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Wednesday, August 15, 2018

Randomness Is Hard to Accept

Randomness Is Hard to Accept


Human nature likes order; people find it hard to accept the notion of randomness. No matter what the laws of chance might tell us, we search for patterns among random events wherever they might occur – not only in the stock market, but even in interpreting sporting phenomena.

In describing an outstanding performance by a basketball player, reporters and spectators alike commonly use expressions such as “Magic Johnson has the hot hand” or “Isaiah Thomas is a streak shooter.” Those who play, coach, or otherwise follow basketball are almost universally convinced that if a player has successfully made his last shot, or last few shots, he is more likely to make his next shot. A 1980s study by a group of psychologists, however, proves conclusively that the “hot-hand” phenomenon is a myth.

The psychologists did a detailed study of every shot taken by the Philadelphia 76ers over a full season and a half. They found no evidence of any positive correlation between the outcomes of successive shots. Indeed, they found that a hit by a player followed by a miss was actually a bit likelier than the case of making two baskets in a row. Moreover, the researchers looked at sequences of more than two shots. Again, they found that the number of long streaks (that is, hitting of several baskets in a row) was no greater than could have been expected in a random set of data (such as flipping coins where every event was independent of its predecessor).

Randomness is hard to accept. Photo by Elena

 While the event of making one’s last two or three shots clearly influenced the player’s perception of whether he would make his next shot, the hard evidence was that there was no effect. The researchers then confirmed their study by examining the free-throw records of the Boston Celtics and by conducting controlled shooting experiments with the men and women of the Cornell University varsity basketball teams. The outcomes of previous shots influenced players’ predictions but not their performance.

These findings do not imply that basketball is a game of chance rather than skill. Obviously there are players who are more adept at making baskets and free throws than others. The point is, however, that the probability of making a shot is independent of the outcome of previous shots. The psychologists conjecture that the persistent belief in the hot hand could be due to memory bias. If long sequences of hits or misses are more memorable than alternating sequences, observers are likely to overestimate the correlation between successive shots. When events sometimes do come in clusters and streaks, people look for explanations and patterns. They refuse to believe that they are random even though such clusters and streaks do occur frequently in random data such as are derived from the tossing of a coin. So it is in the stock market as well.

Super Bowl Indicator

The Super Bowl Indicator

A Gaggle of Other Technical Theories to Help You Lose Money


Once the academic world polished off most of the standard technical trading rules, it turned its august attention toward some of the more fanciful schemes. The world of financial analysis would be much quieter and duller without the chartists, as the following techniques amply demonstrate:

Why did the market rally in 1989? That’s easy to answer for a technical analyst who uses the Super Bowl indicator. The Super Bowl indicator forecasts how the stock market will perform based on which team wins the Super Bowl. A victory by an NFL team predicts a bull market in stocks whereas a victory by an AFL team is bad news for stock-market investors. Since the San Francisco Forty-niners defeated the Cincinnati Bengals in 1989, the auguries for a stock-market boom were good; again, the market responded correctly by rising smartly during the first half of the year. In the twenty years following the first Super Bowl, this indicator has only been wrong twice.

It failed in 1970 when the Kansas City Chiefs’ (AFL) victory was followed by a bull market in stocks and in 1987 when a victory by the New York giants (NFL) was followed by the stock-market crash (although the market did end 1987 higher that it started). Naturally, it makes no sense that the results of the Super Bowl should be useful as a market forecaster. Nevertheless, chance correlations will always pop up. The success of the Super Bowl indicator simply illustrates nothing more that the fact that it is sometimes possible to correlate two completely unrelated events.

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.


Super Bowl Indicator. Photo by Elena

Tuesday, August 14, 2018

Pay Attention to Your 401 (k)

Pay Attention to Your 401 (k)


Fund your do-it-yourself pension plan now or regret it later

For many people, 401 (k) plans will be their largest retirement asset. Yet many employees are contributing below levels allowed by law, and fewer than 35 percent of 401 (k) plan participants set aside enough money to the plan to earn the maximum company match, according to Hewitt Associates, an employee-benefits firm in Illinois. When you figure in compounding over time, that could mean a loss of hundreds of thousands of dollars.

The plans, which get their awkward name from the section of 1978 tax code that created them, are available mostly to corporate employees. They are retirement savings plans that allow you to make voluntary pretax contributions of as much as 15 percent of your salary, or up to a sliding limit, whichever comes first. Employers make contributions on behalf of employees, in most cases matching about half what the employee contributes, yp to 6 percent of one’s salary. Another attraction : a 401 (k) helps out current taxable income and defer taxes on earnings until they are withdrawn on retirement.

Most plans offer several investment choices, including stock and bond funds, and low-risk options like a money market fund of a guaranteed investment contract (GIC) sold by insurance companies. Despite the varied menus, a whooping 30 percent of 401 (k) money went into conservative money market funds of GIC funds, according to Ibbotson Associates of Chicago. The annual yields of GICs have averaged only 9.6 percent since 1995, according to Ibbotson, compared to 14.5 percent return rates for equities and 11.9 percent for bonds.

Always pay attention to your 401 k. White flowers and green and white leaves. Photo by Elena

Nearly all financial advisers agree that investors saving for retirement should allot money for stocks. Just how much depends on the risk level you’re comfortable with, but T. Rowe Price, the mutual fund company, suggests that for someone 25 years away from retirement about 80 percent should be invested in stocks. Those closer to retirement, may want to shift some money out of stocks into less volatile investments. If you’re five years away from retiring , you may want to allocate 40 percent to stocks, split evenly between an equity income fund and a growth fund. Another 40 percent would go into a balanced fund, which combines stocks and bonds and the remaining 20 percent would go into a low-risk GIC.

