tag:blogger.com,1999:blog-8152901575140311047.post766677041774947800..comments2024-03-29T05:33:33.027-04:00Comments on Musings on Markets: Another Market Crisis? My Survival Manual/Journal!Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-8152901575140311047.post-31592309135143129062015-08-28T15:48:38.187-04:002015-08-28T15:48:38.187-04:00Thank you for the advice. I loved your comment on...Thank you for the advice. I loved your comment on CNBC a while back that if you have trouble sleeping at night worrying about your portfolio, you are probably taking too much risk.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-80876348517857045302015-08-27T12:29:32.101-04:002015-08-27T12:29:32.101-04:00Thank you Professor for sharing with us another in...Thank you Professor for sharing with us another interesting article.<br /><br />I just have a minor comment on your finding about the (lack of) liquidity premium. I would think that investors, especially large institutional investors, coeteris paribus, like liquid stocks (hence the liquidity premium) exactly because those stocks can be sold relatively more quickly in case of a sudden price decline.<br />If this is correct, one should expect exactly the effect you have found, i.e. liquid stock are dumped first and in large volumes because they are the equity positions that are most easily unbundled and their prices tend to decline faster. <br /><br />Illiquid stocks are traded more carefully because (irrespective of possible market halts) bid-ask spreads may quickly increase damaging the seller. If one also takes into consideration that most large institutional investors must abide by strick risk management rules that require closing out positions if losses exceed certain given amounts, it is not surprising to see that liquid stocks tend to fall more than illiquid ones in a market crash. If this view is correct they should also rebound faster and this points to liquid stocks showing greater volatilities than illiquid stocks during market crashes (I have never verified this, it is just an idea - possibly wrong).<br /><br />Thank you again for sharing your thoughts.<br /><br />Frank C.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-54732150518342536162015-08-27T09:40:01.463-04:002015-08-27T09:40:01.463-04:00Thank you Mr. Damodaran for the clarification. Thank you Mr. Damodaran for the clarification. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-34790409321557728622015-08-27T08:09:45.462-04:002015-08-27T08:09:45.462-04:00Which data provider do you use? Which data provider do you use? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-52544873585218369162015-08-27T07:13:07.140-04:002015-08-27T07:13:07.140-04:00Tim,
You can have a reservation price at which you...Tim,<br />You can have a reservation price at which you will buy any company but that reservation price may be much, more lower than the stock price today. Thus, there is a price at which I would buy almost every company I have valued over the last year and that can be my limit price. That is why I said that if the crisis abates, none or few of these limit orders will go through.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-42409238093352988242015-08-26T23:17:05.102-04:002015-08-26T23:17:05.102-04:00Hello Prof,
it might be too much to ask, but i a...Hello Prof, <br /><br />it might be too much to ask, but i am going to ask anyway. Is it possible to download your article as pdf or another format? I very much enjoy reading youR blog, however i like reading printed out papers rather than reading on electronic device. <br /><br />please continue writing. <br /><br />AJAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-87267097938271188462015-08-26T16:13:02.303-04:002015-08-26T16:13:02.303-04:00Thanks for the post. I have a rule also. If the ...Thanks for the post. I have a rule also. If the market tanks, and your holdings tank along with it, if you find yourself wanting to sell a stock that is down instead of buying more, you should have never owned it in the first place. The ones where you have done your homework and have conviction, you will find yourself buying more or at least doing nothing instead of selling. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-74280210528393044462015-08-26T14:47:45.641-04:002015-08-26T14:47:45.641-04:00It's been years since I was in your class (usu...It's been years since I was in your class (usually in the front row), but I wanted to let you know that this is sagacious advice, Professor. More psychological than trading on investment based, but then again, that's half the battle (if not more). Anyhow, I can almost hear you speaking this to us ... are you still wearing birkenstocks to school during the winter, or was that just because you lost a bet that one year? <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-45513288679523066282015-08-26T14:26:27.411-04:002015-08-26T14:26:27.411-04:00Thank you Mr. Damodaran on the Survival Manual Blo...Thank you Mr. Damodaran on the Survival Manual Blog Post. I am curious on the companies you ended up buying when the limited buy got initiated on Monday. The only stock that seems to be undervalued in your valuation was APPLE when it dropped past $100. <br /><br />How much of a concern is the Wealth Effect being damaged within China? When the Chinese market was hitting all time highs there were news reports that there were more than 90M Stock Traders (capitalist) than 87M communist.<br /><br />Thanks, <br />TimAnonymousnoreply@blogger.com