ponzoBLOG

my Kindle Books

2010-10-21T00:43:00.001-07:00

Though I've been under-the-weather lately, I managed some conversions of bumpf to kindle format:

---------------------------------------------------

The most fun?
It's been my favourite medicine.

kindle revisited

2010-08-31T22:22:00.000-07:00

I've been browsing thru gummy-stuff to see what may be of interest to kindle readers.
I have the conversion from HTML to .prc format down to a Science.

So far, I got me this stuff.

I also downloaded a bunch of (free) ebooks by H.G. Wells.
He's was such a neat writer.

the next POTUS?

2010-08-29T03:47:00.000-07:00

E-Ink

2010-08-29T01:11:00.001-07:00

So I turn off my kindle.
Don't wanna run down the battery, eh?

Then I look at it later and there's a picture on the screen.

So I turn it off ag'in.
Later, there's an image on the screen
... a different one, like this guy:

Then I read that a still image doesn't draw any power.
Huh?

Then I read that the kindle has e-ink.
E-who?

You apply a static charge to some electrodes.
The polarity changes from point to point.
You got yourself a collection of pixels (in shades of grey).
You turn off the power
... and the charged black & white particles stay put.

Just like the images I'd scratch on the walls of our cave
... when I was young.

So ... what's next?

Mamma mia!

Kindle (again)

2010-08-28T00:37:00.000-07:00

About four weeks ago I ordered one of them new fangled kindles. I got it yesterday and immediately looked to see how my financial stuff looked (after I had converted to an eBook format).
WOW!

Although I was a mite hesitant to spend the time massaging my tutorials before converting (since I had no idea what they'd look like), I reckon it'll be worthwhile to do more (and more).
I won't be around that much longer so it'd be neat to have this stuff available to all, eh?

Some tutorials don't look quite right, but then I discover that you can switch to landscape mode:

Did I mention WOW!
--------------------------------------
My wife has been reading a paperback by Ken Follett.
The print is so small, she squints.
(Price? About $8.)
So I connected (wirelessly) to amazon.com and downloaded the book. It took about a minute.
(Price? About $6.)

The neat thing?
You can change the font size.

You can also look up words ('cause there's a built-in dictionary) and it remembers where you were when you stopped reading (then started ag'in) and you can even ask the kindle to read for you:
Click a button or two and the gadget speaks!
Did I mention WOW!

Okay, so here's the thing:
In the future, why would anyone buy a paperback?
There's a significant cost for publishing, shipping & handling
... and the darn paperback don't talk good!

wikiHOW

2010-08-27T15:02:00.000-07:00

I recently larned about a neat site where anybuddy can write articles on How To Do (almost) Anything:
http://www.wikihow.com

I even tried it meself: Stock-Correlation

Try it! It's great fun.

Stock Waves

2010-08-25T02:34:00.000-07:00

Recently I was looking at the graphical relationship between the price movement and a moving average ... for example:

See anything interesting?
For example, when the price moves above the moving average, the graph tends to be concave down.
(When it's below the moving average, it tends to be concave up.)

Suppose the price graph is described by P(t).
Then positive or negative concavity can be measured by the second derivative, d²P/dt².
That suggests a neato differential equation where the 2^nd derivative is proportional to the deviation from the moving average, sorta like so:
d²P/dt² = -k (P(t) - P_o)
where P_o is the moving average and we see that the right side is negative when P(t) > P_o.

Anyway, I decided to play with that and discovered that I done did it before.
-----------------------------------------------
Once upon a time, long long ago, I played with identifying "waves" in stock charts. I even wrote up a tutorial.

Though it was entertaining (at the time), I didn't think it was gonna make me a jillionnaire.
Good thing that, in spite of fading memory, I remembered that I'd already been down that road.

Buddhism (revisited)

2010-08-21T00:02:00.000-07:00

Realizing that I know little about Buddhism (except that it predates Christianity and appears to promote a way of life rather than belief in a god), I browsed through the 15,000 eBooks that I bought for the Kindle I ordered.

Alas, the folder with all the books on religion don't got nothing on Buddhism ... so I ordered another 100 eBooks from eBay (cost: $10) and they're all on Buddhism.

I reckon I got readin' stuff to last a while:

BUDDHISM

2010-08-20T08:00:00.001-07:00

BUDDHISM IN A NUTSHELL

Four Noble Truths
1. Suffering exists
2. Suffering arises from attachment to desires
3. Suffering ceases when attachment to desire ceases
4. Freedom from suffering is possible by practicing the Eightfold Path

the Eightfold Path
Right View
Right Thought
Right Speech
Right Action
Right Livelihood
Right Effort
Right Mindfulness
Right Contemplation

Characteristics of Existence
1. Transiency
2. Sorrow
3. Selflessness

Hindrances
1. Sensuous lust
2. Aversion and ill will
3. Sloth and torpor
4. Restlessness and worry
5. Sceptical doubt

Factors of Enlightenment
1. Mindfulness
2. Investigation
3. Energy
4. Rapture
5. Tranquillity
6. Concentration
7. Equanimity

Better than a thousand hollow words, is one word that brings peace.

Do not overrate what you have received, nor envy others. He who envies others does not obtain peace of mind.

Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship.

Holding on to anger is like grasping a hot coal with the intent of throwing it at someone else; you are the one who gets burned.

I never see what has been done; I only see what remains to be done.

In the sky, there is no distinction of east and west; people create distinctions out of their own minds and then believe them to be true.

Let us rise up and be thankful, for if we didn't learn a lot today, at least we learned a little, and if we didn't learn a little, at least we didn't get sick, and if we got sick, at least we didn't die; so, let us all be thankful.

To be idle is a short road to death and to be diligent is a way of life; foolish people are idle, wise people are diligent.

Virtue is persecuted more by the wicked than it is loved by the good.

You can search throughout the entire universe for someone who is more deserving of your love and affection than you are yourself, and that person is not to be found anywhere. You yourself, as much as anybody in the entire universe deserve your love and affection. **

----------------------------------------
**
Once upon a time I wrote what I thought was a reasonable & succinct goal in life:

At first I was concerned that maximizing happiness for "yourself" was (perhaps) misplaced.
However, I doubted if anyone would adopt such a "rule of life" unless it included such a goal.
Now, I see that Buddha and I agree, eh?

Of course, there are other Rules of Life
(practised by many):
# If thou art strong, bully the weak.
# If thou art weak, chastise the strong.
# Covet thy neighbour's possessions.
# When vocabulary will not suffice, swear.
# Be wary and abusive to those who differ from thyself.
# If thou hast strong beliefs, proselytize.
# Be a hypocrite, for then thy true self is hidden.
# Speak, do not listen, for the world is thy stage.
# Ravage the Earth, for it is infinite in resource.
# Accumulate wealth, for it commands respect and envy.

These lead me to write this.

Biblical Gods

2010-08-20T01:51:00.001-07:00

Old Testament and New

Alpha looked haggard.
"I tried. It was an experiment that failed," He said.
Beta smiled. "We have time. Try again," She said.
Alpha shook His head, the long grey hair falling in random curl to His shoulder.
"You are so easily discouraged," Beta whispered. "Again. One more time. Please."
"I suppose ’An Eye for an Eye’ was not the ideal philosophy," Alpha said.
"Nor ’Turn the Other Cheek’," Beta said. "We’ve both made mistakes."
"Yes, but it was my idea, wasn’t it? A foolish game."

Alpha reached down and waved His hand and the universe collapsed to a point.

Again.

Islam and Politics

2010-08-19T07:07:00.001-07:00

I'm told that one should never discuss (in a public forum) politics ~~sex~~ or religion. I'm not sure why.
Anyway, let's talk about religion:

RELIGION

Here, the Qur'an says:
So when you meet in battle those who disbelieve, then smite the necks ...
and here it says:
Nor will they cease fighting you until they turn you back from your faith if they can.
yet we read here:
... whosoever killeth a human being for other than manslaughter or corruption in the earth, it shall be as if he had killed all mankind, and whoso saveth the life of one, it shall be as if he had saved the life of all mankind.

Seems inconsistent, eh?
So, does Islam promote violence in order to promote the religion?

How about these quotes:
Then the LORD sent fiery serpents among the people, and they bit the people, so that many people of Israel died.
click

And fire came forth from the presence of the LORD and devoured them, and they died before the LORD.
click

Do not think that I have come to bring peace on earth; I have not come to bring peace, but a sword.
click

Happy shall he be who takes your little ones
and dashes them against the rock!
click

Conclusion:
Ignore violent components of any religion and examine those who currently practise it -- not the radical proponents, not the wierdos, not the extreme fringe groups, but the vast majority of proponents.

Okay, now on to ~~sex~~ politics, eh?

POLITICS

How about a government where:
1. Politicians don't make promises they won't keep.
2. They don't support legislation meant to improve chances of being re-elected.
3. Don't make public statements which are the converse of private statements.
4. They don't sling mud at opponents to win popularity among the feeble-minded.
5. They exercise political power for the benefit of the whole population rather than exclusively for their own self-interest.
6. There is no need for re-election funding.
7. There is no need for lobbying.

Hmmm ... how about a benevolent dictatorship?
Alas, where does one find benevolence -- in politics?

P.S.
Plato (427-347 BC) said of democracy:
"... brings to politics all kinds of power-seeking individuals, motivated by personal gain rather than public good. Democracy is thus highly corruptible. It opens gates to demagogues, potential dictators, and can thus lead to tyranny. Plato’s main charge against the democracy he knows from the ancient Greek political practice is that it is unstable, leading from anarchy to tyranny, and that it lacks leaders with proper skill and morals."

and

"Most people, corrupted as they are, are for him fundamentally irrational, driven by their appetites, egoistic passions, and informed by false beliefs. If they choose to be just and obey laws, it is only because they lack the power to act criminally and are afraid of punishment"

I especially like this one:
"Opinions overcome truth in everyday life. "

Love that guy!

Mosque, eh?

2010-08-19T05:40:00.000-07:00

I find it incredible that there's so much flack over the (possible) building of a Muslim "mosque" near Ground Zero.

Many compare it to the (possible) building of a Japanese religious structure near Pearl Harbor.
Impossible, right?

Statement by Feisal Abdul Rauf:

"It is not a mosque, although it will include a space for Muslim prayer services. It will have a swimming pool, basketball court, meeting rooms, a 500-seat auditorium, banquet facilities and many other things a community needs to be healthy. The center will offer theatrical programming, art exhibitions and cooking classes. These are amenities missing now from this part of the city.

