I'll tell you why Rodders seen though Heathens is waffling. They get paid for telling you where to gamble your money, so why should they invest their own?Quote:
Originally Posted by Rodders rambler
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I'll tell you why Rodders seen though Heathens is waffling. They get paid for telling you where to gamble your money, so why should they invest their own?Quote:
Originally Posted by Rodders rambler
[QUOTE=TheHeathens;153851]:rolleyes:
That's all well and good, but who mentioned Hedge fund??? Stop doing that spin thing!
Definition of hedge (other than the botanic variety):
QUOTE]
Yes and that's what your trying to do by putting your money in a hedge fund. That's why it's called a 'hedge' fund.
[QUOTE=TheHeathens;153851]:rolleyes:
That's all well and good, but who mentioned Hedge fund??? Stop doing that spin thing!
Definition of hedge (other than the botanic variety):
Gambling:
As investment doesn't involve chance (it involves risk), it's not gambling by definition.
QUOTE]
So there's no 'chance' of an investment going wrong then?
CL everything in life can go wrong. You could be one of the 49,999,999 sperm out of 50,000,000 that lose the race to fertilise the egg, you could be put in prison for a crime you didn't commit, you could lose your job, your house could be burgled.... with your stash of cash under the bed that you were too scared to invest stolen :D.Quote:
Originally Posted by christopher leigh
Are you a Daily Mail reader by any chance? ;)
[quote=christopher leigh;153990]I'll answer for Heathens. Of course there's no 'chance' of an investment going wrong but there IS a risk of it going wrong. Tsk:rolleyes:Quote:
Originally Posted by TheHeathens
[QUOTE=Wheeze;154104]2nd definition of gamble: Take RISKY action in the hope of a desired result.Quote:
Originally Posted by christopher leigh
1st definition of chance: a possibility of something happening.
Not sure the Heathens will want you answering for him in future.
Risk and chance are different.
We say 'What is the chance of something happening?' not 'What is the risk of something happening' because we are expecting a quantified answer. Chance is often quantified as odds like the answer to above 'oh, about 50/50'
You cannot easily quantify risk. It is a more abstract notion which asks the question of whether you are willing to be exposed to a particular outcome.
Agreed, in vernacular discussion, risk and chance are often used interchangeably but in the context of this subject, the two are quite different.
Stoll someone does drop that paper off for me occasionally. I think I mentioned it on an earlier post. Anyway the implication is that I'm a pessimistic person by nature, which isn't true.Quote:
Originally Posted by Stolly
I think people who are optimistic or pessimistic without justification, are just emotional repressers. They don't want to face up to the reality of the world they're living in. If they did, they'd have to answer questions about their own ideology.
The reason the banking institutions are in a mess is because of the type of politicians we accept in this country. Those politicians fed the gambling that was going on in the economy. And those who had some short term interest in these actions, voted for these politicians.
If people can't be bothered to demand better politicians they deserve everything that's coming to them. Now is that pessimistic? I don't know, I suppose it depends on whether this has the desired effect.
to blame politicians shows a complete misunderstanding of the situation. 2 sets are responsible for the mess.
firstly irresponsible financial institutions who lent way above their means (Northern Rocks loan to deposit ratio was 170% and therefore funding was entirely dependant on the wholesale money markets) and relaxed their lending criteria far too much (6 x salary and mortgages of 120% loan to value were always going to end in tears).
secondly irresponsible borrowers who borrowed far too much knowing they were never going to be able to pay it back and who in some cases lied about income and financial position to get bigger loans than they would otherwise have been able too.
We're getting to the crux of the issue, which I knew we'd reach eventually. The root of this discussion rests on definitions.Quote:
Originally Posted by Wheeze
In the above though you've invalidated the numerical difference by stating that 'chance is OFTEN quantified' That means some of the time, but not always. So it's optional.
If I observe something unusual and then say to a friend, what was the chance of that happening, he might say "very little" or he might say "one in a thousand." Both responses are valid.
'Chance' is a concept pertaining to ignorance and 'risk' is a concept pertaining to action. If I look at the roulette wheel I know the ball(except in rare events) has to land in a number. I just don't know which(ignorance).
