Thursday, September 17, 2009

What Are The Odds?

I just made a pun and you don't even realize it yet.

I might've learned something "useful" in a class this week. Well, it was in a book, actually: Against the Gods, The Incredible Story of Risk. It's slightly more interesting than it sounds. Slightly.

This week's lesson is about odds. Specifically, odds on horse (or dog, rabbit, turtle, or other raceable animals) racing. Let's say my horse, Brice Lord's Testicle, has odds of 1-to-1 (1:1), and your two horses, Crippleplex and Wendy's Testicle, have odds of 3:1 and 6:1, respectively. Since there's only 3 horses allowed on the track at Brice Lord Memorial Downs at anytime, then my horse has a 50% chance of winning, and yours have 33.3% and 16.7% chances. For example, with 3:1 odds there's a 1/4 chance Crippleplex will win, and with 6:1 odds there's a 1/7 chance that Wendy's Testicle will win. See the pattern? You've learned something already. Anyway, notice how the three horses' odds add up to 100%; this is because some horse must win the race, unless of course they all break their legs.

Wait, it gets a little bit more interesting. At a track that isn't named after me things work a little differently, because they're interested in making money, whereas I am already so goddamned rich I make money from giving it away. The odds at Charlestown Races & Slots for tomorrow are as follows:

Horse, Odds, Relative Probability
1, 5:1, 16.7%
2, 42:1, 2.3%
3, 3/5:1, 62.5%
4
, 3:1, 25%
5, 12:1, 7.7%
6, 7:1, 12.5%
7, 53:1, 1.9%
8, 48:1, 2.0%

Right now you're probably thinking, "Brice comma this is boring as shit semicolon go back to writing about the cola wars period" Exactly! The relative probabilities of all the horses in the race does not add up to 100%, it adds up to 130.6%.

So, what the shit is going on here? How can we be 130.6% certain that a horse is going to win this race? Ever notice how attending races is free? No? Never been to a horse race because it's really boring, simultaneously low- and high-brow, far away, and quite possibly cruel to the animals? Well, it's because that extra 30.6% is the house's take. They skim off the top. It's the bookie fee, the Jew's usury, the Cossack's bargain, the what-have-you.

So next time you rush off to the races to see Cunnilingus 2 run around a dirt path twice in a matter of minutes and then forget where you parked remember that your hard-earned recession-proof cash is lining someone else's lined pockets.

By the way, I don't really know anything about horse racing, so if you do and I'm wrong about any of this, please don't hesitate to immediately explain how you know so much about horse racing.


Tuesday, September 15, 2009

An Obvious Metaphor

Having lost to William & Mary already, the University of Virginia Cavaliers football team probably didn't need their mascot to literally fall off his horse during his otherwise rousing entrance at the beginning of the game on Saturday. Following the mascot's lead, the Cavs watched Texas Christian University put up 30 unanswered points in the 30-14 at home loss. Maybe for the next game he'll switch out his horse for a bicycle.




Tuesday, August 25, 2009

Visited States Update

After another 2 years of aimful (the opposite of aimless) travel, I've created a new visited states map. Note my artful dodge of the central states, which is both incidental and intentional. I've also created my visited Mexican states map, which is somewhat less inspiring.





A comprehensive tally of where I've been in the U.S. of America.


A comprehensive tally of where I have/haven't been in the U.S. of Mexico. Mexico supposedly has states, by the way.

The Stock Market Is Not A Leading Indicator

The logic: "Since the stock market leads economic recoveries, once the stock market recovers, the economy will recover." That is, the stock market is a leading indicator.

I disagree.

I could've asked you
between mid-October 2008 - mid-January 2009, "What would you say is the current health of the economy?", you might've said something like, "Well, the stock market seems to have found a natural bottom around 8,500 (DJIA), so I think we've seen the worst of it, and so I'd expect a recovery in not too long once investor confidence returns in full." How would you explain then the following month and a half we spent below 8,000?

There's an inherent problem in using a stock market index both as a measure of economic health and as a future indicator of economic performance. Analogously, you need both a thermometer and a barometer to perform an analysis of the current environment and to create a forecast. The stock market has no foresight, it is purely reactionary, and so cannot be a barometer.

Why Any Index Sucks

What the Dow Jones Industrial Average Index (DJIA), for example, represents is an instantaneous assessment of investor demand for what the Dow Jones Company deems a representative sample of all publicly-traded companies on the New York Stock Exchange. When the DJIA goes up, the investor demand to own a percentage of those companies within the representative sample of publicly-traded companies goes up, and vice-versa when the DJIA goes down. In fact, it may be the only real world example of a
Giffen good. Leaving aside the validity of any non-statistically selected sample to accurately assess a whole market, we have to question whether the dynamics of that index are capable of capturing (1) the entire current economic state of affairs, and (2) the outlook for the future.

