Words That Changed the World From Biblical Times

Words That Changed the World From Biblical Times

From Biblical times to the present, these documents have shaped our history

Code of Hammurabi, c. 1750 B.C: one of the oldest known legal codes, it lays down the principle of “an eye for an eye”.

c. 1000 B.C. – Old Testament: Written in Hebrew and Aramaic.

100 – New Testament: The 27 writings, with the Jewish Old Testament, make up the Christian Bible.

313 – Edict of Milan: From Roman emperors Constantine and Licinius. Grants toleration and equal rights to all religions.

c. – 650: Koran (Quran): Revelations given to the prophet Muhammad by Allah instructing believers in the proper way to live.

1215 – Magna Carta: Signed by English King John. The basis of constitutional government, it guarantees due process and trial by jury.

1517 – Ninety-five theses of Martin Luther: Challenged the excesses of the Roman Catholic Church and led to the Protestant Reformation.

The winter is coming, and the mankind knows it. Photo by Elena

1776 – U.S. Declaration of Independence: Declares the independence of the American colonies from the rule of Great Britain

1787 – U.S. Constitution: Lays down the rules for a democratic republic.

1789 – Declaration of the Rights of Man and of the Citizen: Approved by the French Assembly. It summarizes the ideals of the French Revolution.

1791 – U.S. Bill of Rights: The first 10 amendments to the Constitution. Guarantees freedom of speech, religion, assembly, and press.

1804 – Code Napoleon: Issued by Napoleon Bonaparte. Forms the basis of modern French civil law.

1848 – Communist Manifesto: By Friedrich Engels and Karl Marx. Ending with the line “workers of the world unite”, it calls for a worldwide revolution leading to a classless society.

1862 – Emancipation Proclamation: President Abraham Lincoln ends slavery.

1905 – Albert Eistein’s Theory or Relativity: Presented in four articles. A new way of understanding motion, time, and energy. Introduces the formula e= mc2.

1918 – Woodrow Wilson’s Fourteen Points: Stressing “open covenants of peace, openly arrived at,” the document sets forth Wilson’s program for world peace after World War I.

1925 – Mein Kampf: Written by Adolf Hitler. Outlines the idea of creating an Aryan state for the “chosen people.” Hitler’s later attempt to implement his plan results in the death of 6 million Jews.

1931 – Statute of Westminster: Grants autonomous government to Great Britain’s former colonial possessions, creating the British Commonwealth.

1945 – United Nations Charter: It created a new international organization that aimed to maintain peace and security in in the world.

1948 – Universal Declaration of Human Rights: Approved by the U.N., it declares freedoms and rights of a common state, an achievement for any all peoples and all nations.

1962 – 1965 – Second Vatican Council: Modernizes Roman Catholic practice.

1973 – Roe v. Wade: The Supreme Court says the 14th amendment gives women the power to terminate their pregnancies.

All of us, we come from the Biblical times... Photo by Elena

Larry Stefon Park

Larry Stefon Park in Toronto Downtown

Larry Sefton Park, in memory of their great friend. 

Larry Sefton Park was built and donated to the city of Toronto by members of the United Steelworkers of America. Larry Sefton was a compassionate, generous and courageous man whose was that people should have the opportunity they require to enrich the human spirit in everyone. He brought the love for his family and friends to every task that meant a better life for someone. As a union leader, he practiced his creed of helping others. 

Larry Sefton Park celebrates what he devoted his life to achieve: public recognition of working people and their unions, co-operation of friends from many places toward a common commitment they share, and the appreciation of the vital unity of mankind and nature.

For 20 years as director of district 6 of the steelworkers union, Larry Sefton was an inspiration to thousands of union members in Canada and elsewhere. The many privileged to have known him have contributed to keep his goal alive: organizing, building, and improving the world in some way every day. “No greater faith hats any man”

On June 21, 1936 in Hamilton, Ontario, the Canadian section of the steelworkers organizing committee was born with a dream of social and economic justice for working people. Renamed the USWA in 1942, it became one of the world`s largest unions, embracing over a million workers.

This plaque was erected in commemoration of the USWA`50th anniversary and the outstanding accomplishments of its members. (Leo W. Gerard, Director, District 6; E. Gérard Docquier, National Director; Lynn R. WilliamsInt-l President. Cast of members of local 6363 USWA and Neelon casing ltd., Sudbury. Mourn for the dead, fight for the living.

United Steelworkers of America. Photo by Elena

Mourn for the dead, fight for the living. Photo by Elena

The plaque erected. Photo by Elena

The Verdict on Market Timing

The Verdict on Market Timing

Many professional investors move money from cash to equities or to long-term bonds based on their forecasts of fundamental economic conditions. Indeed, several institutional investors now sell their services as “asset allocators” or “market timers.” The words of John Bogle, chairman of the Vanguard Group of Investment Companies, are closest to my views on the subject of market timing. Boggle said: “In thirty years in this business, I do not know anybody who has done it successfully and consistently, nor anybody who knows anybody who has done it successfully and consistently. Indeed, my impression is that trying to do market timing is likely, not only not to add value to your investment program, but to be counterproductive.”