When I've assessed the chances I then know the risk. But the risk isn't qualified until I put(action) a £ on red. A person who says "I'm going to put £1000 pounds on red" isn't taking any risk until he puts his money down on the table.
Once the ball has landed 'chance' is irrelevant because you then know where the ball is.
As the OP, I bet that The General is pissing himself laughing at this thread :D .Quote:
Originally Posted by The General
Bladerunner I agree with much of what you're saying, but I have a question for you. What was the source of Northern Rock's money?Quote:
Originally Posted by Bladerunner
Assuming he took his money out of the bank;)Quote:
Originally Posted by Doonhamer
the source of Northern Rocks money prior the problems was the interbank loan market. when that dried up they got into big problems and for a while I would think they were borrowing heavily against the BOE.
Currently they've obviously got a government guarantee as they are nationalised but if they hadn't done that they'd have gone bust. for what its worth I would have let them go bust (and B&B for that matter) just to reinforce the risk part of the risk/reward relationship!!
What a thoroughly entertaining thread this is. No really, I do mean that! :)
I especially liked the discussion of terms twixt Chris and Wheeze on risk and chance. Surely both (words, rather than posters!) are subjective words to describe how a person feels about the underlying mathematical Probability (...a very precise term).
Interestingly, in business terms, risk is the term always used.
Risk is always sought to be quantified (in that an (usually tbh subjective!) assessment of Probability of the event occuring is made).
The probability of occurence is minimised by specific actions (e.g. proto-typing).
And the effect on the event occuring is mitigated (reduced) by pre-event actions (e.g. containment dome around fission reactors).
As for applicability to finance, well, I minimise the risks to me own 10-bob by keeping it in a building society rather than a bank (societies have to, by law, be able to cover (I think) 95% of their liabailities) and have a mortgage with a building society for the same reason.
{Always a repayment mortgage cos I never believed - or if you like, was prepared to take the subjective (and to me unbelievable) risk - that endowment mortgages would deliver. Now there's a nice spin off we could talk about...mass-greed of endowment mortgage "buyers"! And as for the so-called "mis-selling"...pah!, people knew exactly what they were buying and then have the downright audacity to blame others when their plans didn't deliver. Talk about not taking personal responsibility!!! :mad: }
Diversification seeks to mitigate complete or catastrophic loss by selecting what the investor reckons to be statistically independent sectors or companies. I'm not sure that diversification is always an indicator of ignorance though CL (although I see where you're coming from) - but no matter how well you know or have researched a particular market/sector/company there's always a probability of an event which could not be forseen (e.g. an Enron or Maxwell type internal well covered up fraud)
Anyway, if I don't go and get me dinner now there's a risk that it'll have gone cold and I'll have no chance of persauding Mrs Stick to let me go to Bofra relays at Malham tomorrow!Probably. :D
Stick, a couple of things..doesn't matter who your mortgage is with...infact you want your mortgage provider to go bust ;)
Secondly building societies are just as vulnerable if not more so than banks as thier main market is residential mortgages and thats where all the carnage is going to be...hence Northern Rock and B&B going bust due in a large part to buy to let mortgages.
It was the source of their funds that caused their problems, not their mortgages.Quote:
Originally Posted by Bladerunner
Yeah, but the problem with one's mortgage provider going bust is that somehow we (you and me and Joe public) are never the benficiaries are we...! (The Receiver or Administrator sells our debt on to someone else for a pittance and they make a fortune making sure we still pay up!)Quote:
Originally Posted by Bladerunner
I disagree about the BS's being as vulnerable as banks though. Their gearing has to be very low and, by law, their assets have to (just about) cover their liabilities. They lend mortgages on the basis of - and with the funds from - their "income" (their savers funding them) and not the national or international financial money markets.
And the cases you cite (Northern Rock and Brad &Bingley) are banks, not building societies ;) That was their mistake and source of downfall. But of course everyone (including BS account holders) thought they were on a free ride...
