one market will spill over to another market. Then they swoop in to intercept the deal, buying low, selling high, and skimming the margin. This methodology gives a few market participants who can afford massive computing power an unfair advantage over others.35 Such asymmetric market power risks driving away players who feel cheated. To solve this problem, competing exchanges, such as the alternative trading system IEX, are using their own supercomputers to precisely time the order of bids, thereby eliminating the advantages of a Goldman Sachs.36 Architecture can level the playing field, making markets more competitive and fair for all.

Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Independence: Revised and Updated for the 21st Century by Vicki Robin, Joe Dominguez, Monique Tilford

asset allocation, book value, Buckminster Fuller, buy low sell high, classic study, credit crunch, disintermediation, diversification, diversified portfolio, fiat currency, financial independence, fixed income, fudge factor, full employment, Gordon Gekko, high net worth, index card, index fund, intentional community, job satisfaction, junk bonds, Menlo Park, money market fund, Parkinson's law, passive income, passive investing, profit motive, Ralph Waldo Emerson, retail therapy, Richard Bolles, risk tolerance, Ronald Reagan, Silicon Valley, software patent, strikebreaker, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, Vanguard fund, zero-coupon bond

The important thing is to become as knowledgeable as you can regarding your investment options so that, if you choose to work with a financial planner, you will still be empowered and making your own choices. Dispelling Fears Like your assumptions about money and work, your beliefs about investing have probably been pieced together from media hype, the opinions of coworkers, the advice you got from Uncle Harry (“Buy low, sell high, kid”), randomly generated successes and failures and sundry other unreliable sources. To pierce through these confusions and prejudices you need only recognize that most beliefs about investing rest on two primary driving forces: greed and fear. Hopefully you’ve encountered and tamed your greed through applying the first eight steps of this program.

The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein

Alan Greenspan, asset allocation, behavioural economics, book value, Bretton Woods, British Empire, business cycle, butter production in bangladesh, buy and hold, buy low sell high, carried interest, corporate governance, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, diversification, diversified portfolio, Edmond Halley, equity premium, estate planning, Eugene Fama: efficient market hypothesis, financial engineering, financial independence, financial innovation, fixed income, George Santayana, German hyperinflation, Glass-Steagall Act, high net worth, hindsight bias, Hyman Minsky, index fund, invention of the telegraph, Isaac Newton, John Bogle, John Harrison: Longitude, junk bonds, Long Term Capital Management, loss aversion, low interest rates, market bubble, mental accounting, money market fund, mortgage debt, new economy, pattern recognition, Paul Samuelson, Performance of Mutual Funds in the Period, quantitative easing, railway mania, random walk, Richard Thaler, risk tolerance, risk/return, Robert Shiller, Savings and loan crisis, South Sea Bubble, stock buybacks, stocks for the long run, stocks for the long term, survivorship bias, Teledyne, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the rule of 72, transaction costs, Vanguard fund, yield curve, zero-sum game

During such periods, “hard assets” such as precious metals, real estate, and “collectibles” (e.g., art, rare coins, etc.) tend to do very well. And third, this asset’s random volatility will work in your favor via the rebalancing mechanism. If you can hold precious metals stocks in a retirement account and trade them without tax consequences, the natural buy-low/sell-high discipline of the rebalancing process should earn 3% to 5% per year in excess of the low baseline return for this asset. Be forewarned that this process takes discipline, because you will be continually moving against the crowd’s sentiment. While you are selling, you will be reading and hearing some very compelling reasons to buy, and when you are buying, you will find that others consider it an act of lunacy.

Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction by David Enrich

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, anti-globalists, Asian financial crisis, banking crisis, Bear Stearns, Berlin Wall, buy low sell high, collateralized debt obligation, commoditize, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, Donald Trump, East Village, estate planning, Fall of the Berlin Wall, financial innovation, forensic accounting, high net worth, housing crisis, interest rate derivative, interest rate swap, Jeffrey Epstein, junk bonds, London Interbank Offered Rate, low interest rates, Lyft, Mikhail Gorbachev, NetJets, obamacare, offshore financial centre, post-materialism, proprietary trading, Quicken Loans, Ralph Waldo Emerson, Renaissance Technologies, risk tolerance, Robert Mercer, rolodex, SoftBank, sovereign wealth fund, Steve Bannon, too big to fail, transcontinental railway, Vision Fund, yield curve

It turned out anyone could do it—all you needed to do was shell out a few hundred dollars to “lease” a membership, which is what Offit did. The trading pits were chaotic. A slight man, Offit got trampled. Twice his instep was crushed in a scrum; another time he fractured his jaw. But Offit found the trading itself to be pretty simple. Buy low, sell high. “It was an elemental world of bids and offers, winners and losers,” Offit would write about the NYMEX decades later. Offit was a winner, and the money made the physical toll worthwhile. In the early 1980s, Offit enrolled in Columbia’s business school. His new ambition was to become a trader at an established Wall Street firm.

For Profit: A History of Corporations by William Magnuson

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, bank run, banks create money, barriers to entry, Bear Stearns, Big Tech, Black Lives Matter, blockchain, Bonfire of the Vanities, bread and circuses, buy low sell high, carbon tax, carried interest, collective bargaining, Cornelius Vanderbilt, corporate raider, creative destruction, disinformation, Donald Trump, double entry bookkeeping, Exxon Valdez, fake news, financial engineering, financial innovation, Ford Model T, Ford paid five dollars a day, Frederick Winslow Taylor, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Ida Tarbell, Intergovernmental Panel on Climate Change (IPCC), invisible hand, joint-stock company, joint-stock limited liability company, junk bonds, Mark Zuckerberg, Menlo Park, Michael Milken, move fast and break things, Peter Thiel, power law, price discrimination, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, randomized controlled trial, ride hailing / ride sharing, scientific management, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, slashdot, Snapchat, South Sea Bubble, spice trade, Steven Levy, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tim Cook: Apple, too big to fail, trade route, transcontinental railway, union organizing, work culture , Y Combinator, Yom Kippur War, zero-sum game

Second, it bought companies, using the cash from the fund as well as a hefty portion of borrowed money to pay the purchase price. Third, it ran the company for a few years and then sold it, hopefully at a profit, to the public or another buyer. There was nothing particularly magical about these components. “Buy low, sell high” had been a corporate mantra at least since the days of the East India Company. But in the hands of financial wizards like Kohlberg, Kravis, and Roberts, they transformed into something elemental and powerful. To begin with, the trio displayed a remarkable talent for finding people willing to give them oodles of money.

Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein

Albert Einstein, asset allocation, backtesting, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, corporate raider, debt deflation, diversified portfolio, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, fixed income, full employment, Glass-Steagall Act, Great Leap Forward, guns versus butter model, implied volatility, index arbitrage, index fund, interest rate swap, invisible hand, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, law of one price, linear programming, Louis Bachelier, mandelbrot fractal, martingale, means of production, Michael Milken, money market fund, Myron Scholes, new economy, New Journalism, Paul Samuelson, Performance of Mutual Funds in the Period, profit maximization, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk free rate, risk/return, Robert Shiller, Robert Solow, Ronald Reagan, stochastic process, Thales and the olive presses, the market place, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, transfer pricing, zero-coupon bond, zero-sum game

Then the assets are shifted to the market or markets that appear relatively most attractive. Although Sharpe (and Vertin, too) was skeptical about the feasibility of this idea at first, Fouse managed to successfully combine Sharpe’s theoretical concepts with the ideas of Markowitz, Tobin, and John Burr Williams. Although the notion is buy-low-sell-high, tactical asset allocation differs from so-called market timing in two ways. First, it is a scientific method of allocating assets. Second, the idea is to buy undervalued assets and to sell overvalued assets and to wait until the market corrects the perceived misvaluations; this approach differs fundamentally from flatly declaring that “this is the bottom” or “this is the top.”

Your Money: The Missing Manual by J.D. Roth

Airbnb, Alan Greenspan, asset allocation, bank run, book value, buy and hold, buy low sell high, car-free, Community Supported Agriculture, delayed gratification, diversification, diversified portfolio, do what you love, estate planning, Firefox, fixed income, full employment, hedonic treadmill, Home mortgage interest deduction, index card, index fund, John Bogle, late fees, lifestyle creep, low interest rates, mortgage tax deduction, Own Your Own Home, Paradox of Choice, passive investing, Paul Graham, random walk, retail therapy, Richard Bolles, risk tolerance, Robert Shiller, speech recognition, stocks for the long run, traveling salesman, Vanguard fund, web application, Zipcar

Doing this is another way to take the emotion out of investing, because you're investing based on a plan instead of a whim. There are two ways to rebalance: You can sell enough of your winners and buy enough of your losers to bring things back into balance. By selling the investments that have grown and buying those that lag behind, you're following the Wall Street mantra to "buy low, sell high." Be aware, though, that you might owe taxes if you go this route, so check out the tax implications before you sell any securities. If you can afford it, contribute new money to your investment account, but only to buy the assets that need to catch up. For instance, if you only have 34% in bonds instead of your target 40%, add more bonds to bring your portfolio back into balance.

Entangled Life: How Fungi Make Our Worlds, Change Our Minds & Shape Our Futures by Merlin Sheldrake

Anthropocene, Apollo 11, biofilm, buy low sell high, carbon footprint, CRISPR, crowdsourcing, cuban missile crisis, dark matter, deep learning, discovery of penicillin, Easter island, experimental subject, Fellow of the Royal Society, Isaac Newton, Kickstarter, late capitalism, low earth orbit, Mason jar, meta-analysis, microbiome, moral panic, NP-complete, phenotype, randomized controlled trial, Ronald Reagan, seminal paper, TED Talk, the built environment, Thomas Bayes, Thomas Malthus, traveling salesman, two and twenty

Where phosphorus was more readily available, the fungus received a less favorable “exchange rate.” The “price” of phosphorus seemed to be governed by the familiar dynamics of supply and demand. Most surprising was the way that the fungus coordinated its trading behavior across the network. Kiers identified a strategy of “buy low, sell high.” The fungus actively transported phosphorus—using its dynamic microtubule “motors”—from areas of abundance, where it fetched a low price when exchanged with a plant root, to areas of scarcity, where it was in higher demand and fetched a higher price. By doing so, the fungus was able to transfer a greater proportion of its phosphorus to the plant at the more favorable exchange rate, thus receiving larger quantities of carbon in return.

Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

"Friedman doctrine" OR "shareholder theory", Airbnb, Akira Okazaki, antiwork, behavioural economics, big-box store, Black Swan, book scanning, British Empire, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, classic study, clean water, Columbian Exchange, conceptual framework, correlation does not imply causation, Costa Concordia, creative destruction, critique of consumerism, crony capitalism, dark matter, Dava Sobel, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, Deng Xiaoping, do well by doing good, Donald Trump, double entry bookkeeping, electricity market, en.wikipedia.org, epigenetics, Erik Brynjolfsson, experimental economics, Ferguson, Missouri, food desert, Ford Model T, fundamental attribution error, Garrett Hardin, Georg Cantor, George Akerlof, George Gilder, germ theory of disease, Gini coefficient, God and Mammon, Great Leap Forward, greed is good, Gunnar Myrdal, Hans Rosling, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, immigration reform, income inequality, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, John Harrison: Longitude, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labor-force participation, lake wobegon effect, land reform, liberation theology, lone genius, Lyft, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, means of production, middle-income trap, military-industrial complex, Naomi Klein, new economy, Nick Bostrom, North Sea oil, Occupy movement, open economy, out of africa, Pareto efficiency, Paul Samuelson, Pax Mongolica, Peace of Westphalia, peak oil, Peter Singer: altruism, Philip Mirowski, Pier Paolo Pasolini, pink-collar, plutocrats, positional goods, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, refrigerator car, rent control, rent-seeking, Republic of Letters, road to serfdom, Robert Gordon, Robert Shiller, Ronald Coase, Scientific racism, Scramble for Africa, Second Machine Age, secular stagnation, seminal paper, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, spinning jenny, stakhanovite, Steve Jobs, tacit knowledge, TED Talk, the Cathedral and the Bazaar, The Chicago School, The Market for Lemons, the rule of 72, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, total factor productivity, Toyota Production System, Tragedy of the Commons, transaction costs, transatlantic slave trade, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, union organizing, very high income, wage slave, Washington Consensus, working poor, Yogi Berra

As the economic historian Eric Jones put it recently, “Culture, in the sense of bourgeois values [Jones here means psychological dispositions], has not been shown to differ systematically by region.”11 Nor have such values been shown to differ by much else, if “values” are taken to be the dispositions of the bourgeois working down in the marketplaces of Les Halles or Tlatelolco. “Buy low, sell high” is not a modern invention. It has been the basis of trade, always. And Homo sapiens has been a trader, always. Weber’s theory turned the discussion of entrepreneurship toward how psychology is supposed to have changed around 1600, when in fact what changed in Europe in early modern times, starting in Holland, was the sociology and its corresponding politics.