Bogle’s point may be very well illustrated by an examination of the different charts showing the percentage of total assets held in cash of all equity managers funds from 1970 to 1989. They show that mutual-fund managers have been incorrect in their allocation of assets into cash in essentially every market cycle during the seventies and eighties. Note that caution on the part of mutual-fund managers coincides almost perfectly with trough in the market. Peaks in mutual funds’ cash positions have coincided with market trough during 1970, 1974, 1982, and the end of 1987 after the great stock-market crash. Conversely, the allocation to cash of mutual-fund managers was almost invariably at a low during peak periods in the market. Clearly the ability of mutual-fund managers to time the market has been egregiously poor.

Obviously being “out of the stock market” during a period of sharp decline, such as October 1987, would have saved you a lot of grief and money. We all hear of those “astute” few who “knew” the market was too high in early October and sold out. But unless those timers got back into the market right after the lows were hit, they were not more successful than investors who followed a “buy-and-hold” strategy. And the facts suggest that successful market timing is extraordinarily difficult to achieve.

Sergeant Ryan Russel parkette, Toronto. Photo by Elena

Remember, over the past forty years the market has risen in twenty-six years, been even in three years, and declined in only eleven. Thus, the odds of being successful when you are in academic study by Professors Richard Woodward and Jess Chua of the University of Calgary shows that holding on to timing because your gains from being in stocks during bull markets far outweigh the losses in bear markets. The professors conclude that a market timer would have to make correct decisions 70 percent of the time to outperform a buy-and-hold investor. I’ve never met anyone who can bat .700 in calling market turns.

Another example of the difficulty of market timing is provided by two covers from Business Week, one of the most respected business periodicals. On August 13, 1979, when the S&P Index stood at 105, Business Week ran a cover story on the “The Death of Equities,” and on May 9, 1983, after a 60 percent rise in the market, they ran another cover story, “The Rebirth of Equities.” The economist and highly successful and highly successful investor John Maynard Keynes rendered the appropriate verdict more than fifty years ago:

We have not proved able to take much advantage of a general systematic movement out of and into ordinary shares as a whole at different phases of the trade cycle… As a result of these experiences I am clear that the idea of wholesale shifts is for various reasons impracticable and indeed undesirable.

Most of those who attempt it sell too late and buy too late, and do both too often, incurring heavy expenses and developing too unsettled and speculative a state of mind, which, if it is widespread, has besides the grave social disadvantage of aggravating the scales of the fluctuations.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.

The Middle of the Road: A Personal Viewpoint

The Middle of the Road: A Personal Viewpoint

Let’s first briefly recap the diametrically opposed viewpoints about the functioning of the stock market. The view of most investment managers is that professionals certainly outperform all amateur and casual investors in managing money. Much of the academic community, on the other hand, believes that professionally managed investment portfolios of stocks with equivalent risk characteristics. Random walkers claim that the stock market adjusts so quickly and perfectly to new information that amateurs buying at current prices can do just as well as the pros. Thus the value of professional investment advice is nil – at least insofar as it concerns choosing a stock portfolio.

I walk a middle road. I believe that investors might reconsider their faith in professional advisers, but I am not as ready as many of my academic colleagues to damn the entire field. I believe that investors might reconsider their faith in professional advisers, but I am not as ready as many of my academic colleagues to damn the entire field. While While it is abundantly clear that the pros do not consistently beat the averages, I must admit that there are exceptions to the rule of the efficient market. Well, a few. While the preponderance of statistical evidence supports the view that market efficiency is high, some gremlins are luring about that harry the efficient-market theory and make it impossible for anyone to state that the theory is conclusively demonstrated Finding inconsistencies in the efficient-market theory became such a cottage industry during the late 1980s, that I will devote a few word to an analysis of the market anomalies that have been uncovered.

Moreover, I worry about accepting all the tenets of the efficient-market theory, in part because the theory rests on several fragile assumptions. The first is that perfect pricing exists. As the quote from Paul Samuelson indicates, the theory holds that, at any time, stocks sell at the best estimates of their intrinsic values. Thus, uninformed investors buying at the existing prices are really getting full value for their money, whatever securities they purchase.

The secret of getting ahead is getting started (Mark Twain). Photo by Elena

This line of reasoning is uncomfortably close to that of the “greater-fool” theory. We have seen ample evidence that stocks sometimes do not sell on the basis of anyone’s estimate of value (as hard as this is to measure) – that purchasers are often swept up in waves of frenzy. The market pros were largely responsible for several speculative waves from the 1960s through the 1980s. The existence of these broader influences on market prices at least raises the possibility that investors may not want to accept the current tableau of market prices as being the best reflection of intrinsic values.

