Who’s Better at Picking Stocks: r/WallStreetBets or a Goldfish?

Michael Reeves has carved out a unique niche in the online world through his comedy-tech videos, combining his programming skills and love of modern technology with rapid fire jokes and satire.

In his latest production, he's taken on the world of meme investing, as represented by the favorite stocks pitched by top contributors to r/WallStreetBets, and pitted them against pure random selection, as represented by the stock picks of his pet goldfish. In the following 15-minute video (featuring some NSFW language and visual humor), he explains how he did it and presents his experimental results:

Our favorite part is when he pitches the "FISH" system to potential investors.

Reeves' experiment makes sense in the light of the real results of the Wall Street Journal's long-running investment dartboard challenge, in which the performance of stocks picked by professional investors competed against stocks picked by WSJ reporters who threw darts at the newspaper's stock listings to pick stocks at random. Superficially, it appeared the pros beat the darts, but that was because they benefitted from two secret advantages that were hidden in plain sight:

Professor Burton Malkiel of Princeton University, who for decades has been arguing that you can't beat the market, and a colleague found that the stocks the experts picked were risky. They were far more volatile than those the reporters picked using darts or the stocks that make up the S&P 500. When the stocks of the three groups are adjusted for risk, the returns of the experts fall precipitously below those of the dartboard or the index.

Professor Malkiel goes further. He argues that the unadjusted returns of the experts were higher because Wall Street Journal readers noted the selections after they were published and then bid them higher. Had the experts chosen their stocks on the day the stock picks were published instead of the day before, their return would fall a whopping 3 percentage points!!!

All in all, Reeves' goldfish-based investing system is a fun way to revisit those old results.

Previously on Political Calculations

Australian Politics 2022-05-19 21:54:00

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Massive changes to plastic shopping bags in Australia with NSW set to BAN lightweight bags in days, while Woolworths has stopped selling its 15c reusable bags

And what good will this do? The claim is that it will keep plastic out of the oceans. It won't -- for the excellent reason that plastic bags used in Australia don't go there anyway. Most plastic in the oceans comes from Asia. Such waste in Australia is normally disposed of properly. All those garbage trucks running around our suburbs are actually doing something

If you really wanted to stop plastic going into the oceans, you would put a barrage across the mouth of the Yangtse. That would stop about a third of the plastic that presently goes into the Pacific


Australian consumers face a plastic bag revolution in just days with major changes coming into effect in NSW and Western Australia in the coming weeks.

NSW will ban lightweight plastic bags from June 1, while Woolworths supermarket will stop selling its 15c reusable plastic bags across all stores in WA from July.

The supermarket giant will only be offering its paper, green fabric and Bag for Good alternatives when a statewide ban on plastic bags comes into effect from July.

'Over the next month, we'll be gradually phasing out plastic shopping bags from our stores and online orders across WA, as we move to support the WA Government's upcoming plastic bag ban,' Woolworths state general manager Karl Weber said.

'This change will see more than 30 million plastic bags removed from circulation in WA every year — which is a big win for the health of our oceans and waterways.

'While our paper bags will continue to be available, the most sustainable bag you can use is the reusable one you bring from home.'

More than 80 per cent of shoppers are bringing their own bags into the supermarkets - meaning the latest change will have an impact on a small number of customers.

'The vast majority of our customers already bring their own reusable bags to shop, which is the very best outcome for the environment, and we encourage customers to keep up the great work,' Mr Weber said.

'We know the change brought about by this new WA legislation may be an adjustment for some customers and we thank them in advance for their support as we all work together to grow greener.'

Customers will be reminded of the looming change by in-store advertisements.

Environment minister Reece Whitby said the state was leading the way on banning single-use plastics across Australia.

'Western Australia has a strong track record on reducing single-use plastics in the environment, and was named the top jurisdiction in the country two years in a row by WWF Australia, for the work that is being done,' he said.

'The WA community has shown overwhelming support for this — and I would like to thank everyone, including Woolworths, who have embraced these important changes.'

The paper bag will cost 20c and will be able to carry up to 6kgs of groceries.