And, yes, the center will have a public memorial to the victims of 9/11 as well as a meditation room where all will be welcome for quiet reflection. The center will support soul and body.

The center will be open to all regardless of religion."

Arguments:
Anti-mosque:
Muslims should be sensitive to the feelings of Americans and build elsewhere, even though they have the constitutional right to build ...
Pro-mosque:
Americans should promote the building to demonstrate American freedoms and to improve worsening relations with the Muslim world ...

In 1998, bin Laden said:
"... the United States has been occupying the lands of Islam in the holiest of places, the Arabian Peninsula, plundering its riches, dictating to its rulers, humiliating its people, terrorizing its neighbors ... ... Americans' continuing aggression against the Iraqi people ... huge number of those killed, which has exceeded 1 million ... in compliance with God's order, we issue the following fatwa ... kill the Americans and their allies."

There is little point in arguing that the U.S has provided immense aid to Muslims of the Middle East.
There is little point in arguing that the U.S has protected countries of the Middle East from aggression.
There is little point in arguing that the U.S is motivated by Christian ideals.
There is little point in arguing who is responsible for this attitude toward the U.S.
... BUT, can we still wonder why?

the Dilbert Rule

2010-08-15T22:19:00.001-07:00

Scott Adams (author of them Dilbert cartoons) has suggested a trading scheme based upon the presumption that people make irrational decisions based on big round numbers.
The scheme goes like this:
1. When the DOW is exactly 300 points below a big round number such as 10000, 11000, 12000, etc., buy the DOW.
2. When the DOW rises above its big round number by 300 points, sell everything.

Examine the chart of the DOW, over the past 10 years:

(Click to enlarge.)
Look at the green and red lines that straddle the big round numbers (lying 300 points to either side) then decide whether to adopt the Dilbert Rule.

-------------------------------------------------------------
It's a neat idea, so I wonder if there's lots of prices/values congregating near them big round numbers, so I count the number of DOW values in bands of 100 points and get this:

(Click to enlarge.)
Seems they is lots of prices half-way between them big round numbers, eh?
-------------------------------------------------------------
Ron McEwan sent me this neat chart of the S&P500
(plotted on a log-scale):

It likes to hang out with them powers of 10, eh?

So I take a peek at the DOW (logarithmically speaking):

Conclusion?
In the year 2051, the S&P500 gets to be 10,000
... and the DOW 100,000.

P.S.
On the planet Oznop, inhabitants have 9 fingers.
The major stock index (the Wod)
is attracted to powers of 9.
-------------------------------------------------------------
In the log-scaled charts above, the vertical scale is the logarithm to the base 10 (not labelled 2, 3, 4 but rather 10², 10³, 10⁴)

Since you can change [log to base 10] into [log to base B] just by dividing each [log to base 10] by the [log to base 10 of B], then the vertical scale just gets expanded .. but the shape of the chart don't hardly change.

I got me a spreadsheet that'll do that for the DOW, here:
http://www.gummy-stuff.org/Excel/logDOW.xls
and for the S&P here:
http://www.gummy-stuff.org/Excel/logSP500.xls

Y'all can change the base of the logarithm.

For example, using the base 9 gives:

and

Them powers of 9 look pretty attractive, eh?

Perseids

2010-08-15T04:03:00.000-07:00

A couple of days ago I see a shooting star.

Well, maybe not. It turned out to be a component of the
Perseid meteor shower
located (roughly) in the direction of the constellation Perseus:

eBooks (revisited)

2010-08-12T23:27:00.000-07:00

Slowly, slowly
I convert gummy-stuff tutorials to .prc/Kindle eBooks:
Financial stuff

On an eBook forum (where I mentioned the financial stuff), I was asked "Why just Kindle?"
'course, the (correct) answer is that I'm too old, too tired and too lazy to do more.

I was also given some good advice:
"Put the images on a separate page, delete the greek ..."

Alas, I'm too old, too tired and too lazy ...

eBooks, eh?

2010-08-08T10:13:00.000-07:00

Since I'll be ending my long winded sojourn with gummy-stuff.org, it makes me happy that it'll be hosted elsewhere -- hence will survive me.

Then, it occurred to me that maybe a gaggle of eBooks on financial stuff may be in order, so I whipped out my mobipocket to see how difficult it'd be to convert my tutorials to eBooks.

Turns out to be a piece o' cake!
Mobipocket converts directly from HTML.
Here's my first attempt:
http://www.gummy-stuff.org/eBOOK-Investing-Intro.prc

Kindle

2010-08-03T00:15:00.000-07:00

So I ordered one of them thar Kindle things:

I reckon it'll arrive in early September
and it'll hold 3000+ eBooks
and it's got 3G wireless connectivity
and it'll speak the text.
Mamma mia!

So now I gotta learn how to change my novels (finished and otherwise) to eBooks.
I've started here and (pray) hope they can be read by eBook readers - like Kindle.

P.S.
If'n anybody wants to create and/or read eBooks:
http://www.mobipocket.com/en/DownloadSoft/default.asp?Language=EN

Opening Momentum

2010-07-30T19:09:00.001-07:00

Years ago, when I was a prof at the U of Waterloo, the students would hand out questionnaires to students in math classes designed to gauge their opinion(s) of their profs.
There were lots of questions on lots of topics associated with the prof's teaching.
Later in the term, an anti-calendar was published with all the data -- and handed out to faculty and students.

There was so much info, it was difficult to identify profs that should be complimented (or otherwise).

As Associate Dean of the Math Faculty, I decided to distill all the data for each prof into a (gasp!) single number.
"What! That's ridiculous! A single number to represent all the data on each prof?"
There's some merit in that criticism.
It's like identifying a good (bad?) stock by its P/E ratio alone.

However, my prof rating did serve to single out teachers that deserved a closer look.
Once upon a time I tried to do that for stocks, with a single number (perhaps more sophisticated than the P/E ratio): gRANK.

More recently I've been interested in what I call Opening Momentum.
If a stock opens UP significantly, I think that might illustrate some enthusiasm for the stock ... and it'll go significantly higher during the day.

I now have a single number which may (or may not!) identify stocks that deserve a closer look. It's described here.

Check the S&P
------------------------------------
After writing up that stuff, I googled opening momentum
... just to see if'n others used the same words.
I got this at the top o' the list: (Click to enlarge.)

Mamma mia! Google is fast!
P.S.
I notice there's a book that deals with "opening momentum".
It's reduced in price, from $299 to $199.
A good buy, eh?

gummy-stuff gone!

2010-07-30T03:13:00.000-07:00

After some 15 years of playing in my gummy-stuff sandbox

and answering a jillion e-mail questions

I've decided to shut it down.

There's gotta be other things in life, eh?

Cottage time!

2010-07-01T04:30:00.000-07:00

On Saturday, we head off to a cottage for 2 weeks.
It's just as well that we don't got Internet access (else I'd see all my stocks head South).

I'll bring that Archos gadget filled with movies to watch.

I've finished that spreadsheet for my grandkids.

I've packed my pipe & tobacco. (What else is there, eh?)
Heidi has a couple of bushels of stuff.
I've put away all thoughts of ichimoku.

It'll be neat to see to 3-out-of-4 kids
... and play with 5-out-of-6 grandkids.

Ichimoku-who?

2010-06-27T00:41:00.000-07:00

A couple of days ago I ran across a list of technical indicators. I figured that, after 15 years and numerous tutorials, I knew 'em all:
Bollinger, Aroon, ADX, Williams %R ...
In fact, I hardly recognized any on that list.

The most intriguing name was the Ichimoku cloud.
I recall, when playing with candlesticks, running across dojis and haramis (and even the shaven bottom).

But Ichimoku cloud?

Then I asked some charting software to show me that cloud:

Mamma mia!
I reckon I gotta play with that guy ...
P.S.
I understand that the "trend" is UP when the stock prices are above the cloud. I stare at the above chart and feel warm all over. Who knows? I might make $$ next week, eh?
-------------------------------------------

I'm struggling with that $^#@!* spreadsheet.
So far, so good ... I think

Click to enlarge.

Wanna try it?
Click!

Brothers, revisited

2010-06-26T00:03:00.000-07:00

I mentioned them thar brothers: stocks (actually ETFs) that moved in opposite directions, each day.
There's a gaggle of 'em, here:
http://www.hbpetfs.com/pub/en/Etfs.aspx.
They got Bull & matching Bear ETFs, ending in U and D
(for Up and Down, I reckon).

One might think that Bull and Bear ETFs would behave like mirror images.
For example, them that's tied to the Gold Index

Well, close but no cigar ... but they do get a cigar each day:
HGU was UP 4.8% yesterday and HGD was DOWN 4.6%.
Good, eh?

However, it's quite possible that both the Bull & Bear ETFs have negative (or positive) annual returns (as opposed to opposite daily returns).
For example, these guys (tied to crude oil futures) both ended up with a negative annual return:

Yet, on a daily basis they look like ... uh, twins, eh?
(Or is it brothers? What's a good name for these guys?)

Is it the accumulation of tiny differences over a year?
Surprisingly, the answer is NO!

If they are closely tied to some underlying Index or Future, they can both lose over just 2 days.
For example, suppose the "underlying" goes UP 10% on Monday and DOWN 9.1% on Tuesday.
The net result is (1.10)*(.909) = 1.00, so the underlying Index is back where it started.
Yet the two cousins (what are we calling them?) both lose over these 2 days.
The Bull has returns of 20% and -18.2%.
(Them's 2x the underlying Index returns, eh?)
The Bear has returns of -20% and +18.2%
(That's -2x the underlying Index, eh?)

Check it out: they both end up with a negative 2-day return.
(About -2% and -5%.)

Now that deserves a Mamma mia!

These Gemini ETFs (what are we calling them?) are fascinating and I really need to find a way to make a $killing.

Test tube babies

2010-06-24T04:50:00.003-07:00

We watched a movie last night.
A lesbian couple had a baby with one gal donating an egg and the sperm created (artificially) from stem cells.

Fiction ... we thought.
So (as is my wont), this morning I google.

Mamma mia!
Eggs and sperm created in a test tube
... from stem cells.

Magic events

2010-06-23T22:09:00.000-07:00

Remember when we talked about Darvas boxes?
It was a scheme that relied upon the occurrence of some event or situation.
When it happened, you made your move and X% of the time (historically speaking), you'd make money.
If X% were in the neighbourhood of 50%, it ain't a good scheme.
(Half the time you lose, eh?)
However, if x% > 60% then (eventually!) you'd make money
... or so the theory goes.