Another fragile assumption is that news travels instantaneously. I doubt that there will ever be a time when all useful inside information is immediately disclosed to everybody. Indeed, even if it can be argued that all relevant nes for tha major stocks followed by institutional investors is quickly reflected in their prices, it may well be that this not the case for all the thousands of small companies that are not closely followed by the pros. Moreover, the efficient-market theory implies that no one possesses monopolistic power over the market and that stock recommendations based on unfounded beliefs do not lead to large buying. But brokerage firms specializing in research services to institutions wield considerable power in the market and can direct tremendous money flows in and out of stocks. In this environment it is quite possible that erroneous beliefs about a stock by some professionals can for a considerable time be self-fulfilling.

Finally, there is the enormous difficulty of translating known information about a stock into an estimate of true value. We have seen that the major determinants of a stock’s value concern the extent and duration of its growth path far into the future. Estimating this is extraordinary difficult, and there is considerable scope for an individual with superior intellect and judgment to turn in a superior performance.

But while I believe in the possibility of superior professional investment performance, I must emphasize that the evidence we have thus far does not support the view that such competence exists; and while I may be excommunicated from some academic sects because of my only lukewarm endorsement of the semi-strong and particularly the strong form of the efficient-market theory, I make no effort to disguise my heresy in the financial church. It is clear that if there are exceptional financial managers, they are very rare. This a fact of life with which both individual and institutional investors have to deal.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.

Anomalies in the Markets

Anomalies in the Markets

While it is clear that evidence in favor of the efficiency of markets remains extremely strong, two other studies published in the late 1980s are disturbing because they cast doubt on some of the key assumptions of the efficient-market hypothesis.

The first, authored by Kenneth French and Richard Roll, examined the key presumption of the efficient-market hypothesis that market moves are precipitated by the receipt of new information. If the major cause of market movements is the receipt of news, then market prices should not fluctuate more over periods when the market is open than when it is closed. French and Roll demonstrated that this is not the case and the asset prices are much more volatile during exchange trading hours. For example, the variability (statistically, the variance) of prices from the opening to the close of trading on an average day is over six times as large as the price variances from Friday’s close to Monday’s opening even though the weekend is eleven times longer.

One possible explanation for this phenomenon is that new public information (new economic data, merger announcements, judicial decisions, new contracts, and so forth) is most likely to arrive during normal business hours. Alternatively, the greater price volatility during periods when the market is open could be caused by the provision of private information (the predictions of market gurus, the recommendations of fundamental security analysts, and so forth), which typically gets incorporated into market prices when the exchange is open.

Security analysts are more likely to work at this time, and the benefits of producing such information are larger when the information can be acted upon quickly and conveniently.

You are never too old to set another goal or to dream a new dream (C. S. Lewis). Photo by Elena

In order to distinguish between these two explanations, French and Roll examined the volatility of prices around regular business days when the exchanges were closed. During the second half of 1968, the major stock exchanges were closed on Wednesdays because of a paperwork backlog. This gave these two men a wonderful research opportunity. Public information could be expected to be generated without interruption on those Wednesdays while the flow of private information would be sharply reduced. Thus, we should expect the volatility of prices from Tuesday’s close to Thursday’s opening (when the market was closed on Wednesday) to be considerably larger than the variability of prices from Tuesday’s close to Wednesday’s opening (during Wednesdays when the exchange was open) if new public information is the major cause of stock price changes. On the other hand, if the production of private information is an important cause of stock price change, the Tuesday-Thursday volatility would be far less when the exchange was closed on Wednesday. It turned out that the two-day volatility numbers were, in fact, quite small. They were only a little larger than the one-day numbers, suggesting that the generation of private information is a principal cause of price variances in the market.

The point is that the market makes its own news. Just as the discovery of an important new source of petroleum can affect the price of an oil stock, so can the publication of a bullish report on the stock from a major brokerage firm. Although this is not necessarily inconsistent with markets being efficient, it does open the possibility of there being additional influences in the market besides the receipt of new public information. Surely the sentiment of the professional investment community is not irrelevant.

Roll has also shown in another study that even with hind-sight, the ability to explain stock price changes is relatively modest. Less than 40 percent of the volatility in stock prices is explained by news events concerning the economy, industry developments, and specific news about the individual companies It appears that security valuations and their changes over time are quite complex and that private information and the sentiments of professional and other investors can play an important role in the valuation process.

Burton G. Malkiel. A Random Walk Down Wall Street, including a life-cycle guide to personal investing. First edition, 1973, by W.W. Norton and company, Inc.