…

In Jane Smiley’s The All-True Travels and Adventures of Lidie Newton (1998) an honor-obsessed Southerner in Quincy, Illinois, in deep winter around 1840 threatens with his guns drawn a storekeeper and livestock dealer: “Horace Silk, you will cheat me no more! Those mules I sold you for a hundred dollars you turned around and sold to Jed Bindle for two fifty, and you ain’t given me none of the profits!” Imagine that—buying low, selling high, and keeping the profit. The Southerner’s Borderer-aristocratic code of honor demands violent satisfaction. “But then Horace’s father,” the narrator continues, “interposed and explained to the man . . . the role of the middleman in every mercantile transaction.” It is the rhetoric of a Yankee and a bourgeois, which doubtless helped less than the narrator’s mother, who “stepped forward and persuaded [the Southerner] to come farther into the store and get warm,” with an implied invitation for peaceful, knightly gallantry toward women, which he accepts.17 All this cheating magic of trade has long angered people.

Inside the House of Money: Top Hedge Fund Traders on Profiting in a Global Market by Steven Drobny

Abraham Maslow, Alan Greenspan, Albert Einstein, asset allocation, Berlin Wall, Bonfire of the Vanities, Bretton Woods, business cycle, buy and hold, buy low sell high, capital controls, central bank independence, commoditize, commodity trading advisor, corporate governance, correlation coefficient, Credit Default Swap, currency risk, diversification, diversified portfolio, family office, financial engineering, fixed income, glass ceiling, Glass-Steagall Act, global macro, Greenspan put, high batting average, implied volatility, index fund, inflation targeting, interest rate derivative, inventory management, inverted yield curve, John Meriwether, junk bonds, land bank, Long Term Capital Management, low interest rates, managed futures, margin call, market bubble, Market Wizards by Jack D. Schwager, Maui Hawaii, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, oil shock, out of africa, panic early, paper trading, Paul Samuelson, Peter Thiel, price anchoring, proprietary trading, purchasing power parity, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, short selling, Silicon Valley, tail risk, The Wisdom of Crowds, too big to fail, transaction costs, value at risk, Vision Fund, yield curve, zero-coupon bond, zero-sum game

See also Sterling Brown Brothers, 271 BTPs (Buoni del Tesoro Poliennali), 85–87 Bucket shops, 36 Buffett,Warren, 278, 292 Bull/bullish market, 83, 107, 123, 217, 225–226, 228, 230–231, 239, 273 Bund/BTP convergence trade, 85–87 Bundesbank, 14 Bunds, 75, 340 Business cycle, global, 328–329 Butterfly options, 46 Buy and hold strategy, 7, 47 Buy low, sell high, 228–229 Buy signals, 226 Call options, 85 Canada, 167 Canadian dollar, 67, 239, 286 Capital allocation, 24, 33, 98–99, 315, 321 Capital preservation, 144, 323–324 Carry trades, 78–79, 110–111, 113, 117–118, 125, 134 Cash market, 85 Caxton, 9–10, 33 Central bank(s)/banking, 32, 40, 83, 139–140, 148, 151–153, 161–162, 167–170, 204, 313, 331 Central banker(s), 13–14, 160, 229, 349.

Stocks for the Long Run, 4th Edition: The Definitive Guide to Financial Market Returns & Long Term Investment Strategies by Jeremy J. Siegel

addicted to oil, Alan Greenspan, asset allocation, backtesting, behavioural economics, Black-Scholes formula, book value, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, cognitive dissonance, compound rate of return, correlation coefficient, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, Everybody Ought to Be Rich, fixed income, German hyperinflation, implied volatility, index arbitrage, index fund, Isaac Newton, it's over 9,000, John Bogle, joint-stock company, Long Term Capital Management, loss aversion, machine readable, market bubble, mental accounting, Money creation, Myron Scholes, new economy, oil shock, passive investing, Paul Samuelson, popular capitalism, prediction markets, price anchoring, price stability, proprietary trading, purchasing power parity, random walk, Richard Thaler, risk free rate, risk tolerance, risk/return, Robert Shiller, Ronald Reagan, shareholder value, short selling, South Sea Bubble, stock buybacks, stocks for the long run, subprime mortgage crisis, survivorship bias, technology bubble, The Great Moderation, The Wisdom of Crowds, transaction costs, tulip mania, uptick rule, Vanguard fund, vertical integration

Momentum strategies, unlike fundamental strategies, rely purely on past returns, regardless of earnings, dividends, or other valuation criteria. Momentum investors buy stocks that have recently risen in price and sell stocks that have recently fallen, expecting that the stock price will, for a time, continue to move in the same direction. While this may seem at odds with the old maxim of “buy low, sell high,” there is substantial research to support this “buy-high, sellhigher” strategy. In 1993, Narasimhan Jegadeesh and Sheridan Titman found that stocks with the highest 10 percent returns over the past six months outperformed stocks with the lowest 10 percent returns by about 1 percent per month over the next six months.13,14 Other technical strategies, such as buying stocks priced near their 52-week high, have also been shown to be successful.15 It should be emphasized that these momentum strategies work only in the short term and should not be part of a long-term strategy.

