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There are Statistics and Damn Lies

Lies, Damn Lies and Stock Price Trends

To paraphrase Benjamin Disraeli. One of my favorite times of the year is here, with the opening of the N.F.L. season and with baseball coming down to the end of the season, the orgy of numbers coming from both games is astounding and quite satisfying for a number nut like me.

As a kid I reveled in the numbers from Baseball and loved collecting them and comparing them, but even as a kid I learned that all the numbers in the world are only telling you what happened in the past (which can be very important), but these numbers do not necessarily point to what will happen in the future. It is important to know what has happened in the past (because we do not wish to re-do our previous mistakes) but to know the future is what we all crave.

Benjamin Disraeli by Cornelius Jabez Hughes, 1878.jpg

Benjamin Disraeli by Cornelius Jabez Hughes, 1878” by Cornelius Jabez Hughes, British (1819 – 1884, London, England London, England) – Harvard Art Museum/Fogg Museum, Historical Photographs and Special Visual Collections Department, Fine Arts Library. Licensed under Public domain via Wikimedia Commons.

Football is awash in numbers to the point where there is an entire industry that has been created to use the statistics created by football games (Fantasy Football leagues), which astounds me, that you create a game from a game (is that recursion?).

Financial analysts do the same things to investors. They have mega-tonnes of data on every single stock and what it has done since it’s start, and there are entire companies making fortunes analyzing these numbers, predicting what stocks “might” do by doing this analysis.

My understanding of the stock market, is that it has no conscience and no memory. Each day is a new day, and it’s like a Simpson’s episode (i.e. most of what happened yesterday isn’t relevant and it is forgotten) on the Equities market.  The simple fact a stock went down the previous day does not mean it will drop the next day (that fact alone, there may be other much better reasons, but the previous drop means nothing).

I have to laugh when I hear about “downward trends” and “upward trends” being reasons alone to buy or sell stocks, you may as well base your purchases on your lucky rabbit’s foot if you are going to think that way.

Keep crunching those numbers, but remember the numbers alone are meaningless without the context of why the numbers happened.


Free Association Friday

Yes we have reached the end of the week, and my brain is filled with Basketball thanks to a tournament that my wife and I are convening this weekend, so this is going to be a very free association post.

Our friends at Stats Canada say that if you were a Real Estate agent or the like your industry grew by over 30% in the past 3 years. No real surprise in that one, given the sky rocketing price of homes in some cities in Canada, that is for sure. Remember that Real Estate agents can be bargained with, as can most folks in the service industry, even banks too! As I said here, don’t stand for high user fees or service fees.

More and more accounting irregularities at big companies (Dell and Imax for two). I remember the folks that took Accounting at my University, they didn’t seem like a bad bunch, but holy cow, I wouldn’t want to be an accountant right now. They may start moving into the realm of Lawyers for loathing soon.

Remember your taxes and that as a Canadian you will need to be filing soon. I haven’t heard back yet, but I was hoping that the NDP would send me $10 just out of charity because I e-filed.

The Buzz about a possible BCE takeover bid, drove up the shares about $1 yesterday which isn’t a bad thing, however, what will it mean for Canada’s main telecommunications services company? We’ll have to see in that area.

One of my hobbies since I was a kid was playing Sports Strategy games, specifically from the Strat-O-Matic game company. I was surprised to see that the founder is now looking to sell off part or all of the company. I know that if I had won the lottery that would be a company that I might consider buying, just to keep it all going. It’s funny I tried to get a friend’s son interested, by buying him a game one year, and he wasn’t very interested. I had so much fun playing those games with my friends, maybe I’ll try to get my son interested.

Enjoy the weekend folks, and think of your friends locked in dingy gyms, being yelled at by irate parents.

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