Feb

1

Once upon a time, a fellow trader kindly tipped the way to put '+' signs into excel numbers, which inspired one to pass along the following:

Rounding Numbers to Millions

To round numbers to millions:

1. Press Ctrl+1 to open the Format Cells dialog box.
2. Select the Number tab, and from Category, select Custom.
3. In the Type box, enter the following Custom Formatting syntax:
#,##0,, ;[Red](#,##0,,);- ;

Result:
Original number: 5,645,625
The displaying formatted number: 6

Note: The number formatting syntax is: Positive; Negative; 0; Text

No doubt this will give that trendy 'white space' look of many a Spec's balance sheet.

Feb

1

I am not promoting this company and I am not blogging for it.

But I do own a snitzel and see that it is 6.75. Are there any comments as to the phoenix-like rise of the stock from here?

I know that KKR invested 700MM in a convertible bond. I read that this was done to avoid a possible takeover of the company.

Do they have a viable business model now that McNealy has given up the reins?

Feb

1

Harvard psychologist, Steven Pinker, wrote in a recent issue of Time magazine (The Mystery of Consciousness):

… Take the famous cognitive-dissonance experiments. When an experimenter got people to endure electric shocks in a sham experiment on learning, those who were given a good rationale ("It will help scientists understand learning") rated the shocks as more painful than the ones given a feeble rationale ("We're curious.") Presumably, it's because the second group would have felt foolish to have suffered for no good reason. Yet when these people were asked why they agreed to be shocked, they offered bogus reasons of their own in all sincerity, like "I used to mess around with radios and got used to electric shocks." …

One sees echoes of this in the macroeconomic analyst or trader who manipulates incoming information to fit a preexisting view/position.

Feb

1

Last week, the New York Times had a good article on Magical Thinking.

… Psychologists and anthropologists have typically turned to faith healers, tribal cultures or New Age spiritualists to study the underpinnings of belief in superstition or magical powers. Yet they could just as well have examined their own neighbors, lab assistants or even some fellow scientists. New research demonstrates that habits of so-called magical thinking - the belief, for instance, that wishing harm on a loathed colleague or relative might make him sick - are far more common than people acknowledge …

In another experiment, the researchers demonstrated that young men and women instructed on how to use a voodoo doll suspected that they might have put a curse on a study partner who feigned a headache. And they found, similarly, that devoted fans who watched the 2005 Super Bowl felt somewhat responsible for the outcome, whether their team won or lost …

Feb

1

The first blow is half the battle. There is so much drift in stock prices that it's hard to do a good seasonal study, especially since there are numerous possible comparisons and only a small number of years to reep profit. With the best of intentions, I decided to do a proper seasonality study on a going forward basis using prospective information only, which is the only way to do a seasonal study and develop some confidence in it. I decided to handle January in a similar fashion in honor of the mumbo about neural et al since I saw that similarities gave the same results as neural in all cases, but are duplicatable and understandable. This year, January was up 1.4 %. I figured I'd take all the years that had a January of within a 1.5 % range of that and look at the moves in the next three Feb. and the next three January months end to year end. Then I would compute a running total and use that running total to predict the next occurrence. But the best laid plans often go astray. There were only six Januaries with a chance of anything around 1.5% since 1959. The problem is that January is a wild month with many 5 to 10% moves and more. These six Januaries were as follows, with moves the next month and the next 11 appended.

Year Jan. Move Feb. Move Jan. End - Year End
1968 0.5 -1.8 -11.5
1972 1.8 2.5 13.8
1986 0.2 7.1 7.5
1993 0.7 1.0 6.1
1998 1.0 7.0 26.0
2004 1.7 1.2 7.2
Avg.   2.8 4.3

 

No prospective tests are possible because of the paucity. However, the 2.8 % move in Feb. looks about 5 in 100 by chance, which the artful simulator will vet. tomorrow morning.

Steve Wisdom writes:

Previously, Vic wrote that there were only six Januaries with a change of anything around 1.5% since 1959. The problem is that January is a wild month with many 5% to 10% moves and more. Below displays a stem & leaf of January % changes in SPX, since 1959. As suggested by Chair, there are several moves >10%.

-7 | 72
-6 | 92
-5 | 10
-4 | 64
-3 | 8
-2 | 750
-1 | 8760
-0 | 98
0 | 2457
1 | 0478
2 | 457
3 | 33335
4 | 000129
5 | 8
6 | 13
7 | 148
8 |
9 |
10 |
11 | 8
12 | 3
13 | 2

Alston Mabry adds:

“The problem is that January is a wild month with many 5% to 10% moves and more.”

If you look at each January move (S&P cash, 1959-2007) as a z-score using the mean and sd of the previous 12 months, and then create a histogram with steps of .25, you get a distribution with a somewhat different "balance":

z / frequency
-3.39 1
-3.14 0
-2.89 0
-2.64 0
-2.39 1
-2.14 1
-1.89 1
-1.64 3
-1.39 3
-1.14 2
-0.89 0
-0.64 2
-0.39 2
-0.14 2
+0.11 4
+0.36 5
+0.61 4
+0.86 3
+1.11 4
+1.36 1
+1.61 2
+1.86 4
+2.11 1
+2.36 2
+2.61 0
+2.86 1

 

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