The Personal MBA: A World-Class Business Education in a Single Volume by Josh Kaufman

Albert Einstein, Alvin Toffler, Atul Gawande, Black Swan, Blue Ocean Strategy, business cycle, business process, buy low sell high, capital asset pricing model, Checklist Manifesto, cognitive bias, correlation does not imply causation, Credit Default Swap, Daniel Kahneman / Amos Tversky, David Heinemeier Hansson, David Ricardo: comparative advantage, Dean Kamen, delayed gratification, discounted cash flows, Donald Knuth, double entry bookkeeping, Douglas Hofstadter, Dunning–Kruger effect, en.wikipedia.org, Frederick Winslow Taylor, George Santayana, Gödel, Escher, Bach, high net worth, hindsight bias, index card, inventory management, iterative process, job satisfaction, Johann Wolfgang von Goethe, Kaizen: continuous improvement, Kevin Kelly, Kickstarter, Lao Tzu, lateral thinking, loose coupling, loss aversion, Marc Andreessen, market bubble, Network effects, Parkinson's law, Paul Buchheit, Paul Graham, place-making, premature optimization, Ralph Waldo Emerson, rent control, scientific management, side project, statistical model, stealth mode startup, Steve Jobs, Steve Wozniak, subscription business, systems thinking, telemarketer, the scientific method, time value of money, Toyota Production System, tulip mania, Upton Sinclair, Vilfredo Pareto, Walter Mischel, Y Combinator, Yogi Berra

As long as you continue to make your customers happy, only a small percentage of your customer base will cancel each period, giving you the ability to plan your finances with more certainty. Any subscriber attrition you experience can be overcome by enrolling more customers. SHARE THIS CONCEPT: http://book.personalmba.com/subscription/ Form of Value #5: Resale Buy low, sell high. —STOCK TRADER’S MAXIM Resale is the acquisition of an asset from a wholesale seller, followed by the sale of that asset to a retail buyer at a higher price. Resale is how most of the retailers you’re familiar with work: they purchase what they sell from other businesses, then resell each purchase for more than it cost.

Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined by Lasse Heje Pedersen

activist fund / activist shareholder / activist investor, Alan Greenspan, algorithmic trading, Andrei Shleifer, asset allocation, backtesting, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Black-Scholes formula, book value, Brownian motion, business cycle, buy and hold, buy low sell high, buy the rumour, sell the news, capital asset pricing model, commodity trading advisor, conceptual framework, corporate governance, credit crunch, Credit Default Swap, currency peg, currency risk, David Ricardo: comparative advantage, declining real wages, discounted cash flows, diversification, diversified portfolio, Emanuel Derman, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, financial engineering, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, global macro, Gordon Gekko, implied volatility, index arbitrage, index fund, interest rate swap, junk bonds, late capitalism, law of one price, Long Term Capital Management, low interest rates, managed futures, margin call, market clearing, market design, market friction, Market Wizards by Jack D. Schwager, merger arbitrage, money market fund, mortgage debt, Myron Scholes, New Journalism, paper trading, passive investing, Phillips curve, price discovery process, price stability, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Thaler, risk free rate, risk-adjusted returns, risk/return, Robert Shiller, selection bias, shareholder value, Sharpe ratio, short selling, short squeeze, SoftBank, sovereign wealth fund, statistical arbitrage, statistical model, stocks for the long run, stocks for the long term, survivorship bias, systematic trading, tail risk, technology bubble, time dilation, time value of money, total factor productivity, transaction costs, two and twenty, value at risk, Vanguard fund, yield curve, zero-coupon bond

Arbitrage Strategies Turning to arbitrage strategies, these consist of fixed-income arbitrage, convertible bond arbitrage, and event-driven investment. Fixed-income arbitrage is based on a number of so-called convergence trades. In a convergence trade, you look for similar securities with different prices; then you buy low, sell high, and hope for convergence. Since fixed-income securities usually have a finite maturity, convergence must eventually happen, but the sooner it happens, the more profitable the trade. The biggest risk in convergence trades is that the trader is forced to unwind the trade when the price gap widens and the trade loses money.

How I Became a Quant: Insights From 25 of Wall Street's Elite by Richard R. Lindsey, Barry Schachter

Albert Einstein, algorithmic trading, Andrew Wiles, Antoine Gombaud: Chevalier de Méré, asset allocation, asset-backed security, backtesting, bank run, banking crisis, Bear Stearns, Black-Scholes formula, Bob Litterman, Bonfire of the Vanities, book value, Bretton Woods, Brownian motion, business cycle, business process, butter production in bangladesh, buy and hold, buy low sell high, capital asset pricing model, centre right, collateralized debt obligation, commoditize, computerized markets, corporate governance, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency risk, discounted cash flows, disintermediation, diversification, Donald Knuth, Edward Thorp, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, fixed income, full employment, George Akerlof, global macro, Gordon Gekko, hiring and firing, implied volatility, index fund, interest rate derivative, interest rate swap, Ivan Sutherland, John Bogle, John von Neumann, junk bonds, linear programming, Loma Prieta earthquake, Long Term Capital Management, machine readable, margin call, market friction, market microstructure, martingale, merger arbitrage, Michael Milken, Myron Scholes, Nick Leeson, P = NP, pattern recognition, Paul Samuelson, pensions crisis, performance metric, prediction markets, profit maximization, proprietary trading, purchasing power parity, quantitative trading / quantitative finance, QWERTY keyboard, RAND corporation, random walk, Ray Kurzweil, Reminiscences of a Stock Operator, Richard Feynman, Richard Stallman, risk free rate, risk-adjusted returns, risk/return, seminal paper, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, sorting algorithm, statistical arbitrage, statistical model, stem cell, Steven Levy, stochastic process, subscription business, systematic trading, technology bubble, The Great Moderation, the scientific method, too big to fail, trade route, transaction costs, transfer pricing, value at risk, volatility smile, Wiener process, yield curve, young professional

I JWPR007-Lindsey May 28, 2007 15:39 Leslie Rahl 89 was reluctant to return to a staff role, but accepted, subject to the quid pro quo that after a year I would hire a staff, and organize the function, he would teach me how to trade. I knew almost nothing about trading. When, early on in my staff prioritizing, I was asked by my new boss to prepare the division’s quarterly review, I was at a complete loss as to what to write for the section titled “Trading Strategy.” As a placeholder, I wrote “Buy low, sell high.” The head of the investment bank loved it, and the report went directly to John Reed as written. I had not advanced far in my trading education when fate intervened and gave me a big push. In 1983, the Chicago Board of Trade (CBOT) began exchange trading of options on bond futures. I was offered the opportunity to trade these derivatives as a proprietary trader for the bank’s account because “you don’t know anything about trading, but at least you went to MIT.

Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives by Satyajit Das

accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, Asian financial crisis, asset-backed security, Bear Stearns, beat the dealer, Black Swan, Black-Scholes formula, Bretton Woods, BRICs, Brownian motion, business logic, business process, buy and hold, buy low sell high, call centre, capital asset pricing model, collateralized debt obligation, commoditize, complexity theory, computerized trading, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, currency peg, currency risk, disinformation, disintermediation, diversification, diversified portfolio, Edward Thorp, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, financial engineering, financial innovation, fixed income, Glass-Steagall Act, Haight Ashbury, high net worth, implied volatility, index arbitrage, index card, index fund, interest rate derivative, interest rate swap, Isaac Newton, job satisfaction, John Bogle, John Meriwether, junk bonds, locking in a profit, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Marshall McLuhan, mass affluent, mega-rich, merger arbitrage, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mutually assured destruction, Myron Scholes, new economy, New Journalism, Nick Leeson, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, Parkinson's law, placebo effect, Ponzi scheme, proprietary trading, purchasing power parity, quantitative trading / quantitative finance, random walk, regulatory arbitrage, Right to Buy, risk free rate, risk-adjusted returns, risk/return, Salesforce, Satyajit Das, shareholder value, short selling, short squeeze, South Sea Bubble, statistical model, technology bubble, the medium is the message, the new new thing, time value of money, too big to fail, transaction costs, value at risk, Vanguard fund, volatility smile, yield curve, Yogi Berra, zero-coupon bond

LTCM was going to purchase ‘cheap’ or ‘underpriced’ securities and ‘hedge’ them by undertaking short sales of ‘expensive’ securities with ‘similar’ characteristics. DAS_C06.QXP 8/7/06 4:43 PM Page 171 5 N The perfect storm – risk mismanagement by the numbers 171 Profits would result when pricing differences corrected. It was the old buy low sell high and the sell high buy low strategy. There were some old favourites as well – tax arbitrage and the standard carry trades. LTCM used leverage, up to 25 times. Individual strategies only yielded small profits, leverage was needed to accentuate the returns. It assured potential investors that risk would be low because the fund would not take directional risks and outright positions.

Mastering Private Equity by Zeisberger, Claudia,Prahl, Michael,White, Bowen, Michael Prahl, Bowen White

Alan Greenspan, asset allocation, backtesting, barriers to entry, Basel III, Bear Stearns, book value, business process, buy low sell high, capital controls, carbon credits, carried interest, clean tech, commoditize, corporate governance, corporate raider, correlation coefficient, creative destruction, currency risk, deal flow, discounted cash flows, disintermediation, disruptive innovation, distributed generation, diversification, diversified portfolio, family office, fixed income, high net worth, impact investing, information asymmetry, intangible asset, junk bonds, Lean Startup, low interest rates, market clearing, Michael Milken, passive investing, pattern recognition, performance metric, price mechanism, profit maximization, proprietary trading, risk tolerance, risk-adjusted returns, risk/return, Savings and loan crisis, shareholder value, Sharpe ratio, Silicon Valley, sovereign wealth fund, statistical arbitrage, time value of money, transaction costs, two and twenty

We focus on PE investments in mature companies, specifically leveraged buyouts (LBOs) and deals in a competitive process, given that they are the most complex.1 Bidding for a Deal Setting the Price and Winning the Deal In an LBO, PE firms often pursue targets in a competitive sales process. It is in a PE firm’s interest to bid as low as possible both to account for the assumptions and execution risk of a target’s business plan and to boost returns (buy low–sell high). However, buyers need to meet the seller’s acceptable reservation price—or a price that is perceived to be “fair”—and outbid (not necessarily only monetarily) the competition. Aside from explicit pricing terms and implicit value-add, in most processes the buyer needs to build trust and avoid triggering a defiant response by the seller.

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies by Jeremy Siegel

Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, Black-Scholes formula, book value, break the buck, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, carried interest, central bank independence, cognitive dissonance, compound rate of return, computer age, computerized trading, corporate governance, correlation coefficient, Credit Default Swap, currency risk, Daniel Kahneman / Amos Tversky, Deng Xiaoping, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Financial Instability Hypothesis, fixed income, Flash crash, forward guidance, fundamental attribution error, Glass-Steagall Act, housing crisis, Hyman Minsky, implied volatility, income inequality, index arbitrage, index fund, indoor plumbing, inflation targeting, invention of the printing press, Isaac Newton, it's over 9,000, John Bogle, joint-stock company, London Interbank Offered Rate, Long Term Capital Management, loss aversion, machine readable, market bubble, mental accounting, Minsky moment, Money creation, money market fund, mortgage debt, Myron Scholes, new economy, Northern Rock, oil shock, passive investing, Paul Samuelson, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price stability, proprietary trading, purchasing power parity, quantitative easing, random walk, Richard Thaler, risk free rate, risk tolerance, risk/return, Robert Gordon, Robert Shiller, Ronald Reagan, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, stocks for the long run, survivorship bias, technology bubble, The Great Moderation, the payments system, The Wisdom of Crowds, transaction costs, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uptick rule, Vanguard fund

Momentum strategies, unlike fundamental strategies, rely purely on past returns, regardless of earnings, dividends, or other valuation criteria. Momentum investors buy stocks that have recently risen in price and sell stocks that have recently fallen, expecting that the stock price will, for a time, continue to move in the same direction. While this may seem at odds with the old maxim of “buy low, sell high,” there is substantial research to support this “buy-high, sell-higher” strategy. In 1993, Narasimhan Jegadeesh and Sheridan Titman found that stocks with the highest 10 percent returns over the past six months outperformed stocks with the lowest 10 percent returns by about 1 percent per month over the next six months.13, 14 Other technical strategies, such as buying stocks priced near their 52-week high, have also been shown to be successful.15 It should be emphasized that these momentum strategies work only in the short term and should not be part of a long-term strategy.