On (1), conceivably, the movement and value of an index, being a representation of investor willingness to own publicly-traded companies, would accurately reflect the overall state of the economy because those informed people buying up company assets in the form of shares would be reacting to a full set of up-to-date economic data, financial forecasts, industry surveys, and deep corporate analysis of assets and liabilities. The errors enter when you consider how inaccurate that full set of up-to-date information really is. E.g. No nation's central bank forecast this global recession. Alan Greenspan just shrugged his shoulders back in 2004. "A new paradigm!" Can you say the U.S. economy was actually strong 1.5 years ago when the DJIA was tickling 14,000? Or was it a facade of cheap capital that bloated the market's perception of those companies' value and led to our current situation? Even greater than inaccurate information is the investing feedback loop. A big mutual fund company dumps a load of cash into a company or industry, prompting others to do the same to catch the ride upward, prompting smaller investors to do the same and grab the sloppy seconds. All parties then unload their shares, in the process taking some good profit, to the latecomers who think they're onto the next hot stock. Did the value of the company ever actually change, or was it just the perception of the value of the company that controlled the stock value? Of course it was just the perception, and when you start attaching numbers (in this case, dollars) directly to people's perceptions, you get misinformation. For example, I'm an Orioles fan (as much as one can be anymore). Would I have put $10,000,000 on a bet at the beginning of the season that the Orioles would make the playoffs because their new pitching talent was being talked up on local sports radio? What if they're winning percentage in the first 20 games is .750? Doesn't sound like a bad bet, until you consider that the Orioles fucking suck and they have been hot early on but then collapsed at or before the All-Star break every year for the past 12. Anyway, the point is that gambling follows the same principle. You attach a value to your perception of the likelihood of the team you bet on winning, and your perception is based on imprecise information compounded with a dependency on the actions of individual people. The stock market is no different.

On (2), I think the obvious volatility caused by overreaction is enough to tank any stock market index's ability to forecast economic performance. Sure, whatever happens today may have residual effects in the future, but on the whole, it's merely a snapshot and an instant history. Looking at the artificial floor at ~8,000 in early February is enough to call this into question. You could point out that the market is back to about 9,500, but then I'd have to wonder why it ever bothered dropping 20% to 6,500 at all if it were a solid predictor of economic activity. It's not, and its value only tells you what other people just like you think it's worth. For that reason it is often considered a measure of investor confidence. This, I think, is true, but it doesn't really matter that much how confident investors are in the long-run. If all it took was confident coke-snorting traders on Wall Street then the DJIA would have gone into orbit by now; investors were mighty confident two years ago until they realized a lot of their money was tied up in things that weren't worth anything. That is, investor confidence is just a projection of past performance onto the future.

Why Weathermen Are Better At Their Jobs

The weather is a chaotic system. There are countless variables that influence it and there are countless attempts to do so. But despite its complexity, weather still follows the immutable laws of physics. The stock market, and for that matter, the economy, ultimately relies on a deeper chaos: human behavior.



What the stock market, or any index, really is is a forced amalgamation and an instantaneously fleeting assessment of what investors think of the value of traded companies, with no memory and no foresight. Simpler? It's an artificial grouping of what people think things are worth right now. Any attempt to derive much of a prediction from stock market data is doomed to fail eventually, because it's essentially a prediction of what people will do, and predicting people's behavior is, well, impossible, unless you work for Pixar.

Why I'm So Damn Right
Instead of breathing a sigh of relief watching the DJIA tick up-up-upwards, I'm rather concerned about the fact that unemployment---as measured by our screwy method---has increased by 62% since last July. If we're looking for a recovery, it's consumers, as always, that will drive it, and if there is less capacity for consumption, then there's less recovery. Less consumption and wages also means less tax revenue for federal and state governments, and the current government economic stimulus is not sustainable in the medium-term anyway.

I know people don't like thinking pessimistically, and for those without jobs it's particularly difficult to bear, and of course I hope I am wrong and the economy does turn around, but I think for financial analysts in the media and in the markets to continue to herd after the stock indexes is overly simplistic and will only lead to further calamity in the future.


