Investor Think

So I've been thinking about how investors might think. It may (or may not) be rational thought. Nevertheless, it's fun to play with various ideas: Click!

 

Guess the price

I've been reading this book. Fascinating! It's all about what events/numbers/environments influence our (often irrational) decisions. Once upon a time I generated an interesting spreadsheet (described here) which asks you to predict future stock prices (based upon historical stock behaviour). Not possible, right? The past is no indication of the future, right? So what does influence our prediction? Aah, if'n I could only identify investor irrationalizations I'd be a mbillionaire! However, I haven't finished the book, yet. But when I do ...

 

another Index

Remember when I invented the world's best Index ... which I called the g-Index? My idea was: "Invest equal amounts in each stock". Well, I asked by brother-in-law (Gerry) how he'd invest in the DOW 30 stocks. His response was to invest lesser amounts in them that got large market caps. No WAY !! So I played with investing an amount proportional to the inverse of the Mkt Caps and got this (over the past year): See the red curve? That's HIS Index. Tonight, he's coming over for dinner. I'll tell him he's ALSO got a G-Index.

Debt

I've been reading about the U.S. debt (as a percentage of GDP) and thinking that they is in grave danger. Over 60% of their GDP. Mamma mia! So I check out how they compare to other countries: Click on the chart for a larger image. 60%? Peanuts, eh? Check out India & Japan and (gulp!) even Canada! 'course, there are various ways of measuring "National Debt" as there are various ways to measure "GDP". ** Click! ** If'n you hire a nanny, that's part of the GDP. If'n you look after your own, it ain't!

 

Pork Masala

Heidi & I have been trying the local Indian restaurants. Chicken Tikka Masala tasted so great that I figured I should be able to reproduce a similar (but simpler) dish at home, with pork ... sort of. Alas, it was okay ... but a disappointment: I should stick to visiting local Indian restaurants. My Pork Tikka Masala recipe. Note: Garam masala is a gaggle of exotic spices.

 

Indexes (again)

Since the DOW is proportional to the average of 30 stock prices and the S&P500 is proportional to the average of 500 market capitalizations, then what'd happen if'n we invent an Index which is proportional to the average of the gains, beginning at some convenient point in time ... like 10 years ago (November, 1999)? Suppose we try it, using the DOW 30 stocks. This "new" Index would look like so: The S&P is stuck in there for a comparison. I call the new Index the g-Index. The g stands for ... uh ... great. ------------------------------------------------- The justification (if any) for the g-Index is that, being ignorant of which stock will be the best performer, you'd presumably invest equal amounts in each stock. In that case, your portfolio would be a g-Index.

 

Indexes

To calculate the DOW Index, you add all the prices. It's described as a "Price-Weighted Index". Similarly, the S&P is described as a "Market-Cap Weighted Index" ... presumably because its calculation requires you to add all the Mkt Caps. I've always felt that describing these Indexes as "Weighted" was misleading. Perhaps that's because I was thinking "Weighted Averages". Perhaps that's the result of creeping senility. Anyway, now I'm happy. I see that the Gains are weighted averages - even if the Indexes aren't. Besides my confusion over the use of the adjective "weighted", I've always been annoyed at the use of a Sum of Prices to generate an Index. I imagine Berkshire-Hathaway as being a component of a 31-stock DOW. It's weight would be obscene. It'd generate 99% of the value of the Index. On the other hand, as the component of a 31-stock "Mkt-Cap Weighted" DOW, it's weight would be respectable.

 

Holy Books

I am often appalled, surprised and/or confused by conflicting passages from various Holy Books ... in particular the Bible and the Qur'an. I 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." Yet, I read here: "So when you meet in battle those who disbelieve, then smite the necks until when you have overcome them" Then I read [35]: "For I have come to set a man against his father, and a daughter against her mother, and a daughter-in-law against her mother-in-law; and a man's foes will be those of his own household. " Then I read [44]: "Love your enemies, bless them that curse you, do good to them that hate you, and pray for them which despitefully use you, and persecute you" Perhaps the only passage I fully understand is this one: that a husband is the head of the family and may beat his wife if she is disobedient. Though I often mention this divine edict to my wife, she just laughs ... and I fear I may be beaten if I persist.

 

Metric

Sometimes I wonder about this metric system, especially for temperatures. I see it's gonna be 27 degrees Celsius and wonder how hot that's gonna be. So I convert and get about 81 degrees Fahrenheit ... and I'm happy. Then I wonder how many countries are metric and how many ain't and find this map: Mamma mia! We is not alone!!