Anyway, there seem to be lots of such magic events lying around.
We talked about them what-are-they-called stocks,
It was pretty easy to find a pair of stocks, A and B such that:

On days when A opened DOWN, B would go UP that day
--- most of the time.

That suggests a trading strategy for certain magic pairs::

Buy B at the Open and sell at the Close
... whenever A opened DOWN.

Click to enlarge..

Wanna see what would have happened the year before?
Click!

Here's another, simpler scheme based upon the fact that (historically speaking), certain magic stocks (much of the time) increase from Open to Close, even when they open DOWN. That was true of several DOW stocks, over the past year.

For example, the IBM opened DOWN 150 times (over the past year).
In 87 of those times, it nevertheless increased from Open to Close.
That's almost 60%, right?
So here's the strategy (for that magic stock):

Buy at the Open and sell at the Close
... whenever the stock opened DOWN.

Alas, that 60% was just 46% the year before.

Earthquake in Ontario?

2010-06-23T14:19:00.000-07:00

Okay, so the building shook a mite this afternoon.
Heidi was on the couch, watching soccer.
She thought I was pushing the couch.
Then, an e-mail from our daughter, in Texas.
"Did you have an earthquake?"
Huh? In Ontari-ari-ari-O? Impossible!

Now I discover there are (gasp!) fault lines running through the Province.

So I check out the location of earthquakes, worldwide.
Mamma mia! They is here, too!

I larn something every day ...

Brothers?

2010-06-23T02:01:00.000-07:00

Some time ago I played with so-called sister stocks.
Such pairs tend to move in the same direction
... either UP or DOWN.

What about pairs that move in the opposite direction?
How about this pair?

Interesting, eh?
It raises some very important questions:
[1] Where do we find such pairs?
[2] Can we use them to make a $killing?

... and most importantly:
[3] What should we call 'em?

Heidi's recipes

2010-06-20T03:34:00.000-07:00

Some time ago I happened upon a site that told me what things (on gummy-stuff.org) were most popular.
I always assumed they'd be "financial" things.

What surprised me were Heidi's recipes.
They were way up on the list!
I even found this:

I have no idea what it says ... 'cept it's got the proper URL.

Soccer: Offside ^#$@!(?

2010-06-18T07:57:00.000-07:00

We've been watching World Cup soccer.
We never watch soccer, but this is special, right?
Alas, that %#&@!? offside rule is confusing.
I think I got it right, now ... maybe:

>> I kick the ball toward the goal
>>A teammate is the closest person to the goal
(other than the opposing goalie)
>>My team mate is offside.
(If he scores, it won't count.)

On the other hand
>> If the closest team mate receives the ball ONSIDE
he can then move to the goal (with the ball) and score.

So why is soccer the most popular spectator sport on the planet?
It usually ends up with a total score of, roughly, 1.23.
(That's some kind of average, I think.)
Hmmm ... maybe because (unlike basketball) getting a goal is a world-shaking event.
Maybe because (unlike baseball), kids can play with just a ... uh ... ball.

It sorta reminds me of the days when Heidi and I went mushroom hunting.

If we wandered through the woods for hours and found a bushel of these, that was nice:

Aah, but if we spent hours and found just one of these:
MAMMA MIA!

a Horse, eh?

2010-06-18T01:38:00.000-07:00

I mentioned that we'd be at a cottage next month
with a gaggle of grandkids.

For Ty I'm working on that spreadsheet.

I'll be painting this for Heidi:

This Heidi is my granddaughter, not my wife.

I reckon I'll be busy.
I may even get in some fishin', eh?
I reckon Heidi will be busy cookin'.
That Heidi is my wife, not my granddaughter.

Mortgages

2010-06-16T01:46:00.000-07:00

I got e-mail commenting (complaining?) that the XIRR function in Excel ignores leap years.
True, but I reckon that the "error" of 1 day in 4 years ain't significant enough to modify any decisions you make which depend upon the value of XIRR.

The fella who wrote is in real estate, so I thought I'd consider similar "errors" that are introduced in the name of simplicity.

For example, in the U.S., an advertised annual mortgage rate of 6% is taken to mean AnnualRate / 12 per month.
That's 6 / 12 = 0.50% per month.
Amortized over 30 years, the monthly payments for a $100K mortgage would be $599.55.
I think it's the same in France, but not in the U.K.

In Canada, for an advertised annual mortgage rate of 12%, the monthly rate would be
(1+0.12/2)^1/6 - 1 or 0.487% per month.
Amortized over 30 years, the monthly payments for a $100K mortgage would be $594.82.

See mortgage calculator.

Is that the "error" I'm thinking of?
No, I'm thinking that monthly payments imply that a year contains 12 months of equal length.
Remember? Thirty days hath September ...

Okay, suppose we take into consideration the different periods between payments.
You take out a $100K mortgage at the beginning of the year.
The first payment is made after 31 days, the next after 28 days, etc.
If (daily) interest, say r, is charged on the balance, then you'd owe at the end of January (31 days):
100,000 (1+r)³¹
Then you'd make your payment of $P and the balance would be:
100,000 (1+r)³¹ - P
Another 28 days go by, interest at the daily rate r is applied to this balance, then you'd make your next $P payment and the end-of-February balance would be:
100,000 (1+r)³¹⁺²⁸ - P(1+r)²⁸ - P
etc.etc.
30 years go by and your final balance is $0.

If the "advertised" annual rate is 6%, you'd expect the daily rate to be:
r = (1 + 0.06)^1/365 - 1 or 0.01597%

If you know r, the daily rate, then you can calculate $P your monthly payments, right?

Guess what it is?

P.S.
At the (constant) daily rate r (above), a $100K balance would become:
$100,448 after 28 days
$100,480 after 30 days
$100,496 after 31 days.

Did somebuddy say: leap year?

Math problems, eh?

2010-06-15T06:24:00.000-07:00

In a few weeks we're renting a cottage and some of our grandkids are joining us.
We're given the job of providing some grade 4 math problems for Ty.

Heidi buys a math problem book.

I make up a spreadsheet :

Anybuddy got any wee grandkids?

Click!

IRR and MIRR revisited

2010-06-10T14:18:00.000-07:00

As a consequence of senility, I feel I may not understand IRR and MIRR.
Anway, I wrote up something here and here.
The latter has a spreadsheet which compares IRR and MIRR.

Click to enlarge.
--------------------------------
One thing that really bugs me is the ongoing debate about reinvesting withdrawals.
The argument (by some) is that IRR assumes that withdrawals from an investment portfolio are reinvested at the same IRR-rate.
I never understood the argument ... so I wrote up my thoughts here.

I could be wrong ... but those that say there's an implicit reinvestment assumption (when using IRR) never seem to justify that claim.

Indeed, I reckon that somebody said it (long, long ago) and everybody now parrots the claim.

Obama: the God

2010-06-09T02:55:00.000-07:00

Why does everybuddy think he's God?

MFI

2010-06-09T01:50:00.000-07:00

I got e-mail from Ron McEwan that mentioned a scheme that involved volume-weighted stock prices and a momentum indicator ... and it rang a bell.
I don't get too many ringing bells, these days.

Since I usually forget everything that's on gummy-stuff, I did a search and found Money Flow Index.

It does involve volume-weighting of stock prices.
Instead of P you use P*V.
It's also (somehow?) associated with "momentum".
I forget how ... **

Anyway, to make a long story short, I modified the spreadsheet to calculate the MFI for the DOW stocks and got this:

Click to enlarge.
**
Now I remember: MFI measures how often the daily "Money Flow" (as measured by P*V) is associated with increases in price. Over the past year, it's 56% of the time, for JPM (according to the chart).

If'n we use weekly prices over 5 years, we get this chart:

Click to enlarge.

See?
MFI = 77% for DIS and GE has moved up from last place.

MIRR, eh?

2010-06-08T06:45:00.000-07:00

I got e-mail asking about MIRR, the Modified Internal Rate of Return. As usual, I ain't never heard of it.

So I googled and found something like this:
You borrow $A to start some company (or some project).
The Financing rate is F%.
(F% is the interest charged on the loan.)
Profits from the company are Invested at a rate I%.

Expected profits are $B after 1 year and $C after 2 years.
(These you intend to invest at that annual rate of I%.)

Then comes the BIG question:
Is $A too much to pay for the company?

The profits will be worth (at the end of n years):
P = B (1+I)^n-1 + C (1+I)^n-2.

Suppose the company is worth $K, at the end of n years.
The total value of profits + company will then be their sum, P + K.

So what "return" are you getting on your enterprise?
There's some magic rate of return (which we'll call MIRR).
Our A would be worth A (1+MIRR)ⁿ (after n years at this magic return).

Setting that equal to P + K we'd get the equation:

A (1+MIRR)ⁿ = B (1+I)^n-1 + C (1+I)^n-2 + K.

Now all we have to do is solve for MIRR, eh?

To buy that pizzeria, suppose we get MIRR = 8%.
For the burger stand we get MIRR = 7%.
Then we buy the pizzeria.
------------------------------
Note:
If A is the only loan, then MIRR ain't got nothin' to do with the Finance rate F.

However, if there are other loans, we gotta calculate their present value (at the Finance rate F%) and add all these present values to A.
If that give A', then we'd solve for MIRR from:
A' (1+MIRR)ⁿ = B (1+I)^n-1 + C (1+I)^n-2 + K.

'course, there may be other profits as well as B and C, so ... uh ... I reckon y'all can take it from here.

If an initial loan of A₀ is followed by subsequent loans (after 1, 2, ... years) of A₁, A₂ ...
and the Financing rate is F
...
and annual profits (after 1, 2, ... years) are B₁, B₂ ...
which are invested at an Investment rate I
...
then define:
PV = A₀ + A₁/(1+F)¹ + A₂/(1+F)² + ...
That's a Present Value
FV = B₁(1+I)^n-1 + B₂(1+I)^n-2 + ...
That's a Future Value
then MIRR is defined so that:
PV (1+MIRR)ⁿ = FV
So the PV gives FV after n years with annual return MIRR.
Solving:
MIRR = [ FV / PV ] ^1/n - 1

I forgot to mention that one (often) takes the PV as a series of negative cash flows, so - PV is (often) used in the formula for MIRR ... just so you get a positive ratio: -FV/PV.

Further, if I = F = IRR, then MIRR ain't no different than IRR.

I might also mention that there's FMRR.
In the above analysis, all cash flows are discounted to Present Value at the same rate.
With FMRR, there are a couple of rates for this ritual ... and the discounting is not (necessarily) to the "present" value.