Anyway, we'll all be the losers one way or the other. Mind, it'd be nice (...he said as he has a base rate tracker mortgage :rolleyes: ) if UK interest rates do come down next week wouldn't it! (...he said waiting for the flurry of posts on recession and inflation :D)
I stand to be corrected but i think some of the early endowment mortgages were sold with guaranteed returns.These were soon stopped as they were unrealistic.You can't blame anybody but the sellers in that case.Quote:
Now there's a nice spin off we could talk about...mass-greed of endowment mortgage "buyers"! And as for the so-called "mis-selling"...pah!, people knew exactly what they were buying and then have the downright audacity to blame others when their plans didn't deliver.
X Runner 'it was the source of their funds that was the problem not the buy to let market'...
I made the point about their funding in an earlier post...it was through the interbank market. The reason their funding dried up before anyone elses is that the other banks were ultra wary of lending to them because they had a massive exposure to buy to let, the most risky part of the market.
Stick, correct me if I'm wrong, but are you confusing building societies with mutuals? Most building societies and banks are infact the same these days. What are different are mutual building societies which are owned by their policy holders (not shareholders) and may therefore have different financial requirements?
[quote=christopher leigh;153988]Quote:
Originally Posted by TheHeathens
I wish there was a banging your head against a brick wall smiley.
Once again, CL, you are showing your chronic lack of knowledge about funds whilst trying to be clever / sarcastic at the same time. Some funds that are labelled 'Hedge funds' do not actually hedge their investments at all and some don't diversify (which is what I was talking about) in order to get positive returns.
Diversification is one strategy that some hedge funds use, but they also use short selling, arbitrage (which is definitely not gambling as you can't lose), and derivatives amongst others.
I was talking about using diversification as a hedge against losing your money - nothing more, nothing less.
You say I waffle, but how many times have you taken this thread off on an irrelevant tangent? Bringing Hedge funds into it being the perfect example.
Yeah...! :rolleyes: I still hold to my belief though Rodders about people's motives. Even if they were "guaranteed" (and I've never seen anything which did use this term) then it doesn't excuse people's naivety! If I were to guarantee I'd win Kirk Fell next Saturday I don't think there'd be many people who'd believe this and (hopefully!) even less prepared to bet their house on it. (I haven't met anybody yet who's that stupid! :D )Quote:
Originally Posted by Rodders rambler
Well, my understanding is that all UK Building Societies are mutuals, owned by their members (i.e. both savers and borrowers). The ones that gave up their mutual status (Abbey, B&B, A&L, N.R.) floated on the stock market and sold their shares - which is why all members of the society got a windfall. There is thus a vast difference twixt Banks and (the remaining)Building Societies. I think "policy holders" applies to members of mutual insurance companies rather than building societies.Quote:
Originally Posted by Bladerunner
Anyway, I'm off back to running threads 'cos I feel like an interloper here spoiling C.L.'s and The Heathens' fun ;)
Anyone keeping the score by the way...:D
The score is hereQuote:
Originally Posted by Stick
Well my post count is going to stay like that. Everything that needs to be said has been said, plus I've got a busy week this week and wasted far too much time on this thread!Quote:
Originally Posted by XRunner
I only posted my original post to illustrate that the price of gold had gone down over the last 3 months and managed to get dragged into this!
What odds are you offering Stick?? :DQuote:
Originally Posted by Stick
So, we're agreed then, vernacular usage is indeed interchangeable.:rolleyes:Quote:
Originally Posted by christopher leigh
Looks like more black news tonight
At this rate all the banks will be state owned by Friday:o
The Government have had to step onto the FRA forum pebble bank in order to stabilise the situation caused by the ongoing pebble crunch. Too many deposits by the fell ponies have created a disastrous situation and this has been compounded by some maverick elements who were caught trundlering large pebbles down the bank which was creating an avalanche effect. Those overgrown boys DazH and Dominion were considered the main culprits.
The addition of extra cement into the pebble bank has created some concrete foundations on which future interest may grow. Unfortunately Mud has been found under the pebble bank and this has created an unstable solution when mixed with the aforesaid fell pony droppings and other liquid assets. A general freeze on future deposits may help. Otherwise we will have to plant a hedge fund to help these accounts.
The practise of short selling pebbles at the toast exchange has been outlawed until Danbert can again afford his elevenses.