 

Veterans' Week: Nov 5 - Nov 11

In Flanders fields the poppies blow Between the crosses, row on row, That mark our place; and in the sky The larks, still bravely singing, fly Scarce heard amid the guns below. We are the Dead. Short days ago We lived, felt dawn, saw sunset glow, Loved, and were loved, and now we lie In Flanders Fields. Take up our quarrel with the foe: To you from failing hands we throw The torch; be yours to hold it high. If ye break faith with us who die We shall not sleep, though poppies grow In Flanders Fields. Lt.-Col. John McCrae (1872 - 1918)

Obama

Okay, so a couple of Democratic states went Republican ... as measured by the state governors. I'm not sure how a state's gubernatorial party relates to support for the White House. So I look at the situation when Obama won the White House: After exhausting exhaustive analysis, I conclude that the correlation is 45.678%. Jest kiddin'

 

Chandelier

One of our sons works for Harper's Bazaar. In his spare time he makes chandeliers (among other things). That may not seem so unusual, but they're made of paper clips ... thousands of 'em. This morning, he wrote to say that the Royal Ontario Museum will exhibit one.

 

same-sex marriage

Maine has defeated the same-sex marriage law that recently came into effect. So I wondered what worried those opposed to the law. I can understand the opposition on religious grounds. But then I read: "Same-sex marriage could be taught in schools. Teenagers will be encouraged to experiment with their sexuality. Same-sex marriage will become widespread. Gay marriage would undermine western civilization. Marriage is for pro-creation. (Does that mean couples should get divorced after a hysterectomy?) --------------------------------- Heidi and I recently stayed at a lodge ... where you don't gotta cook meals. They feed you. The owners (who did the cooking, etc.) are fantastic ... and gay. They adopted two great kids (who are now teenagers). I suspect they'd find the above concerns hilarious. Uh ... on second thought, they'd find them sad. --------------------------------- In The Netherlands, Belgium, Canada, Spain, Norway, and Sweden, same-sex marriages have the same status as opposite-sex marriages. In the following countries, something "similar" to same-sex marriage exists: Andorra, Australia, Colombia, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Israel, Luxembourg, New Zealand, Portugal, Slovenia, Switzerland, the United Kingdom, and Uruguay. Click!

 

Photons

I just finished a book (SciFi) where particles magically turn into light ... that is, photons. That got me thinking ... a rare occurrence, it seems. I wondered if'n one could "see" the light generated. I think the answer is no.

 

Swine Flu

Heidi & I just got our annual flu shots ... the "regular, seasonal" type. So now I wonder about getting the H1N1 shots (which will be available in a few days). So (as is my wont), I google and discover the following: ---------------------------------- There was a flu outbreak a few years ago as well as cases of Guillain-Barré Syndrome (GBS) which may (or may not) be associated with the vaccine. In 2005, the CDC reported that "available evidence neither proves nor disproves a causal relation between [the vaccine] and GBS". The CDC also notes that the "limitations of the data indicating a small risk for GBS" would not change their recommendations (to take the vaccine). That's not too comforting. ---------------------------------- About the current H1N1 pandemic: "Pandemic" only means it spreads fast, world wide. It has nothing to do with its severity. Indeed, only about 5000 people have died as of this writing: Oct, 2009. The usual "seasonal flu" kills over 250,000 people each year. An earlier definition of pandemic included widespread death. That's been dropped - which is convenient, 'cause "fast track" vaccines are justified by having a pandemic. In Australia, the flu season is ending. Australia has a population of (about) 22 million. There have been 186 deaths. In New Zealand, they predicted 18,000 deaths from swine flu, but at the end of the flu season, it was 17. On the other hand, the 1918 "Spanish Flu" (also an H1N1 variety) killed more than 50 million people, worldwide. Is the current H1N1 like that? The H1N1 virus was detected in the March, 2009. ** Vaccination will begin in the Fall of 2009. Ain't that a mite hasty? Cancer-fighting drugs (for example) take years to go through clinical trials. There's phase I trials, followed by phase II followed by phase III. Mamma mia! I know this 'cause, once-upon-a-time, I followed biotech stocks and invested in an outfit that was designing cancer drugs. I eventually sold the stock ... years later. A study to note the affects of the H1N1 vaccine on HIV subjects will NOT be done until late October, 2009! Clinical trials only began (for some vaccine manufacturers) in August, 2009. H1N1 trials will continue while the vaccinations take place ! "... such factors as optimal antigen content, appropriate dosing regimens, vaccine safety profiles and the interchangeability of H1N1 vaccines from different manufacturers are unknown ..." That's not too comforting. In 2006, in the U.S., the Public Readiness and Emergency Preparedness Act gave the Department of Health and Human Services Secretary the power to grant almost complete immunity for those who make vaccines. That is, vaccine manufactures will not be held liable for any injuries. That's not too comforting. Vaccine manufacturer GlaxoSmithKline has actually stated: "Clinical trials will be limited, due to the need to provide the vaccine to governments as quickly as possible. Additional studies will therefore be required and conducted after the vaccine is made available." And WHO likewise says: "Time constraints mean that clinical data at the time when pandemic vaccines are first administered will inevitably be limited. Further testing of safety and effectiveness will need to take place after administration of the vaccine has begun." That's not too comforting. And what about the mysterious adjuvants (to decrease the required supply of vaccine)? Click! And what about mock-up vaccines for fast-track approval? ** March, 2009? So will we take the H1N1 vaccine? We're thinking ... But then, we is in that Old Folk category, eh?