Simolean Sense Weekly Round Up + Great story on bubbles by NPR

Simoleon Sense’s Weekly Round Up

Collection of must read links, I highly suggest subscribing to the blog.

NPR also did a great story on bubbles and they question if gold is a bubble.  In the NPR story they discuss about an experiment where a group of college students are turned into stock traders. They are given one stock, which will release 10 rounds of dividends, and every round will release about a dollar of dividends. Therefore the fundamental value of the stock is worth 10 dollars at the start, and fore very dividend release it’s worth 1 less. Yet, according to the researcher, about 90% of the time prices of the stock can be wildly different than the fundamental value. For example, there could have been 3 rounds of dividends, therefore the fundamental value is 7; yet the stock would trade for 15 dollars a share. Yet, everyone knows, eventually the the stock will be worth 0.  P

Pretty interesting stuff huh?

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