Short term volatility is greatest at turning points and diminishes as a trend becomes established
Interpretation
Market fluctuations are most intense during major shifts in trends but stabilize once a trend is established.
This quote by George Soros highlights the concept of volatility in financial markets, indicating that periods of intense price changes often occur at critical junctions where market trends are changing. As a new trend takes hold, the market tends to calm down as participants adjust to the new reality, resulting in more stable price movements.
In practice
During a trading seminar, to explain the importance of recognizing market turning points.
The securitisation of mortgages added a new dimension of systemic risk. Financial engineers claimed they were reducing risks through geographic diversification: in fact they were increasing them by creating an agency problem. The agents were more interested in maximising fee income than in protecting the interests of bondholders. That is the verity that was ignored by regulators and market participants alike.
The collapse of the global marketplace would be a traumatic event with unimaginable consequences. Yet I find it easier to imagine than the continuation of the present regime.
Regulating and taxing marijuana would simultaneously save taxpayers billions of dollars in enforcement and incarceration costs, while providing many billions of dollars in revenue annually.
We are the most powerful nation on earth. No external power, no terrorist organization can defeat us. But we can defeat ourselves by getting caught in a quagmire.
My foundations support people in the country who care about an open society. It's their work that I'm supporting. So it's not me doing it. But I can empower them. I can support them, and I can help them.
The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.
Don't try to buy at the bottom and sell at the top. It can't be done except by liars.
Banking is a very treacherous business because you don't realize it is risky until it is too late. It is like calm waters that deliver huge storms.
In other words, the percentage change in book value in any given year is likely to be reasonably close to that year's change in intrinsic value.
It is vital for officials and regulators to have input from people within our businesses who understand the intricacies of how financial markets operate and the consequences of certain policy decisions.
Just because a stock is down doesn't mean it's a great buy.
Investors must keep in mind that there's a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it.
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