Wednesday, August 19, 2009

I Want to Own an Aviary (repost)

I WANT TO OWN AN AVIARY
by Count Langenhoffen (originally posted February 2006)

An Aviary (capitalized because I would own it, and everything I own instantly accords capitalization) is a large enclosure filled with trees and such for the purpose of enclosing birds. You've seen aviaries in such blockbuster classics as Jurassic Park 3 (dazzlingly directed by Joe Johnston, between October Sky and Hidalgo) and The Haunting (which features a pre-celebrity Owen Wilson decapitated by a haunted fireplace[seriously]). So essentially the birds think they can fly through the webbed steel forming the aviary, but it turns out that steel reacts to birds the same way it does to everything else; they hit it, fall, and usually die. BUT, as Darwin taught us, the next generation of birds will know how the system works, and shall obey it unflaggingly, and so they become the living attraction of said Aviary.

Now, my Aviary will be different. First of all, it'll be fucking enormous; not because the birds need room to fly, but because I'm a big guy. In fact, my Aviary will be devoid of those dirty ornithological rats, and if birds end up in my Aviary, it's entirely coincidental. And as soon as you walk into my Aviary you'll be confronted by some kind of spike or boulder trap; notice I use "you," since I would never fall victim to one of my own traps. If you make it past the trap(s?), you'll notice the air is pungent with a tenebrous pall, due in large part to the still black pond to your right and the cobwebbed man-sized iron cages squeaking longingly towards the floor which are numerous and hanging from the roof on long, ancient chains. Spiders are rampant, of course, though not so many so as to draw your attention too much from an omnidirectional moan permeating the wispy white fog. There's some wilting shrubbery that's not been clipped for years, but its plainly obvious they were shorn to resemble souls writhing in the fires of Hell. Twisted trunks of half-dead trees litter the place haphazardly, and there's an exhausted cherry blossom, too (for contrast by juxtaposition). This is obviously just to create the mood for my Aviary, so that the next door neighbor's kids feel compelled to explore it. Then, once inside, they'd be trapped and thusly forced to serve me (not sexually) until their premature death or they embark as a group on a dangerous quest for a pirate ship full of gold hidden in a secret cave within the sewers of the town. If none of the kid's are Asian, then they won't have the quest option, since no one can convincingly yell, "Booby traps!"

Now, being a business-minded person, the logistics of maintaining such an aviary requires some serious rumination. First, there's manpower. Simple solution here: Pay some poor Polish countrymen to immigrate over and maintain my Aviary (I wouldn't use "Aviary" in the Warsaw newspaper ad so as not to stir suspicion). Their rudimentary belief in the spirits of the Old Country would surely remain lit as they torment and toil in my hellish Aviary. And while they toil and cry out at spirits nonexistent, they'd come to me begging to allow their indenture to end. I, of course, would grow to twice my size and cackle ghoulishly at their simple beliefs and hilarious terror. I might allow them put a bird in my Aviary if they agree to stop being fed, but the odds that they learn conversationl English are slim to none since the grand expenditures needed for the Aviary would prevent me from being able to afford Rosetta Stone.

Another important logistical consideration is making sure the Poles and trapped children remain motivated to work, so once in awhile I'd release into the Aviary a pack of hounds or a swarm of locusts. I might also release one of those badass string-tripped swinging log traps that did in the Predator, and I think also may have taken care of Benicio's character in the cinematic feast that is The Hunted.

If the INS gets too hot on my Aviary, I'd just cover it with a tarp whenever they came by looking for missing children and Poles. If they ask what's under the tarp I'd probably just make the whole damn thing send itself into another dimension, and then flash back into our realm when no one's looking.

What's most important for an Aviary is, of course, having a secret room where you crossbreed various hapless animals via torture. There'd be bunny rabbits, little kittens, cuddly otters, happy dolphins, chatty parrots (since they can talk), and tasty chickens (in the form of buffalo wings in the freezer), and also for good measure there'd be a couple of random beating cows' hearts connected to more electrodes than seems necessary. In this room I'd also pay Edgar Allen Poe's great grandson to sit in a tall black chair and read aloud The Telltale Heart and The Raven at odd temporal intervals. Once the creatures I manifest are ready to unleash doom upon the world I'd make sure they go straight for the places of worship, just to fuck with everyone's psyche.

One last item, let's throw in some gargantuan pterodactyls with lasers attached to their shoulders like those Dinobots.

I feel that building from this simple Aviary template, I'll have countless hours of entertainment to tide me over until my battleship is complete.

Bravo


Friday, February 27, 2009

February Spites East, Prepares Impassioned Exit

In a move described by weather policy experts as puzzling and exasperating, February has signaled its general dislike for both the people of the East Coast and the month of March in its declaration of a warm weather embargo to conclude its annual rotation in the weather presidency.