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History by Diana B. Henriques

Alan Greenspan, asset allocation, bank run, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Black Monday: stock market crash in 1987, break the buck, buttonwood tree, buy and hold, buy low sell high, call centre, Carl Icahn, centralized clearinghouse, computerized trading, Cornelius Vanderbilt, corporate governance, corporate raider, Credit Default Swap, cuban missile crisis, Dennis Tito, Edward Thorp, Elliott wave, financial deregulation, financial engineering, financial innovation, Flash crash, friendly fire, Glass-Steagall Act, index arbitrage, index fund, intangible asset, interest rate swap, It's morning again in America, junk bonds, laissez-faire capitalism, locking in a profit, Long Term Capital Management, margin call, Michael Milken, money market fund, Myron Scholes, plutocrats, Ponzi scheme, pre–internet, price stability, proprietary trading, quantitative trading / quantitative finance, random walk, Ronald Reagan, Savings and loan crisis, short selling, Silicon Valley, stock buybacks, The Chicago School, The Myth of the Rational Market, the payments system, tulip mania, uptick rule, Vanguard fund, web of trust

Rising prices would trigger more buying, and that would drive prices up further; falling prices would trigger more selling, with the opposite effect. Jacobs had hit on the aspect of portfolio insurance that troubled the market’s traditional traders, people who shared John Phelan’s instincts and history at the New York Stock Exchange. They believed in the old rule of “buy low, sell high.” With portfolio insurance, you were deliberately supposed to do the opposite—buy when prices were rising and sell when they were falling. It just felt wrong. Indeed, the portfolio insurer’s success depended on a lot of other people believing the strategy was, in fact, wrong. The LOR concept assumed there would always be a large population of wealthy, unflappable bargain hunters who would persist in buying low and selling high, investors who would step into a falling market to buy all the shares the portfolio insurers would be selling.

Venice: A New History by Thomas F. Madden

big-box store, buy low sell high, centre right, colonial rule, Columbine, Costa Concordia, double entry bookkeeping, facts on the ground, financial innovation, indoor plumbing, invention of movable type, Johann Wolfgang von Goethe, Murano, Venice glass, spice trade, trade route, upwardly mobile, urban planning

CHAPTER 3 COMING OF AGE: INDEPENDENCE, EXPANSION, AND POWER, 836–1094 Finding two merchants in Muslim Alexandria in the ninth century pilfering the body of a saint is good evidence that Venetians were conducting trade across the Mediterranean Sea at that time. Their overall business model was a simple one: Buy low, sell high. The ninth-century markets on the island of Torcello teemed with activity, just as they would at Rialto in the late tenth century. Venetian businessmen paid handsomely for a wide range of commodities, many of which were grown or produced in Europe and then transported overland or by river to the lagoon.

Trend Following: How Great Traders Make Millions in Up or Down Markets by Michael W. Covel

Albert Einstein, Alvin Toffler, Atul Gawande, backtesting, Bear Stearns, beat the dealer, Bernie Madoff, Black Swan, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, Carl Icahn, Clayton Christensen, commodity trading advisor, computerized trading, correlation coefficient, Daniel Kahneman / Amos Tversky, delayed gratification, deliberate practice, diversification, diversified portfolio, Edward Thorp, Elliott wave, Emanuel Derman, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, fiat currency, fixed income, Future Shock, game design, global macro, hindsight bias, housing crisis, index fund, Isaac Newton, Jim Simons, John Bogle, John Meriwether, John Nash: game theory, linear programming, Long Term Capital Management, managed futures, mandelbrot fractal, margin call, market bubble, market fundamentalism, market microstructure, Market Wizards by Jack D. Schwager, mental accounting, money market fund, Myron Scholes, Nash equilibrium, new economy, Nick Leeson, Ponzi scheme, prediction markets, random walk, Reminiscences of a Stock Operator, Renaissance Technologies, Richard Feynman, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, shareholder value, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, survivorship bias, systematic trading, Teledyne, the scientific method, Thomas L Friedman, too big to fail, transaction costs, upwardly mobile, value at risk, Vanguard fund, William of Occam, zero-sum game

If you are watching CNBC for prediction of a trend change, you are in trouble, ‘Casey Jones,’ as Jerry Garcia of The Grateful Dead reminds: “Trouble with you is the trouble with me Got two good eyes but you still don’t see Come round the bend, you know it’s the end The fireman screams and the engine just gleams…”26 The Henry theory— statistically corroborated, of course—is that assets, once in motion, tend to stay in motion without changing direction, and that turns the old saw— buy low, sell high—on its ear.27 244 Enron stock was rated as “Can’t Miss” until it became clear that the company was in desperate trouble, at which point analysts lowered the rating to “Sure Thing.” Only when Enron went completely under did a few bold analysts demote its stock to the lowest possible Wall Street analyst rating, “Hot Buy.”

Gonzo: The Life of Hunter S. Thompson by Corey Seymour, Johnny Depp, Jann S. Wenner

Bonfire of the Vanities, buy low sell high, Electric Kool-Aid Acid Test, Golden Gate Park, Haight Ashbury, Mason jar, New Journalism, Norman Mailer, Ralph Nader, rolodex, Saturday Night Live, Seymour Hersh, South China Sea, South of Market, San Francisco, Y2K

This would prevent greedheads, land-rapers and other human jackals from capitalizing on the name “Aspen.” . . . The main advantage here is that changing the name of the town would have no major effect on the town itself, or on those people who came here because it’s a good place to live. What effect the name-change might have on those who came here to buy low, sell high and then move on is fairly obvious . . . and eminently desirable. These swine should be fucked, broken and driven across the land. 3) Drug Sales must be controlled. My first act as Sheriff will be to install, on the courthouse lawn, a bastinado platform and a set of stocks—in order to punish dishonest dope dealers in a proper public fashion.

