I finally got around to checking out WolframAlpha which is an information source that I'm not sure the best way to describe. It is not just a financial resource but if you plug in ticker symbols you will get a lot of information, some of which is the same as other sites but also some unique info (more likely info not available on every finance site) like correlations, mean variance optimization and volatility information.
A reader asked about this over the weekend and in hindsight I misunderstood his question. I only spent a little bit of time on WolframAlpha but it strikes as the type of thing that once learned could offer a lot of utility. At a minimum, time spent plugging in different symbols will give you an idea of how stocks might relate to each other within the portfolio. This sort of subtle stuff is very important if you build your portfolio using stocks and narrow based products. It did seem to have trouble withETF tickers. It recognized the Energy Sector SPDR (XLE) when I entered it with two oil stock ticker symbols.
Maybe we can have a bit of an open thread. If you have used WolframAlpha some and have a few tips please leave comments. Perhaps we can all learn how to use the site together, so to speak.
Ron Lieber at the NY times has an article up about various website services that provide different levels of help to individuals with their portfolios. Presumably the focus of these services is ETFs and index mutual funds. These types of services make me nervous. Generically speaking I cannot envision relying solely on models that determine "ideal" allocations with automated rebalancing. Seeing the forest for the trees, which I think strict adherence to computer models can miss, is very important, IMO.
Did you watch How Bruce Lee Changed the World on the History Channel? I know that he was innovative, had magnetism and influenced many things and obviously I've seen Enter the Dragon a few times but I did not know how far reaching his influence was/is.
A few minutes in, maybe the eight minute mark they had this quote from him;
Adapt what is useful, reject what is useless, and add what is specifically your own.
I'd never heard that quote before but it has applications to many aspects of life including investing. I believe it is similar to a point I have tried to make over the years about taking little bits of process from different places to create your own investment process.
There was also talk about the importance of the journey versus the importance of the destination which I find to be very instructive. In yoga this might equate to being in the moment. Anyone can take from this what they want (which may be nothing) but I think it is good stuff. Investors who can begin to wrap their heads around mental impediments to investing have a better chance for long term success, at least I believe this to be true.
22 comments:
Roger - If you haven't seen it already, you should watch Circle of Iron. The original script was written by Bruce Lee (and James Coburn, I think) under the title The Iron Flute, but it was filmed after his death with David Carradine in what was to have been Lee's role (again). It's meant to be something of a Zen parable.
don't know, but will try to find it. Lee was friends with Coburn so that could make sense.
David Carradine? interesting. like a pre-cursor to his starring in Kung Fu maybe.
Actually, Circle of Iron was released in 1978, which would put it well after Kung Fu. The series was run in the early 70s during Lee's life - at least partially. So the series became pre-cursor to the movie. :-)
Do you like the wolframAlpha site?
Is today a day to emphasize the Random part of the title? :)
i think i like it, it made a good first impression.
part of me thinks it is always a good day for Random
A tad off topic here however recently I have received requests frpom several co-workers, family friends, etc. on how to select a true fiduciary financial advisor. the following was reported by E.F.Moody on the SEC, FINRA and fiduciary:
5/17: News Release
"Finra chief Richard Ketchum is as moronic as SEC chairman Mary Shapiro. Shapiro did all she could before becoming head of the SEC to avoid any fiduciary duty for brokers or firms. Actually, she did about everything she could to stop any broker from knowing anything. I know because I tried for years to get basic investments courses to be required for brokers. Repeated ad finitum, no broker has ever been taught the fundamentals of investing (alpha, beta, diversification, standard deviation, correlation and more). There is nothing on risk. Just in case you missed that, there is nothing on risk. No wonder the messes of 2000 and 2008 occurred. Most all advisers are borderline incompetent and the overseers were asleep at the wheel.
Shapiro also stated that FINRA was a procedural entity, not a substantiative one and not even arbitrators could be taught anything. NASD/FINRA said in the 90's that the brokerage firms would never allow proper instruction since it would slow sales (true). So much for protecting consumers.
Ketchum is the current chairman and chief executive of the Financial Industry Regulatory Authority Inc. and is calling for bringing investment advisers under a self-regulatory organization in order to leverage the ability of the Securities and Exchange Commission to supervise advisory firms. He is now calling for all advisers to adhere to a fiduciary standard.
So, who or what is a fiduciary? In the shortest form, “A fiduciary owes an obligation to carry out the responsibilities with the utmost degree of "good faith, honesty, integrity, loyalty and undivided service of the beneficiaries interest."
Isn’t that wonderful? Don’t you feel all warm and fuzzy? Is your cat purring? Unfortunately it is all a bad joke.
Admittedly, the definition of fiduciary does contain some valid issues but it misses the most critical. Knowledge. Your mother can provide all the elements listed above but you would be dumber than a rock to have her do brain surgery on your daughter. Even your turtle. Doesn’t it seem like the height of hypocrisy to demand the highest duty to consumers when the agents have little comprehension of the fundamentals of investing. Want simple proof? No broker has ever been taught how to use a financial calculator. Over 600,000 ‘fiduciaries’ and none can do a present or future value.
Heed this- Never , NEVER, NEVER GIVE MONEY TO ANYONE UNLESS THEY HAVE AND CAN EFFECTIVELY UTILIZE AN HP 12C CALCULATOR OR SIMILAR
If you or your adviser does not have and cannot use a financial calculator, then he/she does not understand money. You are committing financial/economic suicide when you entrust money to someone who doesn't know how it works.
