Category Archives: Economy

Source : Bloomberg Businessweek

Posted in Dax, Economy | Leave a comment

Courtesy of Joe P.

Posted in Economy | Leave a comment

I was in the process of writing a piece on this very subject.As luck would have it someone has done a much better job.

Posted in Economy, Lying Bastards, Psychology | Leave a comment

Last night I caught a snippet on Woodside calling it quits on a prject in WA. Ordinarily this wouldn’t worry me but I was intrigued by all the crap speak that surrounded the event. So I went in search of what was actually happening. -

Woodside Petroleum Ltd. has decided against using the Western Australian government’s James Price Point LNG hub for development of its Browse Basin gas fields.

The company told the market Apr. 12 that the proposed James Price Point development “does not meet the company’s commercial requirements for a positive investment decision.”

Woodside said it made the decision following a review of tenders for both upstream and downstream sectors of the Browse development. The company will now meet its joint venture partners to discuss and plan a new development concept for the project. Source Oil and Gas Journal

Which of course sent everyone vaguely associated into a spin. In particular it seemed to cause every politician within earshot to claim that investment in resource projects was still motoring along. I thought this was an interesting choice of words – since investment in resource projects and a resource boom are two different things. But there was a desperate attempt to equate the two.

So I did a little digging and found the following -

Apparently according to the RBA investment in resource projects is still strong but even they have used the wrong term. The chart above is from the RBA and is labelled Resources Boom which is incorrect – it is an infrastructure boom. If we were having a resources boom the industrial metals would not look they do.

They all look pretty ordinary as does the Shanghai Composite.

The issue here is one of words and their meaning – we are not having a resources boom but and investment in resources projects boom.  The two are very different as evidenced by the charts above. The RBA data is trailing data and does not relate to markets – the charts of the industrial metals and the Shanghai Composite are forward looking price related and this is the sort of data we should look to.

Its interesting how little research projects turn up some interesting facts and uncover the true meaning of weasel words.

Posted in Compulsory Reading, Data, Economy, Lying Bastards | Leave a comment

The key point for me is the statement – skewed unfairly. This is the crux of the argument, over the past generation it seems as if there has been a concerted attempted to skew the playing field to benefit the uber wealthy whilst disadvantaging everyone else. Systems will also show inequality, this is simply the nature of the world but cheating and getting away with it shouldn’t be part of the game.

Posted in Aspiration, Economy, Lying Bastards, Statistics | 5 Comments

Anyone know the email address of the Cypriot Finance Minister – they might find this interesting. If you want a sensible macro view of things then Grantham seems to be the go to bloke.

Posted in Economy | 1 Comment

More than 10 minutes today….so grab a cuppa.

For some reason some users are having trouble seeing the above video. If you are having trouble cut and paste the following into your browser – http://vimeopro.com/user1683164/ten-minutes-with-tate

Posted in All Ordinaries, Asian Markets, Compulsory Reading, Data, Economy, Predictions, Ten Minutes with Tate | 7 Comments

I recently came across this paper Complex Dynamics in Learning Complicated Games which looks at why some games are easy to master whereas some harder skill based games such as Go or chess are much harder to master.

In simple games with a limited number of moves the most effective strategy is fairly easy to deduce, as a result the game becomes boring. However, in this paper it is argued that in more complex games where each move has a large number of possible permutations then the players action become less rational and it becomes more difficult to find an optimum approach. In effect the action of players can become random.

The authors of the study posit that this may have implications for financial markets (no shit Sherlock) It is always intrigues me that game theorists and academics fail to understand that the real world is dirty, our knowledge is imperfect and the people making the decisions are even less perfect.

One of the things that has always interested me about game theory is its somewhat sterile nature and I have wondered if this sterile nature does not simply consign it to abstract games that centre around geopolitcal conflict. The background for these games is that all players have a a near perfect understanding of the game being played. This understanding is termed the equilibrium point and is perhaps the largest flaw in the applicability of game theory to real world problems.

Our knowledge is constrained by our cognitive ability, the time we have to reach a decision and the quality of information we have. In some ways game theory does recognise this but it fails to understand that whilst we have bounded decision making capability we have an almost unbounded capacity for being irrational. It is this irrationality that undermines the usefulness of fields such as game theory and its red headed cousin economics.

Posted in Cognitive Dissonance, Data, Economy, Predictions, Psychology | 1 Comment

This is probably a question that many on the sidelines are asking themselves having missed the final quarter rally in equity markets. To be honest it is actually an extremely difficult question for a multitude of reasons.

1. There is the eternal question of have you missed the boat?

2. What happens if the market stalls the moment you enter?

3. What happens if it doesn’t stall and still keeps going and you still are not on board?

All of these are possible outcomes and since no one knows the future you need to assume that they are all equally possible. The alternative I want to concentrate on is what happens if the market keeps going and you are still not on board since I regard this as potentially the most destabilising outcome for most investors/traders.

I accept that there is an entire class of market participants for whom participation is not of  importance. What is of major importance to them is annoying me at lectures by telling me that they predicted the GFC and would have made millions but didn’t because they couldn’t borrow them Mums 1985 Corolla to go to the ATM to take out their vast fortune out of the bank and transfer it to their special secret Swiss bank account which seems to only offer accounts to sad middle age men wearing cardigans. But they did predict the GFC and would have made millions…….

I am assuming you are not one of these and are genuinely concerned about entering a market that had a reasonable relative lift in 2012. However, the lift in 2012 needs to be put into context. The ASX 200 began 2012 at 4069 and with glacial slowness dragged its way to a high of 4448 at the beginning of May. The market then stayed below this point until October and even then the lift above this point was short lived. The real gain in the ASX 200 came in a six week period at the end of the year. The rest of the year was a bust.

This context is important because it shows that you have not missed a year but rather six weeks. Now, consider the bull run before the GFC – this run lasted for 241 weeks give or take. The current market has run for six, the previous major run was for 241 weeks or about 40 times the duration of the present run.

Any decision to enter a market is a personal one and needs to reflect each individuals aims and aspirations. But the somewhat breathless I’m ever so damp carry on of financial commentators about the current market simply fails to understand the historical context of the current move. Mindless cheer leading does no one any good. There is always time to take a breath.

Posted in Economy, Predictions, Psychology, Stupid Idea of the Day, Trading | 3 Comments

This has all sorts of implications that in no way have been prepared for by government simply because they have neither the intellect to understand the problem nor the will to fix it.

We are on our own with this one……………..

Posted in Economy, Science, Statistics | 2 Comments