3/2/2012 12:23 am
. said: I think I was at around 200/130 for years. I'm on BP medication now tho.
3/1/2012 7:58 pm
Kat said: I'm at work right now - you should try projecting that.
3/1/2012 7:56 pm
MW.nli said: How will my landlord raise the rent on an extended lease, Sean?
Do you have the math formula to prove this?
You exposed yourself to excess risk because of the terms of the lease, numbnuts. You aren't being compensated for this exposure. You bucket shitter.
3/1/2012 7:47 pm
. said: No wonder you've failed at everything you've ever done.
He's got this weird contorted deluded way of looking at the world. He has very little artistic capability and no business sense. Yet he is starting a photography studio. Lol
3/1/2012 7:44 pm
Liberal.Elite said: James, what happens when your landlord raises rent or decides to sell the property? Can the studio be moved?
That's the single greatest flaw of his retarded business and he refuses to acknowledge it
3/1/2012 7:43 pm
. said: DOUBLE FAIL!
I can hear this distorted radio announcers voice piping those words in
3/1/2012 7:40 pm
MW.nli said: I have no loans, and the only funding is coming from me.
Have you fucked yourself yet today? You should start right after you read this.
You said before that a client has given you an advance of 4k.
3/1/2012 6:29 am
. said: Remember when Sean was going to show Hollywood "how to make movies the right way"?
He's in one of manic phases. It'll pass.
3/1/2012 6:28 am
. said: HAHAHA SANDMAN WILL SAY IT PLAYS A SHITLOAD OF A ROLE, AND KM WILL SAY PRICE FLUCTUATION IS PART OF THE OVERALL BLACK-SCHOLES IMPLIED VOLATILITY COEFFICIENT OF SKEWNESS OF BLAH BLAH BLAH AND THEN ACCUSE YOU OF BEING AN ENGLISH TEACHER
Beta is the one and only risk factor in CAPM.
That is a better model.
3/1/2012 6:26 am
. said: If they aren't passed out yet, I would like to hear Sean or KM explain in their own words what role Beta plays in stock valuation.
You use beta to calculate your required rate of return on a particular stock.
Beta is a measurement of correlation (stock movement) and magnitude (how much movement) in comparison to an index (such as the S&P 500).
3/1/2012 5:23 am
. said: INSURANCE DOESN'T ADD VALUE, KID. IT ADDS COST. I SEE YOU FINALLY GOT AROUND TO GOOGLING WHAT A FORWARD CONTRACT IS, THOUGH, SO NOW YOU ARE TRYING TO BACKPEDAL YOUR WAY OUT OF THIS. NOT GONNA HAPPEN, BACK OFFICE BOI
A necessary cost to manage risk which adds value that exceeds its cost.
3/1/2012 5:13 am
KM.as.a.dot said: The question is one dimensional. There isnt any mystery or anything deeper to it than A = B - C
So Goldman Sachs doesn't care what the price of bonds will be in the future?
3/1/2012 5:11 am
Shiny New Kid said:
I give up.
If schools are issuing passing grades on this kind of waffle it explains a lot about why the finance sector is as fucked up as it is
There is no waffle. You suggest that there is a mathematical relationship regarding bonds (yield and price) that is only relevant to time '0'. Only at the current moment in time does risk asymptote (close to) zero.
3/1/2012 5:07 am
KM.as.a.dot said: Sean, you are wrong about everything in this thread, just stop.
No, I am not. Both you and SNK are looking at it one-dimensionally.
3/1/2012 5:05 am
. said: hey numbskull, what he is saying, which is correct, is that price and yield define each other for a given structure of payments.
if you know price, you know yield and vice versa.
now [perceived relative] risk is what determines price (and thus yield), and sure you can't predict them in the future.
but the point is if you know one you know the other if you know the structure of cash flows.
have you learned nothing?
You are assuming that both variables are known quantities.
The closer you get to the present moment in time, the more known those two variables are.
The further away you get from the present moment in time, the less known those two variables are.
Therefore, there is a direct mathematical relationship when both variables are known. However, either one or both become increasingly unknown over time.