Pundits will say that personal capability is not necessary. They have a computer and financial software to do the work. As the church lady used to say, “well, isn’t that special”. In a recent case against UBS and a CFP, this is what they ‘computed’. The investors could get a $377,000 after tax return on an asset base of $2,140,000 each year for the next 25 years. This represents returns far above Madoff!!! All completely ‘acceptable’ simply because it came out of a computer and ‘that it must be right’. Just plain terrible but nobody checked any of the numbers.
Want more absurdity about duty? AIG was picking up billions in bailout funds while at the same time- with complete acceptance by the SEC, FINRA and all 50 states- it was legally illustrating to consumers through backtesting that it was possible to get 17.53% return each year for at least the next 50 years. Another Madoff and nobody has blinked an eye.
Ketchum notes that Finra would need to add investment advisory expertise to its staff to oversee the advisory industry. Well, they can also add the Silver Surfer for all I care since, as stated over and over, advisers/brokers et al are not taught risk. And they are going to sit around with a bunch of attorneys discussing what? Golf scores? Whatever it is, it is not going to be how to make the industry better (knowledgeable) through education since they don’t have anyone that could teach it anyway. Shapiro had made it very, very clear that FINRA would not make any attempt to educate and Ketchum is going to be no better.
There has been billions of dollars lost through the complete ineptness, stupidity and gross incompetence of the securities regulators. The SEC is a lost cause under Shapiro. Yes, you will see more ‘investigations’ but what can you expect in the end when the regulators cannot do basic financial calculations.
Ketchum wants to introduce a fiduciary duty to advisers where 95%+ have never been taught the fundamentals of investing. Most cannot spell fiudcari."
A video providing an overview of Wolfram/Alpha by its creator is available at http://tinyurl.com/q735x7
It's more than a search engine, that's for sure, but then the same thing could be said about google.
Now what is the sound of useful, eh grasshopper?
Would Master Po ask "when is a search engine not a search engine?"
Indian markets shot up 17% yesterday on news of the election result, and have been choppy but still in positive territory today.
Roger, I know India isn't on your radar at the moment; is there a particular reason why not and what would change this?
Wolfram has a really great quote page with unique value added.
It doesn't seem to recognize etf's, and when it does, the same info is offered as for stocks. Of course, this is nothing new... most of the major sites (Bloomberg, Yahoo, MSN etc.) are that way. You would think one would get on board and create a custom ETF quote page with more relevant info. ETFConnect is the site I use.
the story in China has a big component of modernization and building of cities and infrastructure. China is very committed to this which will help the Chinese people live better lives.
India does not seem to have the same commitment. Maybe this is just perception.
Thanks Roger, China's growth does look more sound.
Also Sterling is looking strong and has been given a thumbs up by many - would you consider UK equities or currency from here?
And thanks for all the great advice. The benefits of experience, given impartially in a adult, intelligent manner, seem to be very, very rare in this industry.
"Expecting the world to treat you fairly because you are a good person is like expecting the bull not to charge you because you are a vegetarian."
- Harold Kushner
Roger,
I've been reading your posts for most of 2009 and find them very educational. Thank you for your incredibly insightful blog. I'd like to know your thoughts on the energy sector, and energy service companies. I don't recall reading any recent posts on this sector.
Max
That thought ties into the election. The theory goes that the India population recognizes the massive corruption and the need for huge infrastructure investments. The election and its sweeping change is supposed to be a step in the right direction.
That said, they are a long way from being China.
Great post by Mish today...I would be adding short positions this rally is about over unless the fed continues to purchase futures into the close.
http://globaleconomicanalysis.blogspot.com/2009/05/effect-of-household-deleveraging-on.html
Hey Roger. Thanks for the tweet on Mebane's book excerpt. I followed the links through and I'm blown away--his proxy for foreign stocks (VEU) is poking above the 200 dma. Personally, I've been adding some emerging market exposure, but I've been very suspect of foreign developed markets, believing that most were in worse shape than the US. I suppose one could be picky and argue that the 200 dma is still sloping down, but I'd better at least start paying closer attention.
Roger:
Glad you looked at the Wolfram engine and found it useful. I found it bogged down with more than three stock entries (I was comparing GSK,NVS, and JNJ wih a fourth stock. Also found it was not as intuitive as Steve's video would have you believe. I was trying to investigate helium as a theme ( diminishing supply, limited producers, unique properties for cooling equipment). It either is too stupid to understand the request or had blocks on the information. Same result with uranium supplies and manufacturers. i found the correlation analysis useful and the random walk results interesting, but not informative. I will be using it to look at the effect of a stock on portfolio volatility and returns relative to another sector selection, not for absolute returns. I believe that you are correct and have followed your advice on the most important decision is when to be in or out, and having an operating discipline for making that decision, then defining what you want to own to get to your goals.
Sam
http://tinyurl.com/q37g6e
I found the above on Wolfram.
Roger- I know you are interested in the alternative space, attached is a link to an article describing 3 new funds (hedge like).
http://news.morningstar.com/articlenet/article.aspx?id=292231
Roger,
thanks for the wolfram site. Very usefull on daily returns analysis, since I do lots of day trade. Like to thank RW about Elizabet Warren lecture, it hit home. In late '80 big '90 I was in a situation facing divorce, making 200k yr spending 300k and living in a church loft as a sexton in order to see my kid and have a place to sleep. Worked on a regular job and at night clean up chuch, soup kitchen for the homeless and night guard for the church complex. Well I never experience such holoucust in my life. If I was in a civilized country, that would have never happened. Today, in italy do not have worry about medical care since medical system is socialized, and live in a more friendly social setting. Hope that God protects those that are in such situation.
Jeff from Milan Italy
200k lira - that was about 12 bucks, right?
Anon 07;29 had the most compelling post I have read in years and drew no comments. That is sad. Whoever you are, thank you for the time and effort of your composition.
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