Not all 401 (k) plans are created equal, even among the nation’s largest companies. The maximum percentage of salary that an employee can contribute are the amount that an employer will match vary from company to company. So do the number and type of investment choices. You should look thoroughly into a scorecard comparing the plans of some of the nation’s largest companies

Toronto - View from the Ground

Toronto


Toronto is the capital city of the province of Ontario and the largest city in Canada by population, with around 3 millions of residents (but the Toronto census metropolitan area (CMA), the majority of which is within the Greater Toronto Area (GTA), has a population of around 6 millions. Toronto is the anchor of an urban agglomeration, known as the Golden Horseshoe. Toronto is a centre of business, finance, arts, and culture, and is recognized as one of the most multicultural and cosmopolitan cities in the world.

Indigenous peoples have travelled through and inhabited the Toronto area, situated on a broad sloping plateau interspersed with rivers, deep ravines, and urban forest, for more than 10,000 years.The British established the town of York in 1793, which was renamed and incorporated as the city of Toronto in 1834, and became the capital of the province of Ontario during Canadian Confederation in 1867.

The diverse population of Toronto reflects its current and historical role as an important destination for immigrants to Canada, with over 50 percent of residents belonging to a visible minority population group, and over 200 distinct ethnic origins represented among its inhabitants.While the majority of Torontonians speak English as their primary language, over 160 languages are spoken in the city.

Victorian house close to Royal Ontario Museum

Dundas Place, Toronto's downtown.
Urban Eatery and other publicities. Downtown.
Hard Rock Cafe, Dundas street and Dundas Square
Dundas square, new pubs
Toronto Planetarium (building only, the planetarium was closed)
Bay and College street
Solar panels, Breadalbane and Bay street

Royal Ontario Museum (ROM), Queen street and Bloor street.
A street in downtown Toronto
Munk School of global affaires, Bloor street
Elm street at Rosedale, Athletics and Wellness center
Bata Museum of Toronto.
Bata museum facade.
Equestrian statue of King Edward VII. Originally standing in Edward Park, Delhi, India, this statue was erected on the present site through the generous subscriptions of the citizens of this area. This gift to the City of Toronto was made possible by the Government of India and the former Canadian High Commissioner to India, His Excellency The Right Honourable Roland Michener, C.C., C.D. Governor General of Canada, and brought to this City through the personal generosity of Henry R. Jackman, Esq., Q.C.. May 24, 1969. William Dennison, Mayor
Queen Park and University street.
Lieutenant-Colonel John Graves Simcoe (1752-1806). First Lieutenant-Governor of Upper Canada between 1791 and 1796. Founder of the City of Toronto on July 30th, 1793.

The Church of Rock'N Roll

The Church of of Rock'N Roll

If you loved, or missed, rock's early years, try the Rock'N Roll Hall of Fame



So you've already criss-crossed the country. And you've hit all of the meccas of American culture. And you just don't have the energy to follow the Dean or make Lollapalooza your life. No problem. Unearth thouse tapes you used to listen to when you wore those hot pants! Pack the car with ones that make you feel like a voodoo child. Take along your prized Fender Telecaster, and drive yourself through all the fields of gold until you reach Cleveland, Ohio, home of the Rock and Roll Hall of Fame...

The concept for a museum dedicated to the history of rock and roll was born over decades ago, with the creation of the Rock and Roll Hall of Fame Foundation. Founded by a group of music industry moguls, the foundation honors men and women who have made unique contributions to rock and roll. In 1986, after a nationwide search for an appropriate location, Cleveland, Ohio, was chosen as the home of the Rock and Roll Hall of Fame and Museum. The doors open in September 1995.

If James Brown's stage costume, Pete Townshend's battered acoustic guitar, Big Joe Turner's passport, or Grace Slick's dress from Woodstock aren't enough of a draw, it's worth the trip to Cleveland to see the creation of one of the world's most famous architects. Designed by I.M. Pei, who also renovated the Louvre, the rock museum has not only exhibition areas and archival facilities, but also indoor and outdoor concert areas, and a working studio where visiting D.Js can conduct live broadcasts.

Rock N' Roll new  young Stars. Photo by Elena

Inside the dramatic cantilevered spaces, the exhibits are likely to delight not only the most diehard rock fans, but also the most technologically sophisticated of visitors with the way high-tech wizardry has been blended with good, old-fashioned story-telling to show how rock and roll helped shape today's culture.

The collections spotlight Hall of Famers by including materials that cover the entire scope of each individual<s life and work, as well as portraying rock and roll in the context of the society that gave birth to and felt the impact of such high-decibel stars and the Rolling Stons, the Beatles, Janis Joplin, Jimi Hendrix, and James Brown.

Museum officials embrace the good, the bad and the ugly; the major music scenes, and the music's impact on the way we live are all covered in exhibitions.

This is no mere Hard Rock Cafe. The museum's special features include a multimedia presentation that leads visitors through a recording session; a series of ongoing film presentations and focused exhibits that provide in-depth information on artists, historical periods, and current events; and interactive database featuring “The 500 Songs That Shaped Rock and Roll”; a three-dimensional display that traces the history of fashion in rock and roll; and tons of memorabilia collected by fans or donated by the legends themselves.

Location: The museum is located on the shore of Lake Erie in downtown Cleveland's North Coast Harbor at 1040 East 9th Streeet, Cleveland, Ohio 44114.