So, risk has no bearing on the mathematical relationship *right this second* but it has a bearing on the mathematical relationship at some point in time in the future.
3/1/2012 5:00 am
Shiny New Kid said: You're still wrong.
There is no change in the relationship between price and yield over time. A change in cash flows still doesn't affect that simple relationship.
Yield = coupon/price
Give me an example of how I'm wrong and an equation that looks like
Yield = coupon/(2xprice)
Google the relationship between yield and interest rate risk.
3/1/2012 4:52 am
Shiny New Kid said: I know. He's over-complicating things. Look at what started the conversation.
I've already responded that everything he's talking about affect the price but not the relationship between price and yield and he responded by spewing out more jargon and failing to understand the basic point.
If it were a simple mathematical relationship you'd be able to calculate the price and yield of every possible bond at any point in the future.
The reason why you can't is because of
3/1/2012 4:51 am
Shiny New Kid said: Not "essentially" it simply "is"
This is something that is so basic it should have been internalised. Throwing out lots of jargon just makes people think you don't really understand what you're talking about but have merely memorised some buzzwords.
Beware of that when dealing with people who know a bit more than I do as I know very little, but enough to know the relationship between price and yield.
Actually it is annual cash inflows divided by the price of a security.
So my usage of the term "essentially" fits well in that context.
You are thinking about the relationship between price and yield at time 0 (today). I am thinking about the relationship between price and yield over time.
3/1/2012 4:48 am
Shiny New Kid said: Again throwing out jargon. Look at KM's response.
He was alluding to the current yield.
What would the yield be in the future?
Bond prices and yields fluctuate because of changes in perceptions of risk.
3/1/2012 4:46 am
KM.as.a.dot said: SNK is right. Its simple maths.
Yield = Coupon - Price
Current Yield is essentially the annual coupon divided by market price.
3/1/2012 4:41 am
Shiny New Kid said: You still don;t understand. You want to throw out jargon because you don;t understand what I'm saying.
Simply tell me how its mathematically possible for the relationship between price and yield to differ.
Or if you can't explain give me an example
I might be completely misunderstanding what you are getting at.
Some bonds are callable. At what point in time they can be called not known. This itself is a risk if you purchase a callable bond.
The yield curve shifts, twists, and moves around based on future expectations of what the interest rate will be. Prices of bonds will shift when the yield curve shifts and the yield curve shifts and oozes around when future expectations of the interest rate changes (interest rate risk).
Risk directly influences yield which influences price.
3/1/2012 4:37 am
. said: KM TALKING OUT HIS ASS AGAIN. HEDGE FUNDS HAVE IMPLODED? FORWARD CONTRACTS AIN'T A ZERO SUM GAME?
How can it be a zero sum game if you are using leverage?
3/1/2012 4:35 am
Shiny New Kid said: Give me an example of where the price changing alters the yield by differing amounts.
e.g. a bond with a price of 100 and a payment of 10 (e.g. yield of 10%) increases in price to 200 and in one circumstance the yield drops to 5% and in another circumstance it changes by a different amount.
Give me an example of how that can happen
Google "yield curve risk".
3/1/2012 4:31 am
Shiny New Kid said: None of which alters the mathematical relationship between price and yield.
All that stuff sets the price (or yield) but doesn't affect the relationship between the two which is a simple mathematical one
Sure it does. The yield curve changes constantly. This is based on uncertainty, or risk. Default risk, liquidity risk, market risk, etc...these factor into what yield bond investors would want given a certain bond and thus, its price.
3/1/2012 4:23 am
KM.as.a.dot said: I guess everybody is different, but when I was learning the ropes I found the easiest way was to reverse engineer all of that from Excel. It is far easier to visualize the relationships as a curve delta than to try and look at everything as a bunch of independent numbers.
You are correct. That is how I teach myself these things. I really didn't even understand IRR until I did my own graphs and intersections.
Creative types tend to use excel to build the models to reverse engineer the math used. The math types (which in finance is like 95% of them) can just look at all the symbols but for some reason have a hard time modeling things using excel.