Alpha Trader by Brent Donnelly

Abraham Wald, algorithmic trading, Asian financial crisis, Atul Gawande, autonomous vehicles, backtesting, barriers to entry, beat the dealer, behavioural economics, bitcoin, Boeing 747, buy low sell high, Checklist Manifesto, commodity trading advisor, coronavirus, correlation does not imply causation, COVID-19, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, currency risk, deep learning, diversification, Edward Thorp, Elliott wave, Elon Musk, endowment effect, eurozone crisis, fail fast, financial engineering, fixed income, Flash crash, full employment, global macro, global pandemic, Gordon Gekko, hedonic treadmill, helicopter parent, high net worth, hindsight bias, implied volatility, impulse control, Inbox Zero, index fund, inflation targeting, information asymmetry, invisible hand, iterative process, junk bonds, Kaizen: continuous improvement, law of one price, loss aversion, low interest rates, margin call, market bubble, market microstructure, Market Wizards by Jack D. Schwager, McMansion, Monty Hall problem, Network effects, nowcasting, PalmPilot, paper trading, pattern recognition, Peter Thiel, prediction markets, price anchoring, price discovery process, price stability, quantitative easing, quantitative trading / quantitative finance, random walk, Reminiscences of a Stock Operator, reserve currency, risk tolerance, Robert Shiller, secular stagnation, Sharpe ratio, short selling, side project, Stanford marshmallow experiment, Stanford prison experiment, survivorship bias, tail risk, TED Talk, the scientific method, The Wisdom of Crowds, theory of mind, time dilation, too big to fail, transaction costs, value at risk, very high income, yield curve, you are the product, zero-sum game

This is the easiest and most automatic adaptation you can make as markets change. Rangebound vs. Trending While markets can be volatile or quiet, and liquid or illiquid, they can also be viewed through the lens of Rangebound vs. Trending. Rangebound markets favor mean reversion strategies (buy low/sell high) while trending markets favor breakout or “go with” strategies (buy high/sell higher). You should always have a good sense of whether each market you trade is trending, rangebound or neither. It is not always easy to tell. It is usually straightforward to figure out whether a market has been trending or rangebound.

Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough, John Helyar

Alan Greenspan, Bear Stearns, Black Monday: stock market crash in 1987, buy and hold, buy low sell high, Carl Icahn, corporate raider, Donald Trump, financial engineering, Gordon Gekko, junk bonds, margin call, Michael Milken, Ronald Reagan, Rubik’s Cube, shareholder value, South Sea Bubble

When an economic downturn slowed its appliance business, Johnson’s impulse was to throw money at the problem, and he fell back on the expensive marketing schemes he’d developed at Eaton and GE. His new boss, a tightfisted hard case named Ralph Barford, rejected each one in turn. “Ralph’s philosophy was buy low, sell high, and argue over the bills,” recalled Jim Westcott, a Johnson friend who would frequently commiserate with him over lunch. “Boy, did Ralph rip the skin off my back today,” Johnson would moan. Johnson chafed at life in a smaller company. GSW was operating on the edge, with lots of debt, and Johnson suffered through weekly grillings by its bankers.

Darwin's Dangerous Idea: Evolution and the Meanings of Life by Daniel C. Dennett

Albert Einstein, Alfred Russel Wallace, anthropic principle, assortative mating, buy low sell high, cellular automata, Charles Babbage, classic study, combinatorial explosion, complexity theory, computer age, Computing Machinery and Intelligence, conceptual framework, Conway's Game of Life, Danny Hillis, double helix, Douglas Hofstadter, Drosophila, finite state, Garrett Hardin, Gregor Mendel, Gödel, Escher, Bach, heat death of the universe, In Cold Blood by Truman Capote, invention of writing, Isaac Newton, Johann Wolfgang von Goethe, John von Neumann, junk bonds, language acquisition, Murray Gell-Mann, New Journalism, non-fiction novel, Peter Singer: altruism, phenotype, price mechanism, prisoner's dilemma, QWERTY keyboard, random walk, Recombinant DNA, Richard Feynman, Rodney Brooks, Schrödinger's Cat, selection bias, Stephen Hawking, Steven Pinker, strong AI, Stuart Kauffman, the scientific method, theory of mind, Thomas Malthus, Tragedy of the Commons, Turing machine, Turing test

" {50} From the outset, there were those who viewed Darwin's novel mixture of detailed naturalism and abstract reasoning about processes as a dubious and inviable hybrid. It had a tremendous air of plausibility, but so do many get-rich-quick schemes that turn out to be empty tricks. Compare it to the following stock-market principle. Buy Low, Sell High. This is guaranteed to make you wealthy. You cannot fail to get rich if you follow this advice. Why doesn't it work? It does work — for everybody who is fortunate enough to act according to it, but, alas, there is no way of determining that the conditions are met until it is too late to act on them.

Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Black Swan, Bob Litterman, bond market vigilante , book value, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, capital controls, carbon credits, Carmen Reinhart, central bank independence, classic study, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, deal flow, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, G4S, George Akerlof, global macro, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, inverted yield curve, invisible hand, John Bogle, junk bonds, Kenneth Rogoff, laissez-faire capitalism, law of one price, London Interbank Offered Rate, Long Term Capital Management, loss aversion, low interest rates, managed futures, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, pension time bomb, performance metric, Phillips curve, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, savings glut, search costs, selection bias, seminal paper, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, stock buybacks, stocks for the long run, survivorship bias, systematic trading, tail risk, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

Specifically, momentum-based stock selection strategies that involve buying recent winners appear profitable. Next, I discuss the literature on value and momentum strategies which initially focused on the U.S. equity market. Cross-sectional trading strategies may be relatively value-oriented (buy low, sell high) or momentum-oriented (buy rising stocks, sell falling ones; essentially buy high, sell low)—and they may be applied within one market (say, equities) or across many asset markets. Micro-inefficiency refers to either the rare extreme case of riskless arbitrage opportunities or the more plausible case of risky trades and strategies with attractive reward-to-risk ratios.

The First Tycoon by T.J. Stiles

book value, British Empire, business cycle, business logic, buttonwood tree, buy and hold, buy low sell high, California gold rush, Cornelius Vanderbilt, credit crunch, Edward Glaeser, gentleman farmer, informal economy, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, margin call, Monroe Doctrine, new economy, public intellectual, risk free rate, short selling, Snow Crash, strikebreaker, The Wealth of Nations by Adam Smith, three-masted sailing ship, tontine, transatlantic slave trade, transcontinental railway, vertical integration, working poor

They would either borrow the shares in order to deliver, then repay the lenders with shares they bought later at a lower price, or—more commonly in this era—make contracts for sale that gave them weeks or even months to deliver, hoping to buy the shares in the interim at a lower price. Instead of buy low, sell high, the short strategy was sell high, buy low. The Commodore's heavy purchases in “sick Transit” (as brokers called the stock) offered the bears a seemingly perfect opportunity. Unaware of the progress of the talks, they believed the price was doomed to sink.76 On Christmas Eve, Allen concluded the negotiations.