Woolworths was the first supermarket to ditch single-use plastic bags in 2018. The reusable plastic bag was introduced for 15 cents and was sold as a cheaper alternative to its 99c fabric bags.

Plastic items will be banned in two stages across Western Australia.

The first stage includes banning thick plastic bags, plates, bowls, cups, cutlery, stirrers, straws, takeaway polystyrene food containers and helium balloon releases.

The second stage will ban thin plastic produce bags, cotton buds with plastic shafts, polystyrene packaging, microbeads, oxo‑degradable plastics, takeaway coffee cups and lids, and polystyrene cups.

This change will come into effect by the end of 2022.

Businesses disregarding the ban risk heavy fines of up to $5,000.

Meanwhile, the NSW Environment Protection Authority outlined more detail on other products facing the state's upcoming ban.

Items in the firing line include single-use plastic cutlery, straws, stirrers, plates, bowls, chopsticks and sporks.

Other products being phased out are cotton buds and expanded polystyrene (EPS) food service items.

Plastic microbeads found in rinse-off personal care products - used for exfoliating and scrubbing - will also face a ban.

The supply of all these materials will be phased out by November 1 2022.

The NSW parliament passed the 'ground-breaking' legislation in November last year which will gradually halt the supply of problematic single-use plastic items.

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Do Leftists rely on ill-informed women to gain power?

On extremely rare occasions, news stories about political focus groups reveal something interesting.

Last Friday, Newscorp reported on a group of swinging voters who will (apparently) decide the Prime Minister’s fate. The group was mainly comprised of women because most male voters said they had already made up their minds.

What did these crucial women voters – who we are told time and time again have a near-mystical understanding of what is best for Australia – have to say?

Did they fume about the Liberal Party’s supposed ‘woman problem’ and demand to smash the patriarchy?

No.

They compared Scott Morrison to Ukrainian President Volodymyr Zelenskyy, finding the latter quite the hottie in his T-shirt and battle fatigues. That is what they ‘want our Prime Minister to be’ on the campaign trail – not shaking hands with people in a suit.

Did they give detailed rundowns on how Morrison has performed and follow up with a careful analysis of his failings?

No.

He ‘knows his finances and stuff’ but ‘comes across as obnoxious’ so they ‘don’t really listen to anything to do with [him]’ – according to the focus group.

Did they rage about ScoMo’s views on climate change, transgender rights, or any of the things that supposedly damn him forever? Did they show an interest in the economy, or security, or long-term nation-building goals?

No.

Even when prompted about their main policy issue, they could not identify anything in particular. They wanted to get rid of Morrison, but didn’t ‘know the best way to go about that … don’t know enough about it’.

Did they show even the most basic knowledge about or interest in the democratic process?

No.

They ‘don’t follow it closely’ but also definitely don’t want someone ‘arrogant’.

Thank goodness these women have vague ‘feelings’ about Prime Ministerial dress codes. Their position on fashion policy will see their votes used judiciously for the common good of the nation.

There is nothing astounding about their quotes. Political scholars have repeatedly found that women – although often more partisan than men and quicker to take up ‘causes’ – are less likely than men to show interest in macro-level political issues and more likely to preference narrow topics that they believe directly affect them (think sexual harassment or paid period leave).

What is new to the political field is this demographic being elevated to holy status in Australia by so-called ‘progressives’ in both major parties.

They want us to believe that women will guide us into a Utopian future – well, a future that involves getting politicians elected without requiring policy detail.

The same ‘progressives’ who are quickest to jump on a platform about how ‘women need to be heard more in politics’ are silent about how little average women know. Female political ignorance suits ‘progressives’, so long as those women stick to criticising anybody who ‘progressives’ disagree with.

‘Progressives’ go dewy-eyed about equality while encouraging women to stay focused on soft, highly gendered issues. By refusing to call any of this out, the same ‘progressives’ who wax lyrical about girl power are complicit in women remaining wilfully ignorant on significant political issues.

Ignorance makes people far easier to control, but is pandering to it for short-term gain really going to take our country in the right direction?

And why do many women choose to remain ignorant in a society where they have so much opportunity to be otherwise?