Hi Tech plasma

2010-06-06T23:55:00.000-07:00

We were thinking about a nice, big 50" plasma TV.
On the weekend, we bought this guy:

Then I read the manual.
Mamma mia! That thing has some neat cerebral facility.
I had forgotten everything I knew (or didn't) about HDTVs:
DVI? HDMI? DLNA? DTCP?

It'll even play photos, music and/or movies stored on one of these:

Soon, I'll get it talking to my PC via an ethernet port.
But that requires an "ethernet bridge".
Huh?
Hmmm ... gotta google ethernet ...

Great Idea!

2010-06-04T00:12:00.001-07:00

plasma TV

2010-06-02T00:03:00.000-07:00

Years (and years) ago, I was a graduate student at the University of Illinois.
Although Heidi was a nurse and generated most of our income (so she got a PhT: Putting Hubby Through), I got a research assistantship.

It meant working, part time, at the Coordinated Science Labs (CSL).
While there, I met Don Bitzer and Gene Slottow.
Gene told me about a hair-brained scheme for displaying images on a screen.
It involved making ionized gases glow, using electrical impulses.
Yeah ... sure.
Gene was a nice guy, but that scheme would never fly.

Last night, Heidi & I decided to buy a 50" 1080p, 600 Hz TV.
I had to look up the significance of "600 Hz". **
While browsing, I also checked on how plasma TVs worked.
I had already studied HDTVs a while back.
(That's when we decided to buy our current 42" 1080i TV.)

Wait! Plasma TVs?
Was that Gene's hair-brained scheme?
So I looked up Who Invented Plasma TV?.

Sure enough: Slottow & Bitzer!!
Mamma mia!

-------------------------------------------
**
The moving images on a TV screen are made up of a sequence of still images, displayed 60 times each second. (That's 60 Hz, eh?)
However, the glowing pixels fade a mite before the next still image is displayed.
To overcome this, each pixel is "flashed" 10 times for each still image.
That makes a 60 x 10 = 600 Hz refresh rate for each pixel.

-------------------------------------------
P.S.
While looking at stuff on good ol' Gene Slottow, I discovered a paper he wrote in 1964 in which he says:

Special thanks go to Dr. Peter Ponzo for programming assistance and for a series of valuable discussions on the mathematics of electron dynamics.

Though Heidi & I weren't sure whether we should go with another plasma or switch to LCD, now I realize that we gotta go plasma!
Why, I practically invented plasma TV myself!!

-------------------------------------------
I understand that some U.S. companies became interested in the Bitzer-Slottow plasma display, but soon gave it up.
However, some Japanese engineers became regular visitors to their lab.
Guess who makes plasma TVs today?

lousy investor

2010-06-01T22:38:00.000-07:00

Because I got me a web site that deals (mostly) with financial stuff, I get lots of e-mail asking advice on when and what to buy.

Fortunately, I got lots of evidence that I'm a lousy investor
... like my take on lithium:

I also provide this evidence, where (in an Internet contest) I come in LAST!.

However, undeterred, I still have faith in my Lithium stock.
Heidi, on the other hand, keeps reminding me of my lousy choice of investment.
"One of these days," I say, "... you'll see".

gC2

2010-05-31T20:54:00.000-07:00

I had forgotten that I did that that Stock Comparison a couple of years ago.
However, now that I look at it again, I see that gSC is NOT what I want.

gSC multiplies stock returns together.
If their product is positive, the returns have the same sign
... and the two stocks move up or down together.

gSC then adds all those products and ~~fiddles~~ scales the resulting number so it lies between -1 and +1.

That means that LARGE returns have a greater product (hence a greater weight) than small returns.
Is that what I want?
NO!

What I want is to be able to say things like:
"Over the past 5 years, the weekly prices of Chevron (CVX) and Exxon-Mobil (XOM) have moved together -- 79% of the time."

Now that calculation don't require no fancy ~~fiddling~~ scaling.
We jest sorta count the number of times the returns have the same sign, eh?
It's like -- a poor man's correlation.

Then we get things like this:

Am I happy?

P.S. Did I mention that gC2 stands for Comparison #2.
---------------------------------------------
If'n y'all want to play this game, here's the spreadsheet:
http://www.gummy-stuff.org/Excel/gC2.xls

I might also mention that, being ~~old~~ ~~lazy~~ efficient, I generate new spreadsheets by modifying old spreadsheets.
Every time I do this, the size of the spreadsheet grows ... and grows.
This one is obscene, at (almost) 6 MB!
That used to bother me.
It don't, no more.

Once upon a time, somebuddy went through all my spreadsheets and created new ones -- reducing the size of each significantly.

That was when there were a couple of dozen.
Now there are over 500 of 'em !!

---------------------------------------------
One thing that's interesting is persistence.
Suppose you discover some neat relationship between a pair of stocks over the last 5 years.
Will that relationship persist over the next year?
Here are charts for 5-years and the subsequent year:

---------------------------------------------

You decide.

gSC

2010-05-31T01:52:00.000-07:00

While flying back from our vacation, I was thinking about Pearson Correlation between pairs of stocks.
I never did like it much. There must be a better way, eh?
What I'd like to know is:
"If the stock X price goes up (or down), will stock Y go up (or down)?"
The usual measure of correlation don't do it.
Indeed, check out the following $1K investments:

See? Both stocks tend to move up/down together, eh?

So what "correlation" do you expect?
In fact, it's -1 (or, as some might say, -100% correlation).

That's because the usual correlation does not measure whether the stocks move up or down together.
It measures whether they move up or down relative to their mean return.

Do I care about their relationship to their mean return?
NO!

Okay, so I whip out a spreadsheet and consider a different kind of "comparison" between a pair of stocks -- one that'll measure whether their returns tend to be positive or negative together.

I'd also like to have this "fancy correlation" represented by a number between -1 and +1.
So I start thinking.
Then I realize that it seems so familiar.
Then I realize that I've done this before, here.

Then I realize that my senility is showing ... again!
Then I realize that I definitely need more sleep.
Must be the time difference and jet lag and all that cruise food ...

P.S.
Note that, for the chart above, gSC = 79%

Greece, eh?

2010-05-21T00:53:00.000-07:00

On our 25th wedding anniversary,
we toured Greece.

Now,
in the year of our 50th anniversary,
we'll cruise Greece.

Tonight
(since the volcanic ash has parted)
we fly to Venice.

Our cruise

May the markets smile upon us all.

Returns vs Volatility

2010-05-20T00:47:00.000-07:00

I read some article that mentioned:
"In questionnaires, investors tended to have higher return expectations when they forecast volatility as being relatively low".
What!
Are investors schtoopid or somethin' ?
Everybuddy knows that one should associate higher returns with higher volatility.

Regardless of what investors "think", what's the data show?
Here's a gaggle of DOW stocks:

5-year Return vs the Volatility of monthly returns:

See? Smaller returns are associated with higher volatility.
Are investors schmart or what !!

Mebbe investors are influenced by what happened earlier (?)
Here's that chart using data 5 years earlier:

P.S.
I got the data from the spreadsheet described here -- with some mods to get 5-year returns rather than annualized returns.
P.P.S.
Shhh ... don't tell nobuddy.
Under one of the buttons it says d for daily returns.
Y'all can change that to m for monthly returns.

Wolfram revisited

2010-05-18T22:16:00.000-07:00

One year ago I wrote about Wolfram Alpha.

I recently checked it out -- again.
Mamma mia!
Try IBM Apple.
WOW!!

I even larn things I didn't hardly know (or believe):
Click!

'nough said

2010-05-18T00:28:00.000-07:00

Them Nordic countries do good, eh?

This is sad ...

Click to enlarge.
-------------------------------------

Prosperity Index

2009 List

Okay, so why do the Nordic countries have this:
>> Almost no poverty or starvation or ghettos.
>> Virtually no homelessness problem.
>> Very little crime.
>> Equal opportunity to education & health care
(regardless of the wallets).

----------------------------------------
Check out the Gini Index (global median = 0.39)
(which measures disparity between rich & poor):

Click to enlarge.

To be ... or not

2010-05-17T23:47:00.000-07:00

There's this volcanic ash thing
that threatens our flight to Venice this Friday.

We keep checking the extent of the ash cloud.

Will it reach Venice?
Will we be on that cruise?

Ash gets sucked in the jets, melts at 1100 degrees,
clogs the jet engine ... then stalls?
Apparently, a plane can drop below the ash and restart the engines.
They've relaxed the conditions for flying in ash.
Maybe we're good to go, eh?

We went to Greece on our 25th wedding anniversary.
This'll be our 50th anniversary.
That pain in the ash wouldn't dare interrupt.
Would it?

Mother Goose

2010-05-17T05:13:00.000-07:00

Remember when I mentioned that the eggs of our Mother Goose were sprayed with oil -- so they wouldn't hatch?

Well, after three weeks of sitting on the eggs, she gave up.
For several days she and Father Goose have been in the neighbourhood, just wandering about.
But they've obviously been busy.

This morning, she straightened out her nest
... then she laid three more eggs! Whooeee!

Opens UP

2010-05-17T00:56:00.000-07:00

Although investing by the charts is fun, I reckon there's an element of investor psychology involved.
That is, one should be able to gauge investor sentiment (concerning some stock) by gazing intently at one chart or another.
My current thinking is that, should a stock open UP (from last day's Close), it says something about how investors feel about that stock today.
Indeed, I reckon that the sentiment that generated the increase will continue -- for a while, at least.

To test that reckoning, I look at the 30 DOW stocks and identify those days where the stock opens UP.
Then I look at the subsequent High.
What happens? Do it continue UP (for a while) or DOWN?

For a DOW stock, when it opened UP, it continued UP by about 1.5% (on average, over the past couple of years).
How about if it opened UP by 1% or 2%.
How High did it go?

'course, it'll depend upon the stock, eh?

Here's McDonald's: **

How about this guy?

Note:
Opening UP by 0.0% just means the Open is larger than the previous Close.

Anyway, if'n y'all would like to play this game. I've modified the spreadsheet described here to include that kind o' stuff.

** When we were in Japan, they called it Maca-Donarudo.

Open up or down

2010-05-15T04:21:00.000-07:00

Okay, so I'm hooked on questions like:
If my stock closes DOWN, will it go UP tomorrow?"
and
If my stock closes UP, will it go DOWN tomorrow?"
and, of course, by how much and how often? etc.