Days of Fire: Bush and Cheney in the White House by Peter Baker

"Hurricane Katrina" Superdome, addicted to oil, Alan Greenspan, anti-communist, battle of ideas, Bear Stearns, Berlin Wall, Bernie Madoff, Bob Geldof, Boeing 747, buy low sell high, carbon tax, card file, clean water, collective bargaining, cuban missile crisis, desegregation, drone strike, energy security, facts on the ground, failed state, Fall of the Berlin Wall, friendly fire, Glass-Steagall Act, guest worker program, hiring and firing, housing crisis, illegal immigration, immigration reform, information security, Mikhail Gorbachev, MITM: man-in-the-middle, no-fly zone, operational security, Robert Bork, rolling blackouts, Ronald Reagan, Ronald Reagan: Tear down this wall, Saturday Night Live, South China Sea, stem cell, Ted Sorensen, too big to fail, uranium enrichment, War on Poverty, working poor, Yom Kippur War

He ordered more details put into the speech. “We’re buying low and selling high,” he said, meaning the toxic assets the government would purchase could still be turned around for a profit eventually. When he returned to the family theater a few hours later, he read the revised text and was still unhappy. Why wasn’t the buy-low, sell-high concept in there? he demanded. Because that was not really the concept, someone explained. Bush was exasperated. “Why did I sign onto this proposal if I don’t understand what it does?” he asked. The president stalked out. He had never seemed more exhausted, his face more drawn, thought Latimer.

Corporate Finance: Theory and Practice by Pierre Vernimmen, Pascal Quiry, Maurizio Dallocchio, Yann le Fur, Antonio Salvi

"Friedman doctrine" OR "shareholder theory", accelerated depreciation, accounting loophole / creative accounting, active measures, activist fund / activist shareholder / activist investor, AOL-Time Warner, ASML, asset light, bank run, barriers to entry, Basel III, Bear Stearns, Benoit Mandelbrot, bitcoin, Black Swan, Black-Scholes formula, blockchain, book value, business climate, business cycle, buy and hold, buy low sell high, capital asset pricing model, carried interest, collective bargaining, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, currency risk, delta neutral, dematerialisation, discounted cash flows, discrete time, disintermediation, diversification, diversified portfolio, Dutch auction, electricity market, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, fixed income, Flash crash, foreign exchange controls, German hyperinflation, Glass-Steagall Act, high net worth, impact investing, implied volatility, information asymmetry, intangible asset, interest rate swap, Internet of things, inventory management, invisible hand, joint-stock company, joint-stock limited liability company, junk bonds, Kickstarter, lateral thinking, London Interbank Offered Rate, low interest rates, mandelbrot fractal, margin call, means of production, money market fund, moral hazard, Myron Scholes, new economy, New Journalism, Northern Rock, performance metric, Potemkin village, quantitative trading / quantitative finance, random walk, Right to Buy, risk free rate, risk/return, shareholder value, short selling, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, Steve Jobs, stocks for the long run, supply-chain management, survivorship bias, The Myth of the Rational Market, time value of money, too big to fail, transaction costs, value at risk, vertical integration, volatility arbitrage, volatility smile, yield curve, zero-coupon bond, zero-sum game

This behaviour is diametrically opposed to that of the hedger. Traders are professional speculators. They spend their time buying currencies, bonds, shares or options that they think will appreciate in value and they sell them when they think they are about to decline. Not surprisingly, their motto is “Buy low, sell high, play golf!” But the investor is also a speculator most of the time. When an investor predicts cash flows, he is speculating about the future. This is a very important point, and you must be careful not to interpret “speculation” negatively. Every investor speculates when he invests, but his speculation is not necessarily reckless.

Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen

3Com Palm IPO, accelerated depreciation, accounting loophole / creative accounting, Airbus A320, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black-Scholes formula, Boeing 747, book value, break the buck, Brownian motion, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, capital controls, Carl Icahn, Carmen Reinhart, carried interest, collateralized debt obligation, compound rate of return, computerized trading, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cross-subsidies, currency risk, discounted cash flows, disintermediation, diversified portfolio, Dutch auction, equity premium, equity risk premium, eurozone crisis, fear index, financial engineering, financial innovation, financial intermediation, fixed income, frictionless, fudge factor, German hyperinflation, implied volatility, index fund, information asymmetry, intangible asset, interest rate swap, inventory management, Iridium satellite, James Webb Space Telescope, junk bonds, Kenneth Rogoff, Larry Ellison, law of one price, linear programming, Livingstone, I presume, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, market bubble, market friction, money market fund, moral hazard, Myron Scholes, new economy, Nick Leeson, Northern Rock, offshore financial centre, PalmPilot, Ponzi scheme, prediction markets, price discrimination, principal–agent problem, profit maximization, purchasing power parity, QR code, quantitative trading / quantitative finance, random walk, Real Time Gross Settlement, risk free rate, risk tolerance, risk/return, Robert Shiller, Scaled Composites, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, Skype, SpaceShipOne, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, systematic bias, Tax Reform Act of 1986, The Nature of the Firm, the payments system, the rule of 72, time value of money, too big to fail, transaction costs, University of East Anglia, urban renewal, VA Linux, value at risk, Vanguard fund, vertical integration, yield curve, zero-coupon bond, zero-sum game, Zipcar

They want the financial manager to increase the value of the corporation and its current stock price. Thus the secret of success in financial management is to increase value. That is easy to say, but not very helpful. Instructing the financial manager to increase value is like advising an investor in the stock market to “buy low, sell high.” The problem is how to do it. There may be a few activities in which one can read a textbook and then just “do it,” but financial management is not one of them. That is why finance is worth studying. Who wants to work in a field where there is no room for judgment, experience, creativity, and a pinch of luck?