For years, this was blamed on useful scapegoats like gendered socialisation. Anybody who still invokes such excuses is trying to skirt the far more likely prospect that there are fundamental differences between how women and men think, and one of those seems to be that – even after decades of feminism – women still prefer babies, husbands, and domesticity. Women are not turned off politics because of misogyny in Parliament House. They never switched on to politics because they simply do not have a burning interest in the big picture.

For all their protests otherwise, ‘progressives’ want the status quo to remain because they need women to have feelings about small targets, rather than thinking deeply about difficult problems. They rely on this for their pathway to power.

If ‘progressives’ admitted that they can only get ahead by manipulating women’s ongoing obliviousness, this would undo years of carefully constructed narratives about the wisdom of women. It would also raise some uncomfortable questions about things like quota systems.

Suddenly, questions might start to come up about whether, when women do engage with politics, it is because they are truly interested in the broad issues that do affect everybody, or because they think their own small issues should concern everybody and damn the rest. Unfortunately, when you consider what is happening in Australia today, it looks a great deal like the latter.

‘Progressives’ validating ignorance and encouraging women to turn a blind eye to anything but the low-hanging fruit of gendered politics is going to end badly in the long term. However, I will not hold my breath on anyone having the guts to stand up against it. Such a step would be too much like real progress. And that might not go over very well in focus groups.

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Energy security fears spark oil and gas supply pledge

Australia’s biggest energy companies say they will ignore calls not to open up new oil and gas fields, describing a “frightening” scarcity of new developments as Russia’s Ukraine invasion sparks the worst global energy security crisis since the 1970s oil embargo.

While the International Energy Agency warned last year that no new oil or gas fields or coal mines should be opened up if the world is to reach net-zero emissions by 2050, Australia’s largest producers say it is vital to develop new sources of supply, with Santos concerned it has already missed opportunities.

“We are watching an energy crisis play out in Europe right now, but we have on our doorstop a prime example of what happens if the energy transition is focused only on stopping new oil and gas projects,” Santos chief executive Kevin Gallagher will tell the APPEA industry conference on Wednesday.

“We’ve had a decade of moratoriums, shutdowns and lockouts in resource-rich states and territories. And, as I have said for a number of years, the resulting scarcity of new developments today is frightening, with forecasts of tight supply over coming years.”

LNG has shot to all-time highs this year, while oil has surged 40 per cent after supplies were effectively shut off from Russia, sparking a battle across Europe and Asia to secure replacement ­volumes.

Woodside Petroleum said a crunch on supplies around the world had elevated energy security into a major issue for both the industry and consumers.

READ MORE:Ditch the ideology on energy policy: Santos chief|Open up new oil and gas fields: APPEA
“I think Russia’s invasion of Ukraine really has catalysed the energy security conversation in a way that it’s not been done since the 1970s with the Arab oil embargo,” Woodside chief executive Meg O’Neill said.

“Nations and political leaders first and foremost think about their home patch before thinking about their role in the global world. And the short-term implication is that there are challenges on reliability and challenges on affordability.”

The scramble for supplies has reignited a debate over energy security and emboldened producers to agitate for opening up new oil and gas fields, despite rising pressure from investors to set more ambitious climate change goals.

A push by activists to exclude fossil fuels was misguided and would simply push supply to rival nations with less stringent pollution goals, said the Australian Petroleum Production and Exploration Association, the industry body that counts Woodside, Shell, Santos, BP and BHP among its members.

“The focus of our opponents on stopping fossil fuel projects has had no effect on consumer demand, and no effect on emissions reduction. What it has done is to push fossil fuel developments to places such as the Middle East and Russia,” APPEA chairman Ian Davies said.

“This has created a supply crunch and has raised prices, hurting people and economies around the globe.”

Chevron, which operates the giant Gorgon and Wheatstone LNG projects in Western Australia, tipped ongoing price and supply volatility.

“There are going to be ­disruptive forces that move the markets around and energy supply around. Given these types of challenges, we can help to solve the types of problems that we‘re seeing, but there will still be some bumpiness as we make the twists and turns,” Chevron Australia director of operations Kory Judd said.

