This is a little off topic, not really finance. But a couple of Duke Management profs have published a piece in Science that says folks suffer from mpg illusion. Basically, they argue that we focus on trying to get higher and higher mpg, when the biggest savings are for those people who drive vehicles that get really bad mileage.
The story is here...
News and Observer article here
The basic idea is this. If you drive some big ugly truck that gets 10 mpg, you'll use 1,000 gallons a year to go 10,000 miles. Now if you trade to a truck that gets 15 mpg you'll use 666 gallons. A savings of 333 gallons a year.
Now consider someone who is getting 25 mpg and they trade up to a hybrid that gets say 35. Their gas savings go from 400 gallons to 285 gallons. A savings of about only 115 gallons a year.
The point then is that the biggest savings come from fairly small improvements on poor mpg vehicles.
The idea is so obvious of course it is brilliant and what is really great is that these guys got it published in Science.
Monday, June 23, 2008
Thursday, June 19, 2008
Google stock screener
Google has a new stock screener. What is cute about it is that you can see the distribution of the values you are screening on graphically. For example you can see the distribution of market values. Very nice.
Google stock screener
You can also screen by sectors etc. What would be nice is if you could screen by index membership as well.
Google stock screener
You can also screen by sectors etc. What would be nice is if you could screen by index membership as well.
Thursday, June 12, 2008
Finance sayings.
Stephen Dubner at the freakonomics blog has a bleg out for finance sayings.
One of my faves is
One of my faves is
The market can stay irrational longer than you can stay solvent. - Keynes
Salaries for college grads
If you are graduating or have just graduated, then this is going to help much - but if it's still interesting.
Salaries for college grads for 2008
HT: Newmark's door.
As Craig Newmark points out - Econ grads earn more on average than finance grads. Food for thought. My limited experience has been that Econ majors taking my classes have always been among my best students. So I suspect that there is a selection bias - on average better quality students become Econ majors.
Salaries for college grads for 2008
HT: Newmark's door.
As Craig Newmark points out - Econ grads earn more on average than finance grads. Food for thought. My limited experience has been that Econ majors taking my classes have always been among my best students. So I suspect that there is a selection bias - on average better quality students become Econ majors.
Tuesday, June 3, 2008
Bad news in the charts
My colleague Don sent me this picture. As all chartists know, you should sell when you see the black swan indicator.
Thursday, May 29, 2008
Mostly Economics Blog
Just a quick mention of the Mostly Economics Blog. Plenty of good stuff over there on current market and economic conditions..
http://mostlyeconomics.wordpress.com/
http://mostlyeconomics.wordpress.com/
Wednesday, May 28, 2008
Bernanke's Bubble Lab
Great article in the WSJ a few days back. This article talks about recent research (in particular by Harrison Hong of Princeton) that looks at why bubbles form.
To summarize...
1. Bubbles occur when investors disagree about the significance of some event. The internet being the obvious one. It's hard to bet on prices going down (limits to arbitrage etc), so the optimists dominate and prices shoot up.
2. Bubbles are then identified by intense trading.
3. Bubbles continue even when "smart" investors know that prices are too high - as individually they cannot attack the bubble. Only when they act simultaneously can their actions have an effect.
The conclusion is that it might be in the best interest of the Fed to contain bubbles rather than let them run their course.
Robert Shiller in his book "Irrational Exuberance" talks about bubbles also. He focuses on the feedback loop between the media and market participants. Bubbles make news and are great for exchanges (lots of trading) so plenty of people have an incentive to keep them going. Bubbles also falsely give the impression to investors that they have stock picking skill when in reality they are just riding the bubble with everyone else. The skill is not in buying the stock, but knowing when to sell.
On a related note - an interesting article on the freakononmics blog here talks about how we tend to think we are above average (drivers, stock pickers etc) which relates us back to a recent post on stock trading and speeding....
To summarize...
1. Bubbles occur when investors disagree about the significance of some event. The internet being the obvious one. It's hard to bet on prices going down (limits to arbitrage etc), so the optimists dominate and prices shoot up.
2. Bubbles are then identified by intense trading.
3. Bubbles continue even when "smart" investors know that prices are too high - as individually they cannot attack the bubble. Only when they act simultaneously can their actions have an effect.
The conclusion is that it might be in the best interest of the Fed to contain bubbles rather than let them run their course.
Robert Shiller in his book "Irrational Exuberance" talks about bubbles also. He focuses on the feedback loop between the media and market participants. Bubbles make news and are great for exchanges (lots of trading) so plenty of people have an incentive to keep them going. Bubbles also falsely give the impression to investors that they have stock picking skill when in reality they are just riding the bubble with everyone else. The skill is not in buying the stock, but knowing when to sell.
On a related note - an interesting article on the freakononmics blog here talks about how we tend to think we are above average (drivers, stock pickers etc) which relates us back to a recent post on stock trading and speeding....
Subscribe to:
Posts (Atom)