EclecticLip

(Originally written Aug 11; posted Sept 5) 

I’ve noted a few times that gold rises pretty much during the university year, and falls in the summer months.  Being the conscientious and only mildly obsessive-compulsive type, it irked me that I didn’t have (favourably-selected) data at my fingertips to back up my statements. 

Fortunately, an American mutual fund manager pulled the data together recently; more fortunately, I stumbled across his editorial piece; and most fortunately of all, when I write these things, it looks like I’m hard at work. 

One of the funny things about investments is that they tend to follow loose patterns — they’re just predictable enough that you think you can make enough money on them, and just unpredictable enough to prevent you from doing so. 

One of the better-known investment rules — and one which actually works — is “sell in May and go away“.  The lesser-known back-half “and stay away until St. Leger Day” (roughly equivalent to Hallowe’en) sadly, is shrouded in relative obscurity, not unlike the three other stanzas for O Canada.  …what?  You’ve never heard “O Canada! Where pines and maples grow”?  Tish, tish…     

The funniest part of the “sell in May”/”buy in November” rule is that… it actually works.  From the Wikipedia article, the phenomenon has held up in 36 of 37 countries, and has worked in Britain for the past three hundred years.  As Wikipedia drily notes,
 
      “According to the efficient-market hypothesis, this is impossible.”
 
…which pretty much tells you all you need to know about the efficient-market hypothesis!  One wonders if ancient encyclopedias concluded their discussion of Magellan’s circumnavigation of the world with “according to the flat earth hypothesis, this is impossible”.

Oh — and bear in mind that a three-hundred year trend might have an off-year that one November you decide to bet everything on “black” at stock-market roulette. 

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But back to gold.  As explained in the article, and annotated by some charts, gold’s typical rise from August to May is largely a function of demand: weddings in India, Christmas festivities in the West, and Chinese New Year.  (The author also mentions Ramadan, but Ramadan shifts back by about ten days every year.  As such, over time, it won’t mesh with the others, which stay put in one part of the calendar.)

During this time period, there’s usually a swoon around October and one around March.  These tend to be due to the fact that investor “chum” notice the uptick in August-Sept or Jan-Feb, put in some savings, causing temporarily overbought conditions… leaving conditions ripe for market sharks to feed. 

(Originally written August 4; posted Sept 5)

We used tar-sands oil aplenty on our Rockies trip, despoiling what’s left of the nature we motored about to see (most gasoline on the West Coast comes from Alberta — happy driving!).  The “tour de sightseeing” from Banff to Jasper was notable in that we met the same fellow tourists at every scenic viewpoint and pullout.  There were so many of her fellow countrymen around that when Aya asked people to take photos, she went straight to Japanese. 

We soon learned not to pull over in the hopes of spotting wildlife, unless at least two other vehicles had already done so — not unlike how a Venus Flytrap won’t close unless two of its trigger hairs are touched in quick succession.

A high point was getting a photo of this mother mountain goat and kid, from just across the highway.  Off-camera, papa goat looked on, perhaps wondering if our car was a Chevrolet.  (Louis Chevrolet’s last name was a corruption of “Chevre Lait”, or “goat’s milk”.)  But alas, it was a rental Sentra, tricked out with a/c, iPod connector, remote entry and power windows.  Features which have coincidentally become must-haves for our next vehicle. 

(Part 1 is here.) 

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This Dilbert cartoon was too good to pass up, in light of the fact that the book club covered The Halo Effect at the end of June, for its 21nd book — since the book argues that this is in fact how “serious” business authors write their books.

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Back from a Rockies roadtrip with the in-laws, the highlight of which was when a black bear family — a mother with two cubs — sauntered past our (parked) car on the road to Miette Hot Springs, near Jasper.  Below was the best picture: with my photographic skills, I managed to override the autofocus feature on the camera on the others. 

We first noticed the stopped cars on the other side of the road, so we turned our hazards on and idled our way forward.  When we saw the bears heading our way, we parked, not wanting to distract or otherwise irritate the ursine family.  After picking at some roadside dandelions, the mother bear decided to cross the road — and the cubs followed, in tow.  I didn’t appreciate how much they actually look like teddy bears.  Now, the term “teddy bear” comes from an incident between a bear and US President Theodore (”Teddy”) Roosevelt.  But unlike legendary Simpsons-hometown founder Jebediah Springfield, Roosevelt neither killed nor was killed by that bear.