Motivated by dramatic drops in my favourite stock(s), I whip out a spreadsheet:

Click to enlarge.

abiotic theory

2010-05-13T00:56:00.000-07:00

I was watching TV and somebody, commenting on the oil spill in the Gulf of Mexico, remarked that oil was created from dinosaurs.
Huh?
The "accepted" theory is that oil was generated from plants (and animals) under great pressure and heat -- plants like algae and plankton.
It is, as they say, a "fossil fuel".
It's a biomass, an organic compost pile.
It's composed of hydrocarbons ... and they're organic in nature.

I always found this difficult to believe.
I tried to imagine the distribution of plants (and animals) a jillion years ago and the current distribution of known oil reserves.

I tried to imagine the geological history of these regions and the abundance of plant life
... and the temperature and pressure necessary to turn a T-Rex into a barrel of oil.

It ain't easy to imagine. Maybe I ain't got much imagination.

Years ago I read of another theory: the abiotic origin of oil, championed by Humboldt in the 19th century.
It posits the transformation of hydrogen and carbon monoxide (derived from things such as methane) to liquid fuel.
The process is initiated at great depths in the Earth's mantle (40-90 miles deep) and the resultant oil percolates to the Earth's crust.

The father of modern abiotic theory was a Russian, Kudryavtsev.
He noted that oil has never been made in the lab from plant material.
Today (I understand), Russia adopts the abiotic theory and uses it to find oil.
Maybe that's why it's the largest producer after Saudi-Arabia.
(Or maybe it's because it's the largest country in the world, eh?)

Recently, abiotic oil has been generated in the laboratory.
In fact, abiotic oil has been generated from methane.

No biological origin?
But what about methane? Does it have a biological origin?
Not necessarily, since it's been found on other planets (and moons) in the solar system.

(Have they got plant or animal life?)

A couple of years ago it was discovered that deep sea hydrothermal vents contained hydrogen-rich fluids.

So ... what about Peak Oil?
One writer asks:
"Just how many dinos and prehistoric ferns does it take to make a barrel of oil?"

-------------------------------------
Did I mention that, although the Gulf spill is leaking 5000 barrels / day, there was the Ixtoc spill in the Gulf, in 1979. It leaked over 3 million barrels over a period of about a year.
There was also a spill in the Persian Gulf (as a result of the Iraqi invasion of Kuwait) which leaked twice that amount, in 1990.

the DOW dump

2010-05-12T02:10:00.000-07:00

On May 6, the DOW dumped almost 1000 points.
That's about 10% of its value.
That's quite remarkable, eh?

So I've been reading that:
[1] Somebody typed B (Billion) instead of M (Million).
[2] Computers were "in charge" and goofed.
[3] Software measured investor sentiment and reacted.
... and MSNBC was showing video of Greek riots!
[4] When traders started selling, there were few buyers.
... and market orders kept going to low bidders.
[5] Proctor&Gamble (PG) dragged down the DOW.
[6] Cancelled trades weren't being recorded.
[7] Circuit breakers on the NYSE kicked in.
... so HUGE trading volumes went to other exchanges.
[8] Was it manipulation by someone who made a fortune?
(That's from dilbert.)
[9] Cyber terrorism.
[10] Insert your own explanation.

The DOW is proportional to the SUM of 30 stocks prices.
How, then, did each DOW component react?
What was their drop, from High to Low (on May 6)?
They was like so:

Figure 1
See? PG dropped the mostest!
But does it constitute a large fraction of the Index?
Here's the (current) weighting of the DOW 30.

Figure 2
See?
IBM (with the largest stock price) has the largest weight.
And PG? A paltry 4.4%.

If'n we take the 30 percentage drops (from Figure 1) and weight them (according to Figure 2), we'd get a 12% drop in the DOW (from High to Low).

So ... what's my explanation for the DOW dump?

GREMLINS

Either that ... or mebbe:

Debt is bad (?)

2010-05-11T05:20:00.000-07:00

This Debt as a percentage of GDP always intrigues me.
Is having a high percentage bad?
Check this out.
Are the "top" countries badly managed (economically)?
Are they in trouble (financially)?

Click for an enlargement.
Is Japan in big trouble? (I doubt it.)
Is Italy in trouble? (Probably.)
Is Greece in trouble? (Definitely!)
Do these numbers mean anything?
Maybe it depends upon who owns your debt, eh?
China ($877B) and Japan ($768B) got lots of U.S. debt.

I understand that much of Canada's debt is owned by pension funds, insurance companies, banks ... so it's owned by Canadians.
How much does China and Japan have?
I dunno.

Take a gander at our geese

2010-05-09T22:41:00.000-07:00

We got us a gaggle of Canada Geese nesting on the shore of Lake Ontario.

Alas, some feel they're a pest and the local Wildlife Service runs around spraying oil on the eggs -- so they won't hatch.

A friend has a blog where he shoots swans and geese with a camera!
His geese seem smart enough to evade the oil.
Why can't ours?

WWII

2010-05-09T09:35:00.000-07:00

Here's a neat sight:

British, American, French (and others) joining the Russians on May Day to celebrate their common victory in WWII.

The Soviet Union suffered the most losses of any country with more than 7.5 million soldiers killed, 5 million wounded and millions of civilian deaths.

Most Russians (me too!) believe they could/would have "won" the war without allied help.
After all, they were winning the war on the Eastern Front
... and over 70% of German troops were engaged on that front on D-Day

I'm waiting for Hollywood to recognize that.

Cuba, eh?

2010-05-09T02:44:00.000-07:00

We're planning a trip to Cuba, next year (to celebrate a wedding).
Aah, but starting May 1, 2010, Cuba requires proof of medical insurance.
(I reckon that's to avoid having tourists arriving to take advantage of Cuba's free medical coverage.)

Alas, the Cuban authorities (so far) haven't clarified what type of coverage is required or what (foreign) companies are "approved".
Cuba does, however, have kiosks in Havana airport where (apparently) you can buy insurance for (about?) $3 /day.

Since Canadians are Cuba's most popular tourist, I'm expecting a personal clarification from Fidel.

reBalancing

2010-05-07T22:10:00.000-07:00

My son-in-law sent me an interesting article on dilbert.com
... about rebalancing your portfolio.
I recall playing with it some time ago.
I guess I never understood this "annual rebalancing" ritual.
(Neither, apparently, does Scott Adams.)

So I searched the tutorials on gummy-stuff and found a spreadsheet which uses a bunch of annual returns for a collection of asset classes, picks out some random 25-year period, compares the return and volatility of a portfolio with annual reBalancing (to maintain some allocation of assets) to a Buy-and-Hold portfolio to see who had the larger return.

Then it does this a jillion times ... to see who "wins".

Using the set of returns for the S&P500 and 5-year Treasuries and an allocation of 80%+20% (and 5000 Monte Carlo repetitions), I see that reBalancing won about 40% of the time (but with smaller volatility).

On the other hand, if we just look at all the 25-year periods from 1928 to year 2000, comparing the two rituals, we'd find that Buy-and-Hold "wins" about 60% of the time.

Conclusion(s)?
I have no idea.
Some 25-year periods one wins ... some t'other wins.

'course, we're talking 25 years.
Over the course of 25 years the situation can change.
Here's 25 years starting in 1972:

Rebalanced is winning ... uh, losing.

Perhaps the main advantage is psychological.
If (for whatever reason) you think X% assetA + Y% assetB is good, then when it deviates from this you'd want to rebalance to maintain what you thought was a good allocation ... unless you'd changed your mind, eh?

On the other hand, changing allocations seems like a reasonable thing to do as one nears retirement ... to preserve gains over umpteen years of investing.
For example, our grandkids each have a College Fund (set up by my son) which begins fairly aggressive when they are toddlers, like so:

and ends up (at college age) at 100% Money Market.

CRASH

2010-05-07T05:15:00.000-07:00

The current magnificent drop in the DOW (due to a trading error?) is scary.

Is the market so sensitive to events (and fumbling fingers)?

Yet, I have faith in the market's ability to recover.
Check out the last great crash, in 1987:

Notice anything interesting (besides the crash in October)?
You'd have made money in 1987, investing in the DOW.
Not much (0.6%), but some.

And the greatest crash of all, in 1929?
Has you bought the DOW 5 years before October 1929, fell asleep and awoke 5 years after the crash ... you'd have made money.
----------------------------
See any similarities?

I recall (10 years ago?) all the gurus were saying:
"The days of double-digit gains are over"

P.S. I thought that the DOW and the European stock markets would (by now) be fairly independent. Maybe not, eh?

Future = Past

2010-05-06T05:02:00.000-07:00

I often says that "The future is a replica of the past".
That's a joke, folks.
However, I got an e-mail that reminded me that:
"Past performance is no indication of the future return."

That reminded me of something I did in the last century, following the "hottest" mutual fund:

My advice?

Richer than you think

2010-05-05T04:54:00.000-07:00

I never thought we were rich.
Indeed, I figured we were just "comfortable".
Then I ran across a site that compared my income to "the world".

Mamma mia! We is richer than we thought!

Alas, I'm not sure the indicator works any more.
I pretended to be Bill Gates.
I think I broke the gadget ...

Coal to ashes

2010-05-04T22:55:00.000-07:00

My coal stocks are tanking!!
Down 24% in a couple of weeks!

'course, after a dramatic 400% increase over the past year, what can one expect, eh?

So when will it end ... for (say) WTN?

At times like this I turn to a patented and infallible guide.
I see that, starting Aug 31/05, WTN behaved much as it has over the past 25 days.

See what happened to a $1K investment?

Then what happened next?
See?

Mamma mia!

So what'd happen had I used my magic technique? Better, but no cigar.

Open up (revisited)

2010-05-04T03:41:00.000-07:00

Okay, so I'm eager to try that ritual where I wait until my stock opens UP by (say) 1%. Then I BUY at the Open
(I can do that 'cause my finger is poised over the Buy button.)

I stick in a SELL order at 1% higher than the Open.
I also stick in a SELL order at 1% below the Open
... just in case the stock don't rise to the occasion.
Then I pray.

So, in order to convince meself that I got me a good ritual, I try it on historical data since (as everybuddy knows) the future is a replica of the past.

Indeed, I try it on one of my favourite coal stocks:

'course, this is fiction ... but great fun, eh?
P.S. I include a $10 trading fee, else the 2-year gain would be 236%.

I might mention that, sometimes, it ain't that good:

and sometimes it's even worser:

Note: Wanna see what would have happened with DOW stocks? Click!

I might also mention that I ignore the case where the stock drops 1%, then I SELL, then it rises to the occasion.
But, as a world famous writer of Science Fiction, I know that I can make anything happen (in my imagination).
P.S.
I've put in an offer on Gates' mansion.

