I'd talked about Darvas Boxes (tho' they is really gummy boxes, 'cause they don't follow all the Darvas Rules)** ... and I figured Darvas was just plain lucky. He happened to find stocks that were "on a roll" in a rising stock market and made a bundle. I then had to stick this into that writeup, pointing out that I (accidentally) happened upon a stock that went bananas. Namely this guy: Now if only I could find a few more I could make that $2M like Darvas. 'course, he traded on margin. Uh, let's see ... how about solar panels or maybe some lithium or maybe I should check out penny stocks... Markets can remain irrational longer than you can remain solvent. John Maynard Keynes **However, I did try to mimic Darvas more closely, here.

 

Correlations

Somebuddy wrote to mention the interesting correlations between various futures. For example, this one which involves gasoline prices. It seemed too slick to be true, so I wandered about and found other neato comparisons. For example: There's a fun spreadsheet here.

 

Darvas revisited

I was playing with that Darvas stuff, typing in a stock symbol, clicking a button, typing in another stock symbol, clicking a button, etc. etc. Since I wanted top see how good (or lousy) that Darvas thing was, I needed a spreadsheet that'd allow me to type in a few dozen stock symbols, then just click, click, click to get the collection of Darvas boxes** ... like this: click! click! etc. etc. etc. So I've added that spreadsheet, as described here. ** Since these "boxes" don't follow all the rules for "Darvas" boxes, I reckon they're "gummy" boxes.

 

Darvas Boxes

Richard C. writes and asks about Darvas Boxes. As usual, I ain't never heard of 'em before. So I browse a bit and find that it's the brainchild of former ballroom dancer Nicolas Darvas (in 1956 ) and has something to do with stock prices trading in a narrow range ... for a while. For example: Microsoft, over the period Nov 18/09 - Dec 16/09): The variation is about 3%. So I draw a rectangle identifying the range. Then I see what happens after that. See? The price breaks out of the rectangle and (I guess?) one should buy the stock. "I guess", 'cause I don't know much about these Darvas Boxes. Did I mention that I ain't never heard of 'em before? P.S. I reckon the stock can break out down as well as up. There's a spreadsheet to play with. Click! See if you can find neat Boxes. ... especially recent ones. Here's a recent one (Walmart): Let's see what happens next, eh? The spreadsheet looks like this. --------------------------------------------------- P.S.

 

Happy Geng Yin

 

Back to the Future

I don't believe in any of the (financial) stuff I write about on gummy-stuff, but it's often quite amusing if not downright entertaining. However, I'm quite surprised at how well the "Predicted Future" has done for my brother-in-law's stock ... so far: Of course, the problem with predicting the next month, starting today, is that ya gotta wait for a month to see if'n it was a reasonable prediction ... or not. So I thought it'd be neat to pretend that "today" is, say, a year ago. Then we can actually see the subsequent month and how well or poorly the "Predicted Future" was. For the DOW (moving back a year or so), I got this: and this (back another year) and this (back another year) Conclusion? Pretty lousy, I'd say ... but entertaining, eh? Want to be entertained? There's a clutzy (and too large) spreadsheet here: testing-1-2-3 I should mention that, sometimes, it ain't bad. Here's Microsoft (pretending that "today" is about 3 years ago):

 

Climate, not weather

This is hilarious: Does anybody really believe that one-day weather events (or one century or one millenium) can prove or disprove global climate change? Remember this guy? (Click on the picture.) re Climate change deniers: Which is more humorous? Their arguments or their antics. Al Gore may have placed too much emphasis on the (human) cause of climate change, but not the fact. I'm often tempted to analyze recent weather patterns using Mean and Volatility a la stock market analysis.

 

Sanctions?

I must be gettin' feeble-minded, 'cause I don't understand economic sanctions (imposed on a country with a nasty dictator). I understand that some 85 sanctions were imposed by the U.S. in the period 1996-2001 (and many more, recently, by the U.S. and Canada ... among others). Do they cause political change? Hardly. Did the Iraqis rise up against Saddam Hussein? Hardly. How about the dictator. Is he hurt? One of Hussein's palaces Indeed, innocent people are hurt. Who do they blame? Their evil leader? No, it's the countries that impose the sanctions. But U.S. companies (for example) lost $billions because of the 1996-2001 sanctions, so they were hurt. In 1996, when former American secretary of state Madeleine Albright was asked on 60 minutes if she thought the death of half a million children (as a consequence of the Iraq sanctions) was a price worth paying, she replied: "This is a very hard choice but the price, we think, is worth it." So, why are sanctions the first (only?) tool employed? Are they "feel good" policies? Canadians (I'm sure) feel satisfied that something has been done to demonstrate our displeasure ... then we go back to watching the hockey game on TV. Maybe I'm gettin' old, but carrots seem better than sticks.