ExxonMobil Australia said the industry was used to geopolitical ructions and the best way for it to respond was by ensuring sufficient supply in the market.

“We’re putting a lot of focus now on Russia but in the past it could have been Venezuela, it could have been Iran, it could have been Libya. So there are always geopolitical events affecting overall supply and demand dynamics. In many instances we see those reflected in price and supply issues,” ExxonMobil Australia chairman Dylan Pugh said. “It goes back to some of those fundamental principles about continuing to bring on investments and making sure that you have a market that’s not so fragile.”

Chevron also took a swipe at iron ore producer Fortescue Metals after its chairman Andrew Forrest attacked the oil and gas industry for relying on carbon capture schemes to cut emissions.

Dr Forrest slammed carbon capture as unreliable and questioned whether a mass rollout of the technology was going to solve the industry’s pollution problems.

Chevron said its $2.5bn Gorgon carbon capture and storage project under WA’s Barrow Island, which is still only operating at half capacity, was storing the equivalent of Fortescue’s annual pollution each year.

“We’ve injected 6 million ­tonnes of carbon dioxide since 2019 and 2.1 million tonnes last year, and that’s about equivalent to the emissions a company like FMG emits in a year,” Mr Judd told the conference.

“I read all of the negativity around it but I see it happening reliably every day.”

Santos, which is developing several major carbon capture projects, was also set to criticise negativity around the technology.

“The new focus on stopping oil and gas projects in environmentally responsible jurisdictions such as Australia is centred around discrediting a proven technology for low-cost, large-scale emissions reduction – carbon capture and storage,” Mr Gallagher is expected to tell the conference on Wednesday.

“Yet CCS has been done before. We are doing it now in 27 commercial projects around the world. And it works.”

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Cost benefit analysis of Australia's Covid response shows low benefit and big costs

Australia’s Covid policy response has been driven entirely by primal fear and hysteria, with reason playing no role. Until today, no Australian state or federal governments have commissioned a CBA.

In mid-2020, Professor Gigi Foster of the University of New South Wales, had prepared on her own CBA for Victoria. Last year, she decided to update it and broaden it to cover the whole of Australia. I have assisted her over the past 8-9 months on this project. She has published a PDF of the Executive Summary of the CBA.

Its highlights are:

The government has lied about the magnitude of the Covid pandemic, which is 50-500 times less lethal than the Spanish flu. Once we consider the fact that Covid kills mainly the elderly, its effective lethality is even less.
Lockdowns have prevented a maximum of around 10,000 Covid deaths during 2020-21 in Australia, not the 40,000 lives Mr Morrison claims to have saved.

There were at least 7,940 additional non-Covid deaths from lockdowns in the first two years of the pandemic (in fact, there were more: ABS data shows over 3,000 excess cancer deaths just in 2021 of people so terrorised by the lockdowns and hysteria in 2020 that they did not get their cancer identified and treated in time).

Every policy-driven harm that reduces our lifespan or earning power, every harm to our children, and every harm through reduced capacity of the government to buy wellbeing is added up in the CBA. Gigi Foster estimates that the harms from lockdowns exceed any benefits by at least thirty-six times.
This CBA’s estimate is not an outlier. It is consistent with innumerable CBAs that have by now been published across the world which show similar (or even greater) orders of magnitude of harm from lockdowns.

While the full CBA will perhaps be published later in a book form, its Executive Summary is sufficient to destroy the innumerable falsehoods we have been told over the past two years.

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Also see my other blogs. Main ones below:

http://dissectleft.blogspot.com (DISSECTING LEFTISM -- daily)

http://antigreen.blogspot.com (GREENIE WATCH)

http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)

http://edwatch.blogspot.com (EDUCATION WATCH)

http://snorphty.blogspot.com/ (TONGUE-TIED)

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What Should the Value of the S&P 500 Be?

Since the S&P 500 (Index: SPX) peaked at 4,796.56 on 3 January 2022, the index has dropped by 18.2% of that record high value. But that simple observation raises a question. What should the value of the S&P 500 be?