As the mother bear passed by the driver’s side front-bumper, cubs in tow, it belatedly occurred to me to roll up my window.    Still, it was very cool to come within about five feet of a sloth of bears in the wild — sloth being a term for a group of them, like a “murder” of crows, “crash” of rhinos, “clowder” of cats and personal favourite, “bloat” of hippos.  It was cooler still, that we were safely ensconced in an automobile at the time. 

The photo also got picked up by Yves Smith on her economics blog, one of the half-dozen or so on my daily reading list.  It was Sunday’s “antidote-du-jour“.  The backstory to her pseudonym is that it’s a play on the Biblical Adam and Eve, and Adam Smith being the codifier of capitalism.

(Originally written June 14.  Posted, with modest supplemental info, June 17.) 

For those who follow my investing adventures (or “monetary misadventures”, depending on how the year’s going    ) gold made it onto the front page of the New York Times this past weekend.  An example of the “magazine cover indicator“, this strongly suggests that it’s due for a plummetting pummelling.

I’d expect this for gold priced in Euros — its slope was nearing positive infinity with the various crises (see the blue line in the image below).  And in market arrangements, things which rise sharply in price — whether the Nikkei index circa 1990, Nasdaq circa 2000, or Shanghai circa 2008 — tend to fall back sharply when the upward momentum stops.  Gold in Euros (blue) dropped sharply after seeing soaring gains in ‘06 and ‘09 — and fell sharply after rising sharply against the US dollar in ‘06 and ‘08 (red).

With the magazine cover, it seems highly probable gold will be cheaper in a couple months’ time, regardless of what might happens in the next couple weeks, as the investing classes find other amuse-portfeuilles for their wallets.  (On account of other self-fulfilling indicators, summarized finely by the pseudonymous Jesse here, I figure its price is due for a modest surge in the very near term.)

Euro-wise, the news has been so bad out of Europe for so long, that the Euro seems likely to strengthen for the next little bit: everyone who wanted to sell, has already sold.  As such, the trading algorithms of government-moneyed investment-bank speculators (whose predecessors Adam Smith characterized as an “idle class”) are likely trading dollars for Euros using some of those very same complex instruments which necessitated their  bailouts.  Ah, few things match the hypnotic stupor of a flatlined learning curve — as long-suffering Leafs (and Canucks) fans will surely attest! 

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(Originally written June 14.  Posted June 17.) 

I was grudgingly happy for the Blackhawks’ recent Stanley Cup win — seeing as the Flyers made it into the playoffs on a shootout in the last game of the regular season (!) it wouldn’t've seemed fair for them to win.  Their loss means that the unbroken streak of Cinderella Cup Finalists losing, continues; karma remains strong, among the hockey gods.    That, and it’s a shade less frustrating when it’s the Cup winners who eliminate your perennially underperforming team…

On the topic of perennially underperforming, the Chicago Blackhawks’ recent Stanley Cup win — their first in 49 years — means the mantle of “longest Cupless drought” now moves to the Toronto Maple Leafs.  Here are a few factoids about the last time they won, back in 1967:

• Canada had not yet celebrated its hundredth birthday    (the Leafs won, a couple months before July 1st)
• the NHL was one-fifth of its current size  (it was the “original six” era)
• their starting goalie, Johnny Bower, did not wear a mask!

Yes, that’s right, Toronto hasn’t won a Cup since its goalies started wearing masks.  Correlation doesn’t imply causation, but if in a few years you hear the Maple Leafs ownership floating the idea of making goalie masks optional, you’ll know where they’re coming from. 

The Blackhawks’ win also means that Marian Hossa managed to avoid becoming the probably-first player to lose three consecutive Stanley Cup Finals for three different teams.  (He played for the Penguins in ‘08, when they got beat by Detroit.  Looking to win, he then signed with Detroit, only to lose in game seven to… the Penguins.)  Claude “Turtle” Lemieux notably won with New Jersey and Colorado in consecutive years, back in ‘95 and ‘96.  And the first year, he was even the Conn Smythe Trophy winner!