Open up => Buy

2010-05-03T06:35:00.000-07:00

I seem to be stuck on this Buy/Sell ritual that looks at the foreign markets (before local markets open) and the DOW futures, then at the opening price of a stock, then I decide whether to Buy or Sell.

Though I'm sure I've done this a jillion times, I did it again this morning.
For example, this is what I find:

Okay, so I'll now try the following:
> If the price opens UP by x%, I'll buy some at the Open and Sell it ** later in the day.
> If the price opens DOWN by y%, I'll Sell some at the Open and Buy it back, later in the day.
> In both cases ...

Note:
It's not only that the percentage of times that the movement continues (from the Open) is high, it's the fact that it happens quite often!

Here's another (more familiar) guy:

P.S. I got me a spreadsheet, but it ain't ready for public consumption ... yet.

** I forgot to mention that I'd never sell more than 50% of my holdings ... just in case I goofed (which is often).
When I sell 50% and the stock goes UP, I tell my wife:
"I'm happy. I kept 50%"
When it goes down, I say:
"I'm happy. I sold 50%"

P.P.S. Okay, now I got me a real, live spreadsheet here.
Soon, I'm thinking of buying Bill Gates' mansion ...

Shanghai

2010-05-01T07:37:00.000-07:00

Shanghai is hosting Expo 2010 ... to the tune of $58B!

There are complaints of long lines: waiting for hours to get into some pavilion.
Shanghai is the largest city on the planet: population 20M.

The last (and only) Expo we've been to was Expo 67.
We often had to wait for hours.

Montreal had a population of 1.2 M in 1967.
Canada's population in 1967?
About 20M.
-----------------------
P.S.
One of the countries that didn't have an exhibit at Expo 67?
China!!

Caveat emptor

2010-05-01T01:08:00.000-07:00

I'm selling stock in my company: Gummy Stuff Inc.
I provide information on the company, like this.
However, I don't tell you that I intend to short the stock -- betting that it'll tank.

Am I doing something immoral / unethical? Perhaps.
Am I doing something illegal? I doubt it.

old age and obfuscational dialogue

2010-04-30T01:25:00.000-07:00

When I was younger, I got ~~angry~~ ~~confused~~ mildly irritated* when I read statements like:

2/3 of stock returns lie within one standard deviation of the mean
and
stock returns have a normal distribution.

Now, much older and (perhaps) wiser, they don't bother me any more.

However, it's still disturbing to note that financial gurus like to change the meaning of words (or attach misleading meanings).

For example, the word risk which the Common Joe would understand to mean:

risk n The possibility of suffering harm or loss.

In financial circles, this guy was assumed to mean the Standard Deviation of a set of stock returns.

Now, to calculate the Standard Deviation of set of n (historical) returns, R_j, the magic formula is:

Standard Deviation
= SquareRoot[(1/n) { (R₁-M)²+(R₂-M)²+...+(R_n-M)²} ]

where M is the Mean of the returns.

As anybuddy can plainly see, this animal is a measure of the deviation of returns from their Mean.

So why would anyone call it the risk associated with this stock?
If my returns were 10% larger than yours, we'd have the same risk.
That's because the SD doesn't change when you add a constant to the set of numbers.

If we both invested in a guaranteed returns certificate, but my guaranteed returns were twice yours, my investment would be twice as risky.
That's because the SD doubles when you double all the numbers.

Okay, so many (recognizing that "risk" is perhaps a misnomer), began to call it the uncertainty associated with stock returns.

Huh? Where's the uncertainty here?
(The first set of returns has higher SD.)

Why can't we just call SD the Root-Mean-Squared (RMS) deviation of returns from their Mean? **

Anyway, we now have a plethora of risk measures, like downside risk, value at risk, drawdown risk, omega ... ad nauseam.

*In the last century, there was this discussion on obfuscational dialogue.
** We (perhaps unknowingly) use RMS all the time. For example, the RMS voltage that comes rushing from out electrical outlets is 120 volts RMS. The actual voltage ranges between +/- 170 volts.

------------------------------
As evidence that I'm gettin' old, I ran across the quiz I have on my web site ... and couldn't answer any of the questions ('cept 5.2)
------------------------------
Once upon a time I thought I'd like to define the sex appeal of a stock as its Standard Deviation. That way, my investing in very volatile stocks (as I do) would make me feel warm all over.

Illegal aliens

2010-04-29T06:32:00.000-07:00

Some interesting numbers, questions, problems one finds while googling ... pertaining to the U.S.A.
[1] According to the World Bank, 53% of Mexico's population of 104 million residents live in poverty.
[2] Unemployment in Mexico: 40%.
[3] Unemployment benefits in Mexico: 0.
[4] Annual monies paid by illegal workers (and their employers) to U.S. Social Secuirty coffers: $7B.
[5] Number of illegal workers who will collect Social Security benefits: 0.
[6] In 1999, under President Bill Clinton, the US government collected $3.69 million in fines from 890 companies for employing undocumented workers.
[7] In 2004, the Bush Administration levied NO fines for US companies employing undocumented workers.
[8] Is the presence of illegal workers profitable to companies and government? Yes.
[9] Are members of congress eager to curry favour with Hispanics? Yes.
[10] Will the U.S. federal government take extraordinary measures to eliminate illegal workers? No.

Comment by Pastor Robin Hoover (of Humane Borders):
The U.S. has two signs at its Southern border
Help Wanted: Inquire Within
and
Do Not Trespass
----------------------------------
On the other hand, education, health care and incarceration of illegal aliensthe costs Californians $10.5 billion per year.
----------------------------------
I just read the new/controversial Arizona law:
sb1070s.pdf

Normalized Stock Prices

2010-04-28T05:57:00.000-07:00

I got e-mail asking about normalized stock prices.
Alas, I never heard of such an animal. **
So I google and find a jillion definitions of "normalized" (when it comes to stock prices).
However, it was intended to identify pairs of stocks whose prices tend to move together.
Then, if they diverge (A goes UP while B goes DOWN), we expect them to converge to historical relationships ... so we sell A and buy B.

So then I find this reference where, by normalized, they mean:

(Price - Mean) / (Standard Deviation)

So we (presumably)

Collect a bunch of (historical) prices for stocks A and B.
Calculate the Mean and Standard Deviation of each set.
Replace each price (in each set) by the its corresponding normalized price.
Stand back and stare at the pair of normalized prices ... and make some decision.

I'm not convinced it'll do much good, but (as is my wont) I generate a spreadsheet to see what I can see. It looks like this:

(Click on picture to enlarge) Okay, so I stare and stare ...

Wanna play? Click here to download the spreadsheet.

** Ron McEwan writes and tells me that Excel does this ... but they call it "standardized" rather than "normalized".

Ralph Stanton

2010-04-26T03:34:00.000-07:00

In 1953, in a first year math class, I had an interesting prof.
His name was Ralph Stanton.

Four years later, when I graduated in 1957, I and a couple of my classmates were invited to teach math at what was known as the "Associate Faculties" of Waterloo Lutheran College, in Waterloo, Ontario.
Sure, why not? Sounded like fun.

This college did not have a charter to grant degrees.
I had to drive to London, Ontario, to have my final exams approved by the math chairman at Western University.

However, there were some, including Ralph (who was head of math at the College), who had great plans:
Build a brand new university just up the street.

Although there were various objections, a number of acres were purchased and (eventually) the University of Waterloo was born.
It had an innovative Coop Education program.
It is now the largest such program in the world.

The old college also became a full-fledged university:
Waterloo Lutheran University ... and then (eventually) Wilfred Laurier University, retaining the initials WLU.

I taught at U of W for a couple of years and watched with awe as the new university grew.
Then (when Heidi had graduated from nurses college), we went to the University of Illinois so I could get a PhD (and Heidi a PhT: Putting Hubby Through).

Although my thesis supervisor had arranged a job at Bell labs, Ralph visited us in Illinois and convinced us to return to Waterloo ... which we did.

How the university had changed!
(Years later, I wrote a short history of Computer Science at Waterloo. It included Ralph's contribution ... but I can't find a copy.)**

During the next first few years I watched Ralph at work.
Again, in spite of various objections, he managed to convince the powers-that-be to create North America's first Faculty of Mathematics.

There were six departments in this new Faculty and Ralph selected me as the first chairman of the Applied Math dept.
(Students in the Faculty, competing in the annual Putnam Math Competition, have ranked sixth in North America, after Harvard, MIT, Caltech, Princeton and Toronto and ahead of Berkeley, Cornell, Stanford, Duke, Chicago, Yale and Columbia. Not bad for a young university, eh? I coached the Putnam Team for a few years. I must have been a lousy coach 'cause, with my input, we never did better than 7th.)

Soon after, Ralph left for the University of Manitoba.
However, his notorious (gawdy?) pink ties are still remembered. Indeed, the pink tie is the icon for the Faculty and hangs with pride on the math building on special occasions:

A few days ago, Ralph Stanton died.

**
Don Cowan (the first charman of Computer Science)
kindly sent me a copy of my lost "history"

The preamble to the History of Computer Science
(based upon stories told to me by Ralph Stanton)

In the beginning ...
It was 4:27 p.m. The meeting of the board of governors had but one item on the agenda: the recommendation of the Academic Advisory Committee (AAC). Ralph Stanton leaned back, gazed at the clock, then at Ted Batke; both looked weary. Carl Pollock was speaking in favour of the recommendation, but there seemed little hope of other support from the board.

Little more than a year had passed since Ralph left the University of Toronto to chair the mathematics department at Waterloo College, a small liberal arts college sponsored by the Lutheran Church and granting degrees through an affiliation with the chartered University of Western Ontario. For members of the math department at the College it meant the curious, annual ritual of driving to London, Ontario, to have final examination papers approved by the math Chairman at Western.

But there was something else: co-operative education, a first in Canada. It was a novel scheme championed by Joseph Gerald "Gerry" Hagey, late of the B. F. Goodrich Company and current President of Waterloo College, and Ira G. Needles, president of B. F. Goodrich and chairman of the board of governors.

Classes had begun in July, 1957, with some seventy-five students who had completed Ontario grade 12 and enrolled in a "pre-engineering" program on the small campus, alternating 3 month academic terms with 3 month work terms. They constituted the Associate Faculties of Waterloo College. The church-affiliated College now had a non-denominational component (a Faculty of Applied Science, with Les Emery as Principal) which could attract provincial funding not available to sectarian institutions.