We have a couple of interesting ways to approach answering that question, the first of which relies upon how investors set the average level of the index with respect to its trailing year dividends per share during periods of relative order in the U.S. stock market. The following chart illustrates the five major periods of order the S&P 500 has experienced since December 1991, which have been periodically interrupted by periods of relative chaos.

S&P 500 Average Monthly Index Value vs Trailing Year Dividends per Share, December 1991-May 2022 (through 18 May 2022)

In the chart, we show the mathematical relationships that have applied during those relative periods of order, which connects the average monthly value of stock prices (y) with the level of the index' trailing year dividends per share (x). We've built the following tool to do the related math to see how investors would set the value of the S&P 500 for the period of order you select for the trailing year dividends per share you enter. If you're accessing this article on a site that republishes our RSS news feed, you may need to click through to our site to access a working version of the tool.

Alternate S&P 500 Valuation Criteria
Input Data Values
Relative Period of Order
Trailing Year Dividends per Share

Projected S&P 500 Index Value
Estimated Results Values
Index Value Corresponding to Selected Period of Order

Using the default selection of the most recent period of order, which lasted from December 2018 through February 2020, until the arrival of the coronavirus pandemic initiated a period of chaos for the U.S. stock market, we find that with May 2022's estimated $62.90 for trailing year dividends per share, the corresponding value of the S&P 500 would be $3,777.

Or rather, that's what the math suggests would be a reasonable level for the S&P 500 had that relative period of order continued to the present. Since that value is below the current level of the index, this result suggests stock prices still have room to fall, but it's important to note that this level is neither a ceiling nor a floor. It simply represents the mean to which stock prices would revert during this particular previous relative period of order.

That mean level is visualized as the extended trajectory for this relative period of order in the chart above, where you can see the chaotic impact the arrival of the coronavirus pandemic had in March 2020, followed by the bubble inflated by the COVID stimulus programs of 2020 and President Biden's inflation-generating American Rescue Plan Act stimulus program of March 2021. That bubble entered its deflation phase after December 2021, which is still underway today.

With more than one previous relative period of order to choose from, there's a lot of room for interpretation. Other selectable options, such as the one for the early 1990s, may suggest the S&P 500 is greatly undervalued for the dividends per share you enter. One of the cool things about this tool is you can do the math for any level of trailing year dividends per share you choose, so you can find out how stock prices could alternatively been set during the days of the Dot Com Bubble, if that's your area of interest, or during any of the other periods in between. Go ahead and take the tool for a test drive to explore the world of alternate S&P 500 valuations!

Can you project where the S&P 500 could go during periods of chaos?

We know what you're thinking. Wouldn't it be nice if you could project what a reasonable level for the S&P 500 would look like during periods of chaos for the stock market? It would indeed, and we have you covered there as well.

Alternative Futures - S&P 500 - 2022Q2 with m=-2.5 from 20210616 - Snapshot on 20220518

If you know what the expectations are for changes in the growth rate of dividends at different points of time in the future, and you know how far into the future investors are focusing their forward-looking attention as they set current day stock prices, you can reasonably project the level for the S&P 500 even during periods of chaos in the stock market. It has been possible since April 2009 and became practical to accomplish after November 2009, when the CBOE introduced modern quarterly dividend futures for the S&P 500.

Why the PM’s first homebuyers plan gets a big tick

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I am normally the last person to disagree with Terry McCrann but I am surprised by his judgment below.  He does recognize that the government proposal will put more buyers into the property market and hence increase prices -- but seems to discount the importance of that.  

His judgment seems to be that the effect on prices will be small.  I suppose it depends on how many take up Morrison's offer.  So some modelling of the effect would be interesting.

My fear is that the price effect might nullify the increased ability to spend.  If the superannunt frees up $20,000 to spend and the price of a desired property goes up by $20,000 we surely have an exercise in futility.  And a price rise of $20,000 would not be a big move



The Government’s proposal to let first homebuyers use some of their super to buy their first house makes unequivocal good sense.

The major criticism is that it’s taken so long. Many people in their 30s and 40s, who are still renting, would be entitled to be a tad pissed.

