the Dilbert Rule

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?