In 1957, classrooms for the Associate Faculties were located in two prefab huts, Annex 1 and Annex 2, providing some 8,000 sq. ft. of teaching space behind Willison Hall, the only permanent structure on campus besides the Arts building. Ralph Stanton had hired four graduates from the Engineering Physics program at the University of Toronto: Dave Fisher, Jim Leslie (now in Physics at UW), Keith Oddson and Peter Ponzo. In 1958, A. S. "Bert" Barber succeeded George Dufault as director of coordination, handling job procurement and sharing space with the fledgling math department in a house at the Albert and Dearborn corner of campus.

But, in the fall of 1957, the recommendation of the Academic Advisory Committee (AAC) constituted a necessary preamble to the creation of a new university - and support was minimal.

Ralph Stanton brushed the hair from his forehead, leaned on the table with chin in hands and listened to the debate. It was 4:42 and the meeting was to end at 5:00. p.m. A.M. Snyder, a local businessman and member of the board, had spoken vehemently against the recommendation. Now Carl Pollock was speaking, again. A native of Kitchener and president of Electrohome Canada Ltd., his support was needed, and appreciated, yet his seemed the only supportive voice. Gerald Hagey had been strangely quiet. Ira Needles, as chairman of the Board, had spoken once or twice; it was clear that support did not lie with him.

Ralph closed his eyes. It was nearly a month since he and Ted Batke and the other members of the "fearsome five" (Ted Batke, Ron Bowman, Art Cowan, Bruce Kelly and Ralph Stanton) had tramped the few blocks down Dearborn Street to the Schweitzer farm, past the vacant lots to the fields of corn and mud. The chestnut trees hung solemn above the farm house and dark clouds billowed in a grey sky. It was cold and bleak, yet there was a certain measure of excitement: the property was for sale, the price was reasonable, it was less than a country mile from the Waterloo College campus.

It was clearly impossible to develop a university on the small campus of a sectarian College. The Schweitzer farm could become, would become, the home of a new university. It meant applying for additional funds from the province and, in particular, a charter to grant degrees. Yet, weren't there already students studying in the new co-operative education environment? Didn't the College already have a complement of arts students? Surely the provincial government would support the application for a charter - and provide the necessary funding. The timing was right. Every qualified youth must have access to a university education. It was becoming a familiar cry in the province.

It had taken less than 24 hours for the AAC to agree on the wording of the recommendation: purchase the Schweitzer farm and expand the facilities of the College to accommodate the increased demand for higher education in Ontario. They had approached Gerald Hagey and he had agreed to put it before the Board of Governors of the Associate Faculties.

Yet, it now seemed hopeless.
At 4:55 there was a rustling of papers in the board room. The meeting was coming to an end. The recommendation would be ignored; too expensive, too grandiose. The AAC had been promised an hour, and the hour had ended. There was little more to debate. Members of the Board were collecting their notes.

Then A.R. Kaufman said something, quietly, unobtrusively ... and the rustling of papers stopped.
Kaufman was undoubtedly the most respected member of the board. A wealthy industrialist, philanthropist, president of Kaufman Shoes, outspoken proponent and supporter of family planning (long before it became fashionable), he commanded the admiration and, indeed, awe of the community and, more importantly, the board room.
Gerald Hagey looked at the tall, gaunt man who had sat for an hour without saying a word.

All eyes turned to Kaufman.
There was silence in the room.
"Gentlemen," Kaufman said softly, "I think we should buy the property ... and we should do it soon."
The silence continued for several seconds, then the chairman harumphed and laughed and chuckled - and agreed with Kaufman. Then all agreed.
The debate had ended.

The Schweitzer farm would be purchased and a new university would be created.

Weighting

2010-04-24T00:33:00.000-07:00

Recently, I talked about volume weighting stock prices, where prices associated with high volume were more significant. That was fun!

Then Donald W. pointed out these weighting schemes for ETFs. **

That reminded me of the days when I dabbled in various schemes for calculating "weighted averages".

Like evaluating a basket of stocks:
Creating Indexes
Equal-weighted Indexes
Comparing Active & Passive performances

Then there's weighting when it comes to looking at historical performances ... like weighted moving averages:
Exponential Moving Average
A host of other averages
Mamma mia! That, too, was great fun!

Mebbe, when people say:
"The average was ..."
we should respond:
"Average? What average?"

** Although it's not clear (at first), by "equal weighting" the author means equal dollar amounts invested in each, not equal shares.

Here's an interesting fact:
Had you bought 1 share in each of the 30 DOW stocks, one year ago, your gain would be 43%. That'd be equal-share-weight, eh? (The DOW Index has this weighting. More dollars are invested in stocks with higher prices.)

Aah, but had you bought $1.00 in each of the 30 DOW stocks, one year ago, your gain would be 49%. That'd be equal-dollar-weight, eh?

Before we get too excited about doing MUCH better, consider the previous year.
Equal-share-weighting would have given us -37% whereas equal-dollar-weighting would have given us -36%.

Here's a pretty picture (using the current 30 DOW stocks):

For reasons I don't understand, the equal-shares weighting should be the same as the actual DOW.
I reckon the DOW components have changed over the past year, eh? After all, GM was dumped ... and wasn't CISCO added?

FL-what?

2010-04-23T05:14:00.000-07:00

When I was staring intently at the ash cloud from that ~~Eyjaf...~~ what's-its-name volcano in Iceland, I noted that the elevation was expressed as FL200, so I needed to know what this flight level stuff was about.

After some googling, this is what I found:
http://www.gummy-stuff.org/flight-level.htm

I'm still working on that ?^#@!& formula ...

Stirex Knives

2010-04-22T09:33:00.000-07:00

Some twenty years ago, Heidi did a project for a researcher at the Univ. of Waterloo ... on assistive devices.
One of the devices was a neat knife.
It had a handle at 90 degrees to the blade.

When the project was completed, Heidi got to keep the devices. (I guess that was her salary, eh?)

For 20 years she's been devoted to that knife.
Why aren't all knives made that way?

Anyway, her old knife was getting dull, so I googled.
Ain't google wunnerful? Stirex Knives

Volume weighting

2010-04-21T13:21:00.000-07:00

Once upon a time I got very excited about volume-weighted stock prices.
Prices associated with high volumes should have a greater weight, right?

I'd calculate the vol-wgt'd price like so:
P_vol-wgt = P_close * Volume / (Average Volume)

Then I'd go through every conceivable Buy-Sell strategy (based upon closing prices) and substitute volume-weighted closing prices.

For some reason, I lost interest in that ritual.
Can you see why?

-----------------------------------------------
What's remarkable (to me, at least) is that the violent behaviour of the vol-wgt'd price don't change things so much.
For example, long, long ago (and far, far away) I played with a Buy/Sell ritual called ADX: the Average Directional Index.
When I introduced volume-weighting (and called the result VDX), it don't hardly change the Buy/Sell signals.

For example:
(Without weighting it's ADX. With weighting it's VDX.)

Indeed, only 3 of the 30 DOW stocks have their (current) signals changed.

Katla webcam

2010-04-21T07:11:00.000-07:00

Keep your eye on volcano Katla!

Will it blow?

Iceland

2010-04-18T04:23:00.000-07:00

Iceland sits on the edge of a tectonic plate:

Click to enlarge.
During the late 18th Century, continuous volcanic eruptions in Iceland heavily damaged a quarter of the island nation, and blotted out the sun's light for several years.
Can you pronounce Eyjafjallajökull ?

There may be other nearby eruptions ... soon.
Like the much larger Katla:

President of Iceland, Ólafur Ragnar Grímsson, said that the current eruption was just a warm-up for the eruption of Katla. Luckily, he's not a geologist.
There's a Katla webcam here.

What about this one?

Grímsvötn: In the year 2004!
It grounded plane traffic.
--------------------------------
In May, Heidi & I are planning a cruise to some Greek islands. I stare intently at the ash cloud to see if'n it'll reach Venice (where our cruise begins).
Note#1:
SFC/FL200 means from the Surface to 20,000 feet.
Note#2:
Read the Reykjavík Grapevine.
--------------------------------

Derivatives

2010-04-16T03:25:00.000-07:00

I was just reading Paul Krugman's article (love that guy!) and noticed his comment about:
... derivatives, the complex financial instruments Warren Buffett famously described as "financial weapons of mass destruction".

I recall when I thought derivatives meant dy/dx.
I also recall this humorous look at derivatives.
Well ... it makes me laugh.

Here's what I larned.
-----------------------------
It's been said that:
Math may have caused the financial crisis.

Conclusion? Math is dangerous!

World in the morning

2010-04-15T05:13:00.001-07:00

Every morning I check the World,
to see who's up at this time o' the morning.

Then I check the U.S. futures.

Then I check preMarket trading for a BIG coal stock.
'cause I like my coal stocks, eh?

Then I check to see how coal has been doin' recently.

Then I get ready to Buy or Sell,
my finger poised on the broker's button(s).

Alas, it don't do me no good ...

Ponzo Illusions

2010-04-15T01:45:00.000-07:00

I recently ran across slick examples of the Ponzo Illusion.
This is Mario Ponzo's original:

Here are others:

Okay, so I'm hooked on illusions
------------------------------------------
So, does this guy get smaller as he gets closer?

Just kidding

Probabilities

2010-04-14T01:46:00.000-07:00

I often think I should announce that I have a wunnerful scheme that's guaranteed to make money 95% of the time!, over 10 years.

Then you try it and lose money.
Then I say: "Too bad. You're in that last 5%."
You say: "So what's that 95% all about?"
Then I say: "It means that if you repeated my scheme a jillion times, you'd make money 95% of the time.".

Cute, eh? I know perfectly well that you can't repeat it a jillion times ... so I'm correct, in my announcement.

Indeed, I'm always amused when gurus say that there's a 95% probability that your retirement portfolio will survive 40 years with an x% withdrawal rate.
Now, if you believed in a hundred reincarnations ...

Aah, but what if you repeated my scheme hundreds of times? Then, if it were efficacious, you should be able to make money, eh?
Indeed, even if my scheme worked, say 60% of the time, you should make money if'n you applied it hundreds of times.

Okay, so I been thinkin' about that Blake ritual for Buying and Selling ~~stocks~~ mutual funds.
Blake identified funds where the probability of success was over 60% (based upon analysis of historical data) ... then he traded like crazy!!

Alas, that'd require that trading fees were minimal.

