Historical Analysis

Historical analysis is an integral component of the study of history. Specifically, it entails interpretation and understanding of various historical events, documents and processes. History is best understood as not a series of facts, but rather as a series of competing interpretive narratives.

Inflexion Point Zone

One of Stevenson’s former students Eric Sinoway wrote a book on the professor’s teaching titled “Howard’s Gift.”

In the book, a the two discuss a friend of the author’s named Michelle is scared about her future after her boss and mentor retired suddenly.

Stevenson says that situations like this one are called “inflection points” and should be taken advantage of.

Stevenson told Sinoway:

“In Michelle’s case, it’s coming at a moment in time when the structures are removed and the rules are suspended. A moment in which she can reflect inwardly about what she wants, and then act to redefine the situation in such a way as to help her accomplish it.”

We spend so much time following rules and being guided that we panic when those guard rails are removed. The easiest and safest course isn’t always the best one. An unexpected shock can help to remind us that there are other options.

That’s a lesson that extends beyond individual careers to businesses. One CEO, confronted with the worst financial crisis since the depression, went on a hiring spree and increased her marketing spending. By doing the opposite of everyone else, by moving when others were paralyzed, she was able to get talent that wouldn’t have considered her company before and significantly increase sales.

By focusing on novel opportunities — not on what can go wrong — you can make the unexpected work for, rather than against, you.

Head and Shoulders Pattern for Trades

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The head-and-shoulders bottom chart pattern – is generally regarded as a possible reversal of a stock’s current downtrend and into a new uptrend. And if there is one thing that nearly every market observer needs to find right now, it’s stocks on the verge of a possible reversal.

The head-and-shoulders pattern is a popular pattern with traders, but there are a few things key to understanding this picture. First, just what does a head-and-shoulders bottom look like?

A perfect example of the head-and-shoulders bottom has three sharp low points created by three consecutive reactions in the price. It is crucial that this pattern form following a major downtrend in the stock’s price.

The first point – the left “shoulder” – occurs as the price of the stock in a falling market hits a new low and then rises in a minor recovery. The second point – the “head” – occurs when prices fall from the high of the left shoulder to an even lower level and then start to rise again. The third point – the right “shoulder” – happens when prices fall again but do not touch the low of the head. Prices rise again after they have hit the low of the right shoulder. The lows of the shoulders are decidedly higher than that of the head and, in a classic formation, are often more-or-less equal to one another.

Entrepreneurship Education

Rediscovering Enterprise

Perhaps the phenomenon we are witnessing now has less to do with action or risk-taking than with the simple observation that people, not institutions, create economic wealth. A Rediscovery of business as a process limited only by the boundaries of each individuals intelligence, imagination,energy & daring.

e_ed

Hindsight Bias – continued

Hindsight bias, also known as the knew-it-all-along effect or creeping determinism, is the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.

Abstract

Traditional accounts of “hindsight bias” inadequately distinguish “primary” hindsight bias from both “secondary” and “tertiary” hindsight bias. A subject exhibits primary bias when she assigns a higher ex ante probability estimate to actual outcomes, secondary bias when she believes that she herself would have made the same estimate of the prior probability of an event before receiving outcome information as she made after receiving it, and tertiary bias when she believes that third parties lacking outcome information were unreasonable if they did not make the same prior probability judgments that subjects now possessing such information make.

In our experiments, we find that when people can readily calculate the actual ex ante probability of an outcome, they don’t reassess that probability when told what outcomes actually occurred. They reassess only in situations in which they are unable to assess prior probabilities or when given information that the outcome was not simply a result of sampling or chance but the result of an imperceptible feature of the initial situation. Observed primary bias may therefore often be rational.

The Options Strategies » Collar

Buying the put gives you the right to sell the stock at strike price A. Because you’ve also sold the call, you’ll be obligated to sell the stock at strike price B if the option is assigned.

You can think of a collar as simultaneously running a protective put and a covered call.. Some investors think this is a sexy trade because the covered call helps to pay for the protective put. So you’ve limited the downside on the stock for less than it would cost to buy a put alone, but there’s a tradeoff.

The call you sell caps the upside. If the stock has exceeded strike B by expiration, it will most likely be called away. So you must be willing to sell it at that price.

Many investors will run a collar when they’ve seen a nice run-up on the stock price, and they want to protect their unrealized profits against a downturn.

Some investors will try to sell the call with enough premium to pay for the put entirely. If established for net-zero cost, it is often referred to as a “zero-cost collar.” It may even be established for a net credit, if the call with strike price B is worth more than the put with strike price A.

source: http://www.optionsplaybook.com

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