Mr. Market

A Morning with Charlie

admin — Fri, 17 Jun 2011 06:18:38 +0000

Charlie will be speaking at the Pasadena Convention Center Friday July 1st.

“A Morning with Charlie”

Charlie Munger cordially invites you to attend a Morning with Charlie on Friday, July 1, 2011, at 10:00 a.m., in the Exhibit Hall & Ballroom Building of The Pasadena Convention Center in Pasadena, California. Charlie will make some opening remarks, and then he will take questions from the audience about business, economics and life.

The Morning with Charlie will be held regardless of whether the merger between Wesco and Berkshire Hathaway is approved at the special meeting of Wesco’s shareholders, which is currently scheduled for June 24, 2011. Please note that Charlie will not be speaking at the special meeting.

The Pasadena Convention Center is located at 300 East Green Street, Pasadena, California. The Convention Center’s parking structure may be accessed from Euclid Avenue, which runs north-south, to the east of the Convention Center. Additional parking can be found nearby, in the shopping center across Green Street to the north, and at the corner of Green Street and Los Robles Avenue, one block to the east of the Convention Center.

See you there.

Link: http://www.wescofinancial.com/page10.html

On the Bubble?

admin — Tue, 24 May 2011 03:04:32 +0000

NPR's Planet Money had a great episode recently about bubbles where they referenced work by Arlington Williams. Williams actually gave students the intrinsic value of the single stock they were trading, called them insane, and posted what the price should be on the wall. The result? The price sky rocketed even further from intrinsic value.

In the lab, they set up the world's simplest stock market. There's one stock that the students can trade. At the end of every round of trading, the stock pays a small dividend — an average of $1, say. At the end of the game, the stock is worth nothing. So if there are 10 rounds left in the game, the stock should be worth $10.

They make this very simple for the students, who have computer screens that tell them exactly how much the stock should be worth. But the price of the stock still almost always shoots way up over the expected value. Then, at some point before the end of the experiment, it crashes.

One time, in the middle of a bubble, Williams pointed out the apparent insanity of what the students were doing. That made the stock price go up faster.

"Showing people that the market was in a price bubble just fueled the price bubble even more," he says.

Follow the link to listen to the program: Gold: The 4,000 Year Old Bubble