Yesterday, Ron McEwan wrote to me about the Blake ritual:

The US government employee retirement plan (Thrift Savings Plan) is the largest pension plan in the world. You could trade in and out of about 10 different funds as much as you want with no charges. One day someone at the Fed found out that some guys had made themselves over 3 million dollars using a similar strategy. It wasn't illegal, but shortly after it was discovered, the Plan changed the rules to make it unprofitable.

Ron also provided these: Click! Click!

A buying strategy

2010-04-13T05:35:00.000-07:00

Somebody wrote and asked about some Gil Blake method for buying and selling.

Of course, I had never heard of the guy ... but I did find these comments by Blake:
"If the Dow climbs 10 points, what's its expected further excursion before reversing?"
and
"... once they've gone, say, 1 percent in one direction, they're likely to go 2 percent further before they go back again."

Huh? Is that true?
So I decided to check out that observation by looking at, say, GE stock.
Well, not exactly that observation.
I looked at the total gain over a moving n-day window.
When the gain exceeded 1%, did the gain for the (moving) time period continue to increase?
If that happened most of the time, then should one buy when that occurs?
Would that be following some "trend"?

But what's a good value for n?
Should we look at the gain over a window of n = 3 days
or maybe n = 4 days ... or what?

Anyway, to make a long story short, I got some charts that look like this:

Now I gotta massage that spreadsheet.
If we see a nice n-day gain, how much more can we expect?
Click for a pretty picture.

Surfboards

2010-04-12T12:10:00.000-07:00

I have a friend who builds surfboards.
A few years ago he asked me to write a spreadsheet that would help design the "shape" of the board ... so I wrote this.

Although I didn't think it was particularly useful, it was fun.

Today I get a message from somebody at the Atlantic Surfing Museum asking to stick a link on their site. He said the surfboard thing was cool.

Now, I see it was not only fun but also cool.

Distributions

2010-04-12T06:21:00.000-07:00

Once upon a time I looked at the problem of finding the relationship between the Standard Deviation of stock returns and stock prices.
Indeed, Bollinger Bands use the SD of prices (over the past umpteen day) to provide Buy & Sell signals.

Anyway, the problem (mathematically speaking) might go like this:
You have a set of returns, {X}, with a known distribution.
You pick n at random and calculate:
Z = (1+X₁)(1+X₂)...(1+X_n).
Them's the prices, eh?
So what's the distribution of the Zs?

After thinking about it, off and on (for years), I figured I was just too schtoopid to solve the problem -- even if I assumed the set of returns were Normally distributed.
(Math-types always make such simplifying assumptions.)

Then I recently ran across some papers about the distribution of the product of just two random variables.
It involves (are you ready?) K₀.
He's a Bessel function. I met him before.

Then I run across a paper dealing with the distribution of the product of three random variables.
It involves Meijer G-functions.
Huh? I ain't never met her before.

Somehow, I feel better ... and I'll give up this quest 'cause I now know I am too shtoopid

$USD/$CAD

2010-04-06T08:37:00.000-07:00

Heidi keeps a $USD bank account and sticks money there when the Canadian dollar is doin' good .... for trips to visit our kids South o' the Border.

Now she's heading out the door ... to the bank.

U.S. deficit

2010-04-05T04:26:00.000-07:00

The U.S. has (finally!) joined the rest of the civilized world in providing universal health care.

So will it break the bank?
Will the U.S. suffer from massive deficits?
Can the U.S. recover from this gargantuan expenditure?
Has such a projected deficit (over 12% of GDP) happened before?

Happy Easter

2010-04-04T09:26:00.000-07:00

Guess the price

2010-04-03T13:59:00.000-07:00

I was feeling pretty schmart.
I had guessed the price movement of some of my favourite stocks.
Then I thought: "I should try that Guess-the-Price game."
Now, with all that practice, I'd be a whiz.

I was disappointed to learn that I was still lousy.

Okay, now you try.
Here are the weekly stock prices for 32 weeks.
What'll it be in 4 weeks?

Click the chart to see.

Here are more:

So ... are you lousy too?

bit torrent

2010-04-03T05:09:00.000-07:00

Since buying that neat gadget I figured I should know something about bit torrent ... especially since there's so much Internet traffic involved with this stuff.

It's really quite amazing
... so (as is my wont), I wrote what I found.
Is it accurate? Who knows?

I'll be back

2010-04-01T02:33:00.000-07:00

This is my last blog entry for a while.
I bought an Archos so we can watch movies while travelling ... especially if we're next to a TV set.

The I started downloading movies.
I guess that's illegal because I first got a warning message from my ISP.
Then I got a knock on the door : the family lawyer.
Apparently I am to be taken to some U.S. district court.
Others who have done this P2P thing ...

Lithium (again)

2010-03-30T06:42:00.000-07:00

Last Fall I got interested in Lithium stocks.
This one in particular.
I even bought a few shares, realizing it'd take a while for gains to materialize.
Indeed, the stock has dropped from $2.19 (when I bought some) to $1.38.

SO I was delighted to see that somebody has raised their price target to $4.40.
Now I'm happy.

Silly Pic

2010-03-30T02:32:00.000-07:00

See my new avatar?

Lori insisted I use this ~~ridiculous~~ photo
... and I always do what I'm told.

Next month

2010-03-30T01:46:00.000-07:00

Yesterday, one of my favourite stocks closed at $6.12.
It's up about 20% in the past week.
I can't wait to see what happens next.
When I get that feeling, I whip out one of my spreadsheets.
It's the one that comes with a money-back guarantee.
It'll tell me what happens next ... over the next month:

Did I mention the money-back guarantee?
For looking deeper into future, this is handy:

For I dipp'd into the future
Far as human eye could see
Saw coal stocks on the rise
A portfolio full with glee.

Up X%

2010-03-28T14:17:00.000-07:00

After returning from our week in Mexico, I was surprised to find that one of my coal stocks increased by 20% during the week.

So I whip out a spreadsheet and count the number of times (over the past year) that one of them thar penny stocks increased by 10%, 15%, 20% ... in a week. Does that happen often?

(Click to enlarge the chart.)

Note that WTN and GCE are right up there!
'course, they may very well decrease by 15%, too ... right?
So I check that.
GCE did decrease by 15% (or more) about 2% of the time (over the past year).
WTN never did.

Maybe it's more frequent with penny stocks, eh?

For DOW stocks, only AIG had a weekly decrease of 15%.
How about increasing by 15%?

(Click to enlarge the chart.)

Fascinating ...

Wanna play? click!

in Mexico, eh?

2010-03-22T04:47:00.000-07:00

We got us Internet access in the villa, so ...

Mexican Diary

Playa del Carmen

2010-03-18T11:44:00.000-07:00

Guess where we'll be?
March 20-27.

Happy St. Patrick's Day

2010-03-17T07:06:00.000-07:00

Surprise

2010-03-16T04:31:00.000-07:00

On March 6, a day after Heidi & I celebrated our 50th wedding anniversary, there was a small dinner planned ... just a few, at a nice restaurant.
Heidi & I arrived, expecting about six people.

There were thirty-six!

Heidi's reaction ?

East Side Story

2010-03-15T03:57:00.000-07:00

I read the latest U.N. missive re Israel and East Jerusalem.

I stare intently at this map.
I wonder where Israel plans to build.
Where is Ramat Shlomo?
Is it in the Green Zone, which (for decades) has been set aside for environmental and recreational purposes?
Is it in the Green Zone, where (for decades) Palestinian construction has been denied?
Is it in the Green Zone, where (for decades) Palestinian homes have been torn down?

Click on the map to enlarge.

What do the Palestinians say - in print?
What do the Israelis say - in print?

I don't understand ...

Gurus

2010-03-13T03:38:00.000-08:00

I enjoy articles/books where the guru says he's got the perfect scheme for making money.
I was thinking of doing likewise.

The magic scheme?
Put a BUY order 1% below the Open when the stock opens lower.
(You may or may not get the stock
... depends upon how low is Low.)

Put a SELL order 3% above the Open when the stock opens higher.
(You may or may not sell the stock
... depends upon how high is High.)

Recognize the scheme?
We talked about it in the last few posts.
Then (in my book) I show you as neat chart:

See?
The scheme almost doubled your money in a single year!

Then you buy my book and change things a mite and get this:

or mebbe this:

But I sold a copy of my book, right?

Wanna play?

------------------------------------------
As Danyon noted, Bernie bought my book:

Opening UP

2010-03-12T04:03:00.000-08:00

I was staring at that Opening DOWN spreadsheet and felt uneasy about the lack of symmetry, so I added a 2-way switch* so I could get Opening UP as well.

For example:

Now I'm happy.

*
I know! I know! It's called a radio button.
However, after polling 1000 visitors I find that 99 44/100 % understand "2-way switch" whereas only 47% understand "radio button".
This poll had a margin of error of 3.1% at the 95% confidence level.

BLOGs is nice

2010-03-11T02:50:00.000-08:00

For years (and years) I stuck things on gummy-stuff whenever I thought others may be interested.
There, I talked only to my sidekick.
>Hey!That's me!
Visitors to gummy-stuff were bystanders, listening to the banter.
The neat thing about a BLOG?
I'm talking to visitors!
Another neat thing is that I can test some spreadsheet here before I stick it on my web site.

Now THAT is cool!

Opening DOWN

2010-03-10T05:34:00.000-08:00

Yesterday I bought some stock at the Open (which was a drop from the previous day's Close) and (surprise!) that turned out to be the Low for the day.

So I lay in bed thinking:
Does that happen often?
If the Open is down from the previous Close, can we expect a further decrease from Open to Close?
How much of an additional drop will there be ... on average?
If I buy at the Open (after a drop), should I have waited for an additional drop?
What if ... ?

Anyway, to make a long story short(er), I hopped out of bed and whipped out an Excel spreadsheet.

I downloaded 10 years worth of daily price data.
I identified days where the stock Opened down.
I checked out the subsequent Low for the day.
I plotted
average decrease: Open-to-Low
versus
Previous Close-to-Open.
I stared intently at the chart, expecting to see something exciting.

Not too exciting ... so I went back to bed.

Wanna play? Click!

Alas, when stocks split, the change from previous Close to Open can be screwy *$%#@!?

Here are a few more:

Huh? Is that "additional" drop, Open to Close, (almost) always close to 1.0%-1.5%?

------------------------------------

I should mention that them percentages are:

(previousClose - Open)/previousClose

and

(Open - Low)/Open

so they come out as (positive) "drops".

------------------------------------

I also noted that, sometimes, the larger the drop the larger the drop:

------------------------------------

P.S. Because of nico's remark, I now count the numbers:

and I even got me a tutorial, too.