"It's a general 'Fuck all of you'", says Robert Straus, an expert in foreign weather policy at the University of Colorado's Center for Atmospheric Research.

Straus is not alone in his assessment of February's brusque behavior. Conditions seemed to be warming between the rogue month and the people of the East Coast for several weeks, bringing higher temperatures and brighter spirits across the land. "Easterners who were led to believe the harsh winter cold was in a welcome recession are now left wondering what happened as they grab for their down jackets, scarves, and little colorfully patterned rubber boots that I guess they buy at Urban Outfitters."

Some speculate that February is again using its position as a bridge month between much-reviled winter and favored spring to gain leverage with the international weather community after a particularly unfruitful meeting of the G12. February is believed to have lured in half the country with a delightful warm spell, only to lash out in a childishly retributive manner to bring much-desired attention on its supposed plight. "February has long wished to use the arctic blast weapon to convince the 12-member governing body that its allocation of 28 or 29 days is unfair and moreover, bizarre" believes James Ogden, the U.S. Deputy Ambassador to the UN Special Commission for Clouds, Rain, and Grey Skies.

But Straus doesn't think it's that simple. "Why now?" asks Straus. "If this is the feared arctic blast weapon then where's Jake Gyllenhaal and those crazy ice wolves everybody predicted?" Straus favors engagement with February, noting that as the month warmed, the public began to write it off and take its unusually pleasant weather for granted. "I think this really pissed February off. It didn't have to be nice outside on the weekends. It could have been a blustery hell, as February always is, with crazy ice wolves lurking around every corner."

There may be some truth in that. As January's annual reign of terror came to a close, relations between the neighbors were frosty, at best. At a temperature-fixing summit in Kathmandu, Nepal, January delivered a scathing polemic to February for its cozy relationship with March, a month considered to be partly aligned with the centrist Spring bloc. January, long the hard-line member of the G12, was likely lambasting February for its decision not to support January's Joint Resolution To Act In Accordance With The Groundhog Day Proclamation, thus depriving it of the needed supermajority.

"I really don't think the public understood what February had given up to leave January...out in the cold. I'm not particularly surprised this happened, particularly considering the potential for puns" says Frank Case, a former national climate and weather security adviser to President Clinton.

Additionally, while much of the attention has been paid to February's drastic actions and its affect on the East, little mind has been paid to February's other immediate neighbor, March. The enigmatic month has been conspicuous in its denunciations of February's measures. Enraged at its stained reputation as it is forced to swallow a massive cold front and late-winter snow and ice squall pushing eastward across the Midwest just as it begins its term, March has threatened to cut off diplomatic ties with February. "It's just what we need, a more disjointed, confusing transition of power from February---a month with a variable number of days---and March---a month symbolized by two completely opposite animals, the lion and the lamb," says Straus.

February, at least, for its part, is not so pessimistic. While senior officials could not be reached for comment, a high-level source within the month's government tell End The Cola Wars Digest that the reasons for the row came down to the economy. According to the source, February receives covert netback revenues from the natural gas and power industries. Given the presumed state of the month's treasury (it does not release official figures), it comes as little surprise that it has chosen to turn the screws on the public in a bid to shore up domestic reserves. "February has no real economy of its own when it comes down to it," says Case," it's essentially a middleman between the prolific cold exporter January and Ides-heavy March; February's' just a broker."

How the breakdown in relations between February and January and the general public in the future remains to be seen, but cracks have already started appearing in February's grip on state control. "I've about had it with this damn month," proclaims Mary Radabaf, a manager at a Washington area Haagen Dazs. "Every time you think February's had enough, it turns out you were wrong, and it's cold as shit all over again." Sentiments among the public do not stray far from Ms. Radabaf's harsh remarks. A Pew poll on the 25th showed that 95% of people disagreed strongly with February's handling of its rotating presidency; the remaining 5% of people indicated to the pollster that they hadn't left their residences since September ended.

Ogden is more pointed: "We're looking at a possible paradigm shift in the whole world order. Blizzards in July, heat waves in November, fall in April, and frogs in May. The whole system could be on the brink of collapse."

There may still be some hope, believes Case. "With such opposition from all fronts, it might be difficult for February to continue to isolate itself. February's unexpected cold tantrum will really damage its ability to influence the annual two straight weeks of misty drizzle, this year planned for late May."

August could not be reached for comment.

Brice Lord reporting from Los Angeles.