ALL THINGS BIG AND SMALL 2.0

Dry Bulk shipping companies are those that carry raw materials such as coal, iron ore, grain, fertilisers and chemicals in their specialized ships. The demand for dry bulk shipping is a good leading indicator of the health of the world economy. The Baltic Dry Index is an index of freight rates for dry bulk shipping as compiled by the Baltic Exchange in London. Since October, the BDI has gone down by 40 %, and with it the share price of the dry bulk shippers. In this experiment, using the Self-Organising Maps [SOM] in http://www.viscovery.net software. [for more on Self-Organizing Maps see http://en.wikipedia.org/wiki/Self-organizing_map ] we took the data for 156 stocks from the Transportation Sector. The data included the output of ValuEngine's quantitative models and covered variables such as Valuation, EPS growth, 1 year-forecast retrun %, 1-month forecast return%, P/E ratio, Sharpe Ratio, 1 yr return %, 5 -yr return % etc. There were more than 30 variables. For more on ValuEn...

* This article was actually written about a year ago. The year of the Pig is now coming to an end, and Chinese New Year on Feb 07 will usher in the year of the Rat. The Pig is an animal, as useful as can be An icon of happiness and prosperity They say that the Pig is most intelligent I can vouch that it is not belligerent Pigs are productive and breed like rabbits Though I can’t say much about their mating habits What I like most about pigs is not what they do What I like most about pigs is a bowl of pork rib stew Pigs ear, pig’s tongue, pig's brain and pig’s tummy The last when cooked with white peppercorn is real yummy Pig’s liver, snout, kidney, skin and even pig’s tail Does something good for appetite, they never fail This year it is, the Year of the Pig This year, I think I’ll make it big And the reason is as clear as a Fig For I was born in the year of the Pig Not just any Pig, but a pig of Gold 600 years in waiting, lo and behold The Golden Pig has come to my door Not much...

Click on Table for full-size and details Nassim Nicholas Taleb's "The Black Swan" (Random House, 2007) has attained cult status with the hedge fund crowd. His book is about the enormous consequences of highly improbable events. The essential points are: 1. Black Swans are the highly improbable events that have had enormous historical impact- like the current credit crunch caused by the sub-prime crisis, 9/11, the Latin American debt crisis of 1982, or the fall of the Soviet Union in 1990. Though very rare, Black Swans have many times more impact than more predictable, more frequent events. Black Swans are by definition unpredictable. 2. Black Swans are not as improbable as conventional statistics theory would have us believe. This is because the way we calculate probability has always been, and continues to be based upon the Gaussian [Bell Curve] distribution, where anything beyond 3 standard deviations is considered to have a probability of less than 1 %. Black Swan dis...