Why is it now only happening when that first house is probably going to cost me a million, at least in Melbourne and Sydney?

Why wasn’t it around when I could have got my first house for, say, $500k? And then spent the last ten or more years building a tax-free capital gain – and by the bye shared in the Reserve Bank mandated free money for home loans for a few years – instead of all that rent money?

It is important to understand two big points.

First, the Morrison scheme has the same roots as the Albanese proposal for the government to fund up to 40 per cent of that first home buy.

Head-to-head, Morrison’s proposal is, in my view, superior. But I would also argue there is clearly both room for and a need for both. Let the buyer choose.

Albanese’s proposal has a homebuyer going ‘partners’ with the government to buy the property.

In contrast Morrison’s has the homebuyer going ‘partners’ with their own super fund; and in a more limited way.

Albanese’s would have the government providing up to 40 per cent of the total home cost; and so also would get up to 40 per cent of the – of any – capital gain.

Morrison’s would indirectly limit the super fund’s effective equity in the home to a much smaller percentage; and so both the super fund’s exposure to the property, to the ‘risk’ of profit or loss.

But critically, there’s no real ‘leakage’ to a third party. The super fund’s likely gain still is also the homebuyer’s.

The second big point is to accept that, yes, the whole issue of doing ‘something’ to boost the ability of first-home buyers is a vexed issue; there are genuine pluses and minuses.

This was rather neatly captured in a series of successive emails that popped into my inbox in reaction to the prime minister’s announcement.

“Allowing super for home deposits would ignite a new housing price explosion.”

“Super for housing inflationary and contrary to retirement income objective.”

“Access to super a step up for home ownership.”

Yes, all of them have elements of truth; in particular, any scheme which boosts the number of buyers and the amounts they can pay, other things being equal, will add upward pressure to property prices.

But to make that determinative - that there should therefore be no or only very marginal schemes – is really an argument to deny first home buyers both the ability and the right to buy their first home.

To deny them that, critically, in the context where there’s active concerted and persistent action by policy-makers to enrich those already owning property.

It’s not only a social imperative to help people buy their first home; it’s also a critically important finance one and really about fundamental financial equity.

Further, the bit of the third email headline I left out – from the Master Builders I might note – asserts, correctly, the over-arching justification for the Morrison proposal: it “maintains (the) Integrity of (the) super system.”

This is not a proposal to let people take money out of their super to go on a holiday, or fund a business or some other frolic.  It is very directly an investment by the super fund, just like any other investment.

And one that critically enables the single most important investment a person can ever make, given the way owner-occupied home ownership is so significantly and widely tax-enhanced

https://www.dailytelegraph.com.au/business/terry-mccrann/why-the-pms-first-homebuyers-plan-gets-a-big-tick/news-story/1f1c3299001d55af520183dc77110de9

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Unemployment drops to lowest rate since 1974

Uncategorized

This is not as good as it sounds.  It is basically a "sugar hit" from massive governmemnt spending. But that spending will fuel inflation, which will in turn lead to job losses as people  have to cut back on their spending

The latest unemployment figures show that the unemployment rate has dropped from 4 per cent to 3.9 per cent.

That’s the lowest level in half a century or since mid-1974 and it comes after a small increase in the number of people working through April.

Officially, the Australian Bureau of Statistics (ABS) says the unemployment rate held steady at 3.9 per cent that’s because it revised down March’s rate of 4 per cent to 3.9 per cent, the same figure for April.

It is the lowest jobless rate since August 1974 when it was 2.7 per cent.

Total employment increased by only 4000 for the month but there were huge swings involved.

Full-time employment increased by 92,400 but part-time employment dropped by 88,400.

Underemployment dropped by 0.2 percentage points to 6.1 per cent while the hours worked lifted by 23 million across the economy.

“The number of people working fewer hours than usual due to bad weather dropped from its March peak of over 500,000 to around 70,000 people in April,” ABS head of labour statistics Bjorn Jarvis said.

https://www.smh.com.au/national/election-2022-live-updates-anthony-albanese-to-release-labor-s-costings-six-million-australians-voting-early-as-campaign-enters-final-days-20220518-p5amh8.html

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