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hey can you tell me why patterns dont work when many people start following it ? for example when the chart is on peak , and as per pattern it should go down , so mostly people would sell the stock, tht means it will go down. That means pattern worked! right? so i did nt get the concept. can u please explain?

Let's say that most people are planning to sell the stock when it reaches the expected peak. A smart person will sell the stock before the peak to capture that profit. Everyone is trying to get ahead of the curve.

Good thing I live in America. Its rigged so it's easy to make the efficient projection of what should be reflected in stock prices since everyone is too busy taking on one strategy based on unlimited QE and fiscal stimulus....until there isnt and I make my money.

@@Diplomastronaut Hmm sounds like a Taleb strategy of buying an out of the money option and using a disaster scenario. Small loss if you're wrong, huge gains if you're right. Unfortunately, there are too many investor douchebags and corrupt leaders buying the official story that you may be waiting forever. Keynes was right, in the long run we're all dead.

@@gmshadowtraders official story will naturally fall apart soon so I dont worry. I have made a lot. Been value investing combined with my Tesla sale has helped me earn a ton without a lot of work that is done with more complex derivatives

Exactly my thought when I heard him say physics is so predictable.

Not quite. In physics you know as I know that mere observation of the wave function collapses it. In finance this isn't the case. An investor has to actually act on buying or selling an asset so that the market changes, merely observing the asset won't change anything. So there is no analog between market and quantum state.

Thanks!

The price is not random but it is unpredictable.

finance assumes prices are in geometric brownian motion, this means that both momentum and mean-reversion are ephemeral in the time series. the only method to gain 'edge' or expected value of profit is critical economic information regarding the asset or quantitative/statistical based methods. being correct is the only way to profit.

The direction of the price is a Brownian motion. The magnitude, viz. volatility, has predictable components (Lo and McKinley 1987). You don't bet on predicting a single stock; you minimize the cost in case your prediction is wrong. If you want to check the common global and regional trends among international equity, it's my MSc. dissertation.

@MIT OpenCourseeWare I get it, but the latest Archego Whatsoever got the real WILD FIRE in financial news. A professional hedge fund played the multiple leverage little fires. Once he run out or doing m magic trick, this fire will be a big wild fire and need JP Morgan wipe that guy's a** to bail out. HAHAHA then back to equilibrium, it went to FAR northwest negative territory. HAHAHA even smaller than 0.🤣🤣🤣

130/30 portfolio. Is short selling 30% of the portfolio value and using the loan to buy 30% more on the long. Every portfolio's weighting ends up being equal to 100(%). The cash position you start with could be altered or reduced by using securities to lend against. In a 130/30 portfolio, if we started with $100,000 and shorted 30%, we now have $70,000 in a long cash position. Though we start with a portfolio value of $130,000, knowing that $30,000 will need to be paid back at some point in time.

@@brandoncable5243 Does this (and the entire Portfolio Theory section) explain the 140% short interest in Gamestop that has retail traders in such an uproar?

@@dodgingdurangos924 Somewhat. That's simply the motivation for the behavior. The methodology is a little more nuanced. It has more to do with the T+3 settlement rules for buying and selling stocks. Essentially the hedge funds were borrowing phantom shorts from each other before the "date of record" aka the actual day you are recorded as either being or not being a shareholder. The order is filled immediately, and the funds debited or credited immediately, however the official record is still T+3. To short a share that has not cleared the official record is called naked shorting, which is supposedly illegal.

@@bhe8336 So, regular settlement rules also apply. There seems to be a bit of double-counting that happens with every transaction. It seems like the extra 40% is kinda like a transitory glitch that will last until the short seller unwinds the trade, returns the shares and the percentage will reflect the original actual number of shares outstanding. What would the short seller's portfolio weights look like during and after the short sale? Something similar to the 130/30 calculation?

@@dodgingdurangos924 I'm not sure but they are adding a more negative weighting to the portfolio by trading phantom shorts.

Beta is the slope of the line formed by running a regression of an individual security against the market.

It is actually like that in quantum physics

it depends on the definition, mate. As Dr. Andrew already mentioned in the lecture, there are several ways to measure risk. Some professionals choose to focus only on the downside instead of both sides. But this is out of scope of the course. In this course, the volatility is measured using the standard deviation

in finance risk refers to the change of price of any asset, whether it is up or down. even volatile positive profit in a portfolio is seen as too risky

Same thing

no risk is no volatility mathematically... you need movement since seeking a profit includes risk.

Well essentially yes. But that does not mean that the people trading don't have convincing evidence to back their position. The timing is just next to impossible since everyone else would have to agree with you right AFTER you take on your position. Doesn't stop people from trying though.

Many market move heavily on human emotion and human emotion is predictable, especially on big numbers.

They do.

Award for asking the best question goes to you.

I'm 4 years late so I'm posting this for anyone else who has this question. The risk free rate is a guaranteed amount of money. You simply cannot lose money on a tbill if you hold it until maturity. Therefore the graph for the portfolio is shifted upwards by an amount equal to the risk free rate multiplied by the percentage of the portfolio dedicated to risk free assets. It's like solidifying part of your returns. The S&P500 could go down 5% in a year, but you are guaranteed to have Return = riskyReturn * riskyComposition + riskfreeReturn*riskfreeComposition. It's like looking at a graph of y=x. If you add 2 so it's y=x+2 it's the same line just translated up 2 units.

The full playlist is: kzfaq.info/get/bejne/fsp4n8matKeuqXk.html. Visit the course on MIT OpenCourseWare at: ocw.mit.edu/15-401F08 to see the complete materials. Best wishes on your studies!

You sound like a salty loser.

HAHAHA Robber? No need such epic education at all. Just number high or low and in or out, Looser.

Yeah, about that... It turns out that astrophysicists & engineers who don't know a thing about finance are the ones being hired by financial institutions & paid multi-millions of dollars to find new ways to quickly solve equations that make their firms wildly rich. The people who work for Elon Musk or Mark Zuckerberg are worse than a greedy Gekko.

LOL, beat me to it!

Lmao frl nowadays people panic when it “spikes” a little from 1-2% 🤣💀

This course can make you understand the basics of the finance, which is very critical if you want to specialize in any equity or asset trading or investing. Especially net present value concept will help you understand the time value of money. The professor is amazing with his teaching skills and could give you the essence of the most complex concepts. But i still think that you could have hard times for understanding or getting motivated in, if you never heard of the concepts or instruments explained in the courses. After finishing the course you will still need to specialize yourself in stocks value investing or trading based on your preference. Technical analysis based trading i believe is more like a craft and could be learnt from practitioners rather than professors. There are a lot of sources in udemy, youtube and even twitter. I would also recommend you learn from the people who is active in the country you want to trade in as the dynamics of the market could differ a lot. Investing based on valuation is a craft too but luckily there is a very famous professor Damodaran who has shared his lectures in youtube. Financial skills are hard to improve but when you do it might open the gates of wealth for a dedicated person who has no realistic chance of getting rich while only working in 9-5 jobs.

@@merteraltinoz thank you soooo much for such a clean explanation of things and I'll definitely take your suggestion. Thank you so much again

Books, and what do you mean by learn more about investing :)

Equity is Asset plus Liability. Asset= 100000$ Liability=400000$

he was singing for the school band

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But physics is predictable while studying. Financial market is not

are you sure, please check his profile and check his net worth, you will be shocked.