 

Super Bowl

We don't (usually) watch hockey, baseball, football ... except for the Stanley Cup, World Series and, of course, the Super Bowl! For sentimental reasons (linked to Katrina), Heidi & I were cheering for New Orleans. We weren't alone. Click! When the Saints go marchin' in ...

 

SWRs

Having brought up the subject of Safe Withdrawal Rates here, I reckon I should amplify my thoughts. Historically, a portfolio of U.S. stocks would have lasted at least 30 to 40 years had you withdrawn 4% of your initial portfolio, increasing each year with inflation. That's a worst case scenario. Click. For example, an S&P500 portfolio would last 40 years if the withdrawal rate were anywhere from 4% to over 12%. But that'd depend upon when you started withdrawing! Note the "worst case" SWR. It's about 4%. So is the infamous 4% rule useful? Indeed! When you're young and figure you'd need to withdraw $A each year, at retirement, how large should your portfolio be? You should try to achieve a portfolio of $25A. That way, A is 4% of your retirement portfolio, eh? Aah, but at retirement, you should ignore the 4% and make sensible withdrawals. Anyway, that's my position and I'm stickin' with it! ------------------------------------- P.S. To see the possible variations in future S&P portfolio values, we can select random monthly returns from the 1950s, 1960s, etc. and generate a 120 month portfolio: Scary, eh?

 

SUVs

So we discuss trading in our old KIA Sportage for a newer SUV. So I surf the Net (my favourite exercise). So I find a plethora of choices!! Mamma mia! Then, in Canada, fuel efficiency is measured in Litres per 100 km. I have no idea whether 10 is good or bad. I'm accustomed to miles per gallon ... and that means Imperial (U.K) gallons. So I gotta make me a conversion thing. Heidi picks this one: VOLCANO RED?! That's another Mamma mia!

 

The youngest - the last

The good thing about being the youngest of six children is having your older siblings to lean on. The bad thing is being the last to go. Joe Ponzo: Dec, 1927 - Feb, 2010

 

pillow stock

Some time ago (when I used to visit several financial discussion forums), estimating how long a portfolio would last if you withdrew $X each year, and what percentage withdrawal rate was "safe" ... that was a hot topic of discussion. Maybe it still is (?) Anyway, I spent far too much time on SWRs. Typically, one looks at the past, extracts a few convenient numbers (average returns, volatility, asset allocation, etc.) then extrapolates into the future. Anyway, I happen to run across one of them spreadsheets (and sobbed at all the time I wasted), then thought of an interesting question: How would your portfolio compare to putting your money under a pillow? Well, it was interesting to me. So I decided to compare a stock portfolio with putting the money under a pillow. With each "portfolio", I withdrew just enough each month so the "pillow stock" would run out in 10 years. That meant 120 withdrawals, each being 1/120 of the initial portfolio. Example: Start with $120K and withdraw $1K per month for 120 months, eh? I repeated this with the stock portfolio, calculating the final portfolio (after 10 years) as a percentage of the original. This is what I got (for DOW stocks): CATerpillar ended up with 218% of the initial portfolio !! (CSCO lasted just 36 months.) The other DOW stocks didn't make it. The DOW itself barely made it. Now, ain't that interesting? I might point out: For the 10 years ending in Feb, 2005, a CSCO portfolio ended UP over 700% !!! Have I mentioned that the future is a perfect replica of the past? P.S.

 

CBQ

A couple of weeks ago I fired up that neat spreadsheet that found the "best" match between the current month and some historical month and (for Gerry) predicted the future behaviour of a BRIC ETF. Of course, there was a smiley attached to the prediction: Okay, so here's the prediction (on Jan 22) and what actually happened over the past few days: The prediction is for one UP day followed by four DOWN days ... good, eh? The future is an image of the past, right? I explained that the values ain't right 'cause electrons have been escaping from my PC:

 

Yahoo options

Every once in a while, Yahoo changes things: URLs, symbols etc. Recently, I've been getting e-mails complaining that a certain spreadsheet (that downloads option data) isn't working. So I try to fix it ... in vain. Then I read this (from the Yahoo web site): Note: The consolidation of changes in options symbology will happen over a period of time from Jan 2010 to May 2010. Note the time period: Jan, 2010 to May, 2010. I reckon I'll wait for a month or three before I try again.