Below: a photo of Maple Leafs’ maskless, Cup-winning duo of Johnny Bower and Terry Sawchuk.

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Through a link on the usually-relevant, often-irreverent FlowingData website, I also found a brilliant little visualization of Stanley Cup finalists in the past eight decades, which puts Leafs’ fans misery in perspective.

On the other hand, since the Canucks have been around since 1970-1971, it’s not exactly as if we’re doing much better here on the Left Coast…!  The Vancouver Millionaires did win back in 1915 (probably before goalies wore jockstraps) though fortunately we’re not the worst-off in that regard.  The Winnipeg Victorias won in 1902, and so hockey-inclined Winterpeggers have waited even longer than Cubs fans for another championship.  Mind you, Winnipeg didn’t have an NHL team for most of the ensuing eleven decades, so they aren’t quite as overdue as Cubbies’ fans are. 

(Originally written May 10; posted May 17) 

If you’ve had the (mis)fortune to work with me in recent months, you’ll know that I’m on a bit of a warpath against poorly-labelled graphs.  And that I think label-challenged chartists should be consigned to one of Dante’s famous nine circles of Hell — or at a minimum, one of his obscure, seven terraces of Purgatory.

After getting home Friday, refreshed from a good week’s work, I saw the following on Flowing Data, which makes the case better than any 1022 words of my own raging rhetoric, ever could.

(written May 15, posted Oct 9) 

The Montreal Canadiens’ recent elimination of the top-seeded Washington Capitals, and then the defending Stanley Cup champion Pittsburgh Penguins, was completely unexpected.  In fact, it’s arguably the most unexpected thing to happen in the world of Montreal hockey since Claude Ruel pulled his goalie in the third period of the final game of the 1969-1970 season.  With nine minutes left.

It’s true that this would be a rather weak argument (the Canadiens winning in 1986 was probably even less expected) but it *is* arguable; and usually, unsuccessfully so. 

But the saga of Claude Ruel — whom Hab fans probably regard as their Kryptonite coach — deserves a wider retelling.  Which I shall hereby offer, with the languid prose of a decompressing fuel cell engineer easing his way into a Friday evening after a long week’s work, despite offering the appearance to onlookers, of attending to his emails. 

__(’Read the rest of this entry »’)

Saw this on Barry Ritholtz’ blog (originally from ThisIsIndexed).  Now it’s appeared on Mish’s blog.  Which means this bit of visual poetry is spreading online as fast as economic instability through Europe and beyond…

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We recently covered Jim Collins’ book Good to Great, in our business book club.

The tome is responsible for popularizing the hedgehog metaphor, namely that a company should stick to what it’s best at, and not diversify into other sectors where it has no competitive advantage.  (I’ve heard of this kind of diversification being jeered as “deworsification” by irritated investors.    )

I’d heard that the fox / hedgehog contrast originated from Aesop’s fables…  but when I double-checked, it turns out that Aesop’s fox/hedgehog story was a parable about how when the proletariat overthrow the bourgeoisie, it just leaves a power vacuum for a new and even-more-rapacious aristocracy to move in.  Or at least, that’s how Marxists would put it. 

Turns out the fox-and-hedgehog comparison comes from an even more obscure Greek guy, Archilochus, who said: “the fox knows many things, but the hedgehog knows one big thing”.  That’s about the only thing of his that’s survived.  Who knows — but for selective scribes, equally pithy aphorisms about, say, the hippo and the oxpecker, or the cat and the giraffe, might have inspired future business books!  (Hippos and oxpeckers are symbiotic species, while I chose cats and giraffes arbitrarily.)

Now, the real test as to whether the fox-and-hedgehog parable holds true, is whether there are more foxes in the world, or hedgehogs.  Sadly, I couldn’t find any population numbers in a quick online scan.  Though given how dumb hedgehogs are reputed to be, I’d sort of imagine foxes would be more genetically successful… which would contradict the saying. 

(Mind you, foxes are near-top-of-food-pyramid predators, and there are generally far fewer such predators than any prey species.)