The resignation of The Heathens as a financial expert has been a difficult loss but the sacking of Christopher Leigh was universally welcomed.
It is expected that these precautions will allow us to continue the run on the pebble bank.
Signed A.Darling.
To those of you who haven't yet discovered The Daily Mash, now might be a good time...
http://www.thedailymash.co.uk/news/b...-200810081308/
THE government is to invest £500bn of your money in British banks so they can lend it back to you with interest.
The historic move is being hailed as a lifeline for the financial system as long as nobody asks too many questions.
Julian Cook, chief economist at Corbett and Barker, said: "The government will give your money to the banks so the banks can start lending you that money, probably at around 7% APR.
"Thanks to all the interest you're paying on your own money, the banks will make billions of pounds again and normality will be restored.
"After a few years of this the government will cash in the bank shares it bought with your money and use the profits to build a huge ****ing dome somewhere."
He added: "In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot."
Chancellor Alistair Darling said the decision had been taken in tandem with the banking industry, adding: "They used a lot of dirty words I'd never heard before and one of them had an angry looking dog."
Meanwhile, Emma Bradford, a sales manager from Bath, said: "Why doesn't the government just give my money to me so I can buy stuff from businesses who will then make a profit and put it in a bank?"
But Mr Darling insisted: "Shut up."
Looks like various local councils didn't act on this thread title soon enough!
http://news.bbc.co.uk/1/hi/uk_politics/7659783.stm
Soooo, where are we then?
I'm VERY wary of taking anything in the media as anything like the truth. My personal experience is that when you are directly involved in something that hits the media, what gets out to the public is, at best, a significant distortion of the truth if not a fabricated sensationalised fairytale.
Listening to the news today, they talked about 'dramatic' cuts in interest rate, as if 0.5% was something totally out of the ordinary....which its not.
OK, so some financial institutions got burned playing a risky game. Well, sh*t happens. And liquidity has dried up. Yeah well, so what? It will come back, it's just the players may have changed. £400 billion from the public purse to bail out banks? Well, as usual, its not an actual figure. Most of it is guarantees to winkle banks out of their shells again and get playing. Sure, we may spend £50 billion but it will come back with interest and the government probably ships figures bigger than that in loans to impoverished countries with no expectation of ever paying it back.
So, I'm tired of all this media froth. All it does is erode confidence and its that that has a downward effect on people, not the temporary cessation of the money merry-go-round. So come on hacks, lets get back to Jordans b**b jobs please! (I never thought I'd hear myself say that!:()
:rolleyes: me too - I get to spend my days working with journos too :mad:Quote:
Originally Posted by Wheeze
What we need is a mass murderer to hit the headlines and they will all forget about the financial situation :rolleyes:
Its all Robert Peston's fault :D (Seriously though it is).
http://www.bbc.co.uk/blogs/thereport...nset_203_2.jpg
In the interests of getting away from doom and gloom and onto far more important matters you really need to go here
And end up with banker's cramp after a withdrawal and a deposit:eek:Quote:
Originally Posted by Stolly
Lad's humour and not at all funnny:rolleyes:
Quote:
Originally Posted by christopher leigh
If you'd invested as Christopher Leigh said (solely in gold) on the last date of this thread, you'd have made 9.42% on your money.
However if you'd invested it in a diversified high risk portfolio, you'd have made 35.06% with less portfolio volatility.
Higher growth, less volatility - where would you invest?
That's an impressive route profile. Which line's your HR? :D
What you're saying is true now. But it looks to me like gold outperformed the other one for about 50% of the time period shown.
Which is fine if you wanted to get your money out 6 months ago, but you should only invest in gold or equities for a time period of 5 years plus (mentioned earlier in the thread - I'm not asking you to read it though!) so the longer time period the better. We're talking about investors, not stock market traders.Quote:
Originally Posted by noel
Basically I've said in this thread says that diversification reduces risk and you shouldn't put all your eggs in one basket - perfectly illustrated by the way gold has dropped off.
There was a rush to gold as a hedge against falling markets, but look at the trend now as equity markets are rising...
Goody... an old favourite back from near-death...