Dinner party, RMBS news

[drscott]

It was a lot of work (and I didn't have time to go to the gym) but the dinner party went well. Two people didn't show, so we had only 5 people plus us for a total of 7. Paul's appetizer of grilled encrusted brie with Mission figs and wine reduction sauce was a big hit. His jerk chicken was on the mild side, but this was to accommodate the Easterners who don't tolerate really hot food. The quinoa was popular, the asparagus with sesame oil adequate, the usual salad (greens, cilantro, tomatoes, cucumber, feta, black grapes, walnuts, pistachios...) consumed less than usual because we didn't put out salad bowls. The guests brought three desserts, a not-too-sweet (which I like) fruit tart, some mango and aloe cubes in a semisweet sauce, and dark sweet potato slices with coconut sauce. We have lots of leftovers now.


RMBS cleaned up the options accounting, settled the class-action lawsuits related to that, and is repricing options for employees to fix up any remaining problems. This was the problem I was suggesting was temporarily dragging down the stock price, since many institutional rules disallow investment in shares of a company in violation of the accounting rules. The clearance of these issues hasn't been noticed too much by the market, but the price is rising ($21 today) and up 70% from where I was buying at the time I mentioned it. Probabilities favor a continuing rise in the next few weeks (by the "slow reaction to obscure news" mechanism.)

Comments

[sflonestar.livejournal.com]

You obviously don't believe the market is efficient.

[dr-scott.livejournal.com]

For less-followed individual issues, it isn't, very. The Efficient Markets Hypothesis has been shown to be an approximation at best.

[sflonestar.livejournal.com]

I pretty much agree with you. I remember reading a book called "The Random Walk and Beyond" about twenty years ago. It's out-of-print now. It really influenced my entire approach to investing. I gave up trying to predict stock prices. I am sure inefficiencies exist, especially in the smaller issues, but I don't have the time or expertise to take advantage of those inefficiencies. I have a small stock portfolio, but the majority of my holdings are in mutual funds. I'm a buy-and-hold guy. I love index funds. The strategy doesn't take much time and it has worked out quite well!