Posts filed under “Mathematics”
I love this debate between the idea of Tobin’s Q-Ratio as th be all for valuation analysis. It is embodied between Smithers & Co. quoted in this scary BBRG article and Pragmatic Capitalism’s Cullen Roche.
Here is PragCap:
“Better yet, look at the number of times this ratio has been cited during the most recent bull market as a reason to exit stocks:
- In November of 2009 Smithers said equities were 40% overvalued (see here also).
- In December 2010 Smithers said equities were 70% overvalued.
- In March of 2012 Smithers said equities were 50% overvalued.
- And now we hear the citation about an 80% overvaluation.
At least he is consistent!
Let me remind readers of the folly of Single Variable Analysis . . .
Single vs. Multiple Variable Analysis in Market Forecasts (TBP, May 4th, 2005)
When Correlations Lie (Bloomberg View June 27, 2014)
Salil Mehta is a statistician and risk strategist. He served for two years as Director of Analytics in the U.S. Department of the Treasury for the Administration’s $700 billion TARP program. Salil is on the Editorial Board for the American Statistical Association, is a Chartered Financial Analyst, a fellow member of the American Statistical Association and…Read More
There was some pushback on yesterday’s rather tame suggestion that the U.S. properly finance the fund that pays to maintain and repair our roads. Much of the correspondence was surprising. Then again, I am continually flabbergasted by the cognitive errors that the human brain can make. It’s a marvelously designed piece of wetware that does a…Read More
We’re down to the Final Four in this year’s iteration of March Madness, also known as the national collegiate basketball tournament. Our earlier discussion of “The March Madness Theory of Investing“ didn’t sit well with some readers. The lessons we sussed out from the bracket-destroying results included home-country bias, how expert forecasts are about as good as those…Read More
Salil Mehta is a statistician and risk strategist. He served for two years as Director of Analytics in the U.S. Department of the Treasury for the Administration’s $700 billion TARP program. He is the former Director of the Policy, Research, and Analysis Department in the Pension Benefit Guaranty Corporation. Salil is on the Editorial Board for the…Read More
As one of those folks who has spent a lot of time bashing economic and stock-market forecasters (see this, this, and this), I have no choice but to take issue with an argument made by former hedge-fund manager Jesse Felder, who asserts “that everything is a forecast.” To quote Felder: Can we please stop bashing forecasters already? There is a…Read More
Earlier this week, Greg Zuckerman of the Wall Street Journal pointed out one of the great mysteries of today’s investment landscape: Despite underperforming by a substantial margin, hedge funds keep attracting more investors and assets under management. It is almost as if (to borrow the headline on Zuckerman’s article), “Hedge Funds Keep Winning Despite Losing.”…Read More
Broadcaster and physicist Brian Cox recently explained why the discovery of the Higgs particle was so amazing.
“We sort of do know what the fuck is going on at some level with subatomic particles,” he said on the Joe Rogan Experience podcast. “If you look to the LHC — the Large Hadron Collider — which is the place where we generate the highest energy, so it is the biggest microscope in the world in that sense, we have an extremely good understanding of the laws of physics at that level, up to and including the discovery of the Higgs particle.”
Brian Cox excitedly explains the unreasonable effectiveness of math