I have this as a draft for over two months, but this story cause me to publish:
There is no better example of how broken the stock market is and how worried it should make you. The solution is to decontruct it. To much of our value is based on "stockholder" Opinion!
I do not care what complex math or modeling is used. Aside from the imperfect knowledge it is also an imperfect system. The feedback loops are just broken. Too much of a stocks value is based seemingly on “stock holder” opinion or collective intelligence (group intelligence) which is flawed. The easiest example is how quickly a stock price varies in relation to news that should have no effect. We have a complex system with bad feedback loops. I read recently that Berk-shire Hathway preformed better because Anne Hatheway hosted the Oscars- bringing web traffic to their site.
The rate of change is greater than ever before and rate of change itself is increasing in all aspects of our world. The system is becoming more virulent which of course means that more money can be made or loss faster than ever before. Day traders and computer purchases have destroyed the feedback loop. This is a system that is vunerable to a massive failure.
My solution is to remove myself as much as possible from the stock market. I think we are in line for another “dip” or significant drop in the overall stock market.
The system will not survive as it exists now (I know that is a weak prediction- I will make no others). My point is that no matter what you may think you know, unless you have insider trading or are on the inside (like a broker who makes money on the stock sale) it is a straight up gamble and further the vitility is increasing.
Accept that you are gambling or my advice--- stay out!