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  • The Beta-Rho Sham? (Addended)

    George Rebane

    Here’s a little something from my financial engineering toy box that one or two RR readers may find interesting.  The discussion is a tiny bit technical, but the pictures should be accessible to all.  Most investors know that a stock’s beta (Greek β) is a number that indicates how well the security tracks its market, say, the SP500.  And rho (Greek ρ) measures the correlation between, say, the price series of two stock’s – the way they both zig and zag together, or how much one zigs while the other zags.  I’ll try to keep this short.

    From august sources like Modern Portfolio Theory (MPT) by nobelists Markowitz and Sharpe, we learn that if a stock’s β equals one, then it more or less goes up and down in similar percent changes with the market.  If β > 1, then the stock’s swings have a greater percentage than the market’s; and if β < 1, then the stock’s swings behave in a more reserved manner than do the market’s.  Riskier stocks have the bigger swings, and more conservative stocks have the smaller swings.  The referenced formula (here) for beta reflects this with its inclusion of the standard deviation of the price swings.

    As stated above, ρ measures in how tight of a formation two stocks will fly.  The range of ρ is between +1 and -1, with the positive values indicating tighter formations, and ρ = 1 denoting a perfectly tight formation matching each other’s zigs and zags.  A small or zero ρ means that the stocks pretty much act independently of each other.  In designing your investment portfolio from a selected shortlist of stocks, MPT teaches that you should try to avoid stocks that pair with high ρ values.  Doing probabilistic math recommends that you pick stocks that pair with the lowest ρ values possible to give you a low volatility (i.e. low risk) portfolio.

    Now after you understand all that, we’re going to throw a monkey wrench into the whole thing, a little bit of information you will not hear from your well-paid wealth advisor who manages your portfolio.  (Drum roll please.)  Betas and rhos, calculated from past performance, are pretty much worthless measures of securities performance for portfolio design.  Why?  Well, that answer depends on what is known as the investor’s ‘investment horizon’.  That’s the period into the future over which the investment plan is supposed to hold with numbers such as expected portfolio appreciation, its most likely upper and lower limits, and so forth.

    (more…)

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  • Scattershots – 3jan22 (updated 7jan22)

     

    George Rebane

    Eight days with no power on Hind Tit Rd.  We have received the same lame information-less message five times from PG&E, telling us that they have access to our area and are starting to assess the outage to see what must be done to restore power.  Not even a hint of any schedule or estimate of how long we have to stay hunkered down.  We're a stone's throw from the Rood Center, and there is total access to our ridge, the outage up here is no doubt due to some problem at a local distribution facility, which you’d think would be easier to fix than having to wait until trees are cleared from the road and downed power lines are restrung.  At every turn they demonstrate another function or task of which they are incapable.  But hey, their outage map is looking better today than yesterday.  Some day it’ll be our turn.

    The next worry on everyone’s mind is propane or gasoline for their generators.  Gasoline appears to be available – we trade at Robinson’s and they are doing their job with their fuels.  My supplier is Amerigas, with whom I’ve been a 45-year customer.  They have promised to resupply me before the sun sets on Wednesday.  Most people have already run out or are about to with not even a promise of their next delivery.  Calling a propane company today will have you listening to some very irritating elevator music for almost an hour or so until you go to Plan B.  Amerigas’ online account management is up, and they confirmed my delivery schedule in writing (of which I took a screen image) for what good that will do.  In any event, many others are really faring poorly.   It’s amazing how many people – especially the elderly and infirm – are stuck in their homes with no preparation at all for when the grid goes down.  Grandson-in-law Shawn, owner of Estey Electric, has been doing yeoman’s work during these las days with his crews and coordinating Project Haart teams of volunteers to do everything from getting generators going, bringing food and fuel, and clearing driveways.  These people are a blessing to the community.

    Kudos to the Supes for getting Nevada County declared a disaster area.  Can anyone actually tell if that designation has yet to benefit us?

    [4jan22 update]  California’s incompetence on parade – dumping untold amounts of water into the Pacific Ocean.  H/T to reader for the links (here and here) that tell the story of the Democrats’ eternal incompetence when it comes to governance and regulating public affairs.  In the last two years we have pissed away a 7-year water supply from our reservoirs in a state blessed with abundant water that comes to us interspersed with dry years – a centuries old climate phenomenon in this part of the West (that’s why God invented reservoirs).  But again, ‘the fault dear reader is not in our stars, but in ourselves, that we are the terminally ignorant voters.’ (with apologies to The Bard.)

    "I've got a few bones to pick with recent columns", so writes Mr Richard Borlik in the 30dec21 Union.  He does a good job outlining all the left-leaning and politically correct (cum woke) editorial and news pieces to which The Union is prone.  And kudos to the newspaper for having the balls to publish such a forthright criticism of its editorial and news policies.

    [7jan22 update]  How far we are apart.  A longtime RR reader and commenter, well-known to our regulars, is a dedicated leftwinger as evidenced by years of his comments on various subjects that decorate these pages.  He recently put another shot across my bow in a discussion thread by not only refusing to read a citation I gave him, but pre-emptively declaring that its author is a “totally non credible source”, not to be believed or trusted.  I was advised to “try again.”  The author, Victor Davis Hanson, is a noted historian and scholar (Stanford professor) who is nationally known, and who many Americans consider a national treasure.  He is also acknowledged as an astute observer of the country’s socio-political scene, and has an extensive contribution of published books, scholarly papers, and articles regularly appearing in prominent publications.  He is also interviewed frequently by a spectrum of media outlets for his views on current events, which he is uniquely able to connect with historical perspectives.  No one has ever accused or shown VDH to fly loose with his assessments or falsify any factual content in his writings.  Nevertheless, dedicated leftists abhor him because he is intellectually unassailable, and his presentations devastate the progressive narrative and established public policies.  If people like VDH are not accepted by the Left, then there truly is no possibility of dialogue.

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  • Predicting 2022 (updated 1jan22)

    George Rebane

    Confused2022 will be another pivotal year in a growing string of such recent years.  Most predictions, save the premature happy dancing by Republicans, range between dour and cataclysmic.  A reader gives us a taste of that by pointing to James Howard Kunstler’s entry in Clusterfuck Nation with his ‘Forecast 2022 – Dumpster Fire Blazing on the Frontier of a Dark Age’.  So here are some of my prognostications with an invite for readers to add their own.  Please try to submit your entries before the first week of 2022 becomes history.

    Since we know predicting is hard, especially about the future, and very little is certain, I will attach some quantitative probabilities to my efforts, and invite others to do the same.  We can then even determine who wins the 2022 Nostradamus Award, as I demonstrate in the coda.

    1. Bumblebrain will not be president on 1 January 2023 (0.5); will not be president on 21 January 2025 (0.4); will serve out his full term (0.1).
    2. Kamala will resign before 2022 election (0.6).
    3. Covid will revert from pandemic to declared endemic (like the flu) status before 4 July 2022 (0.7).
    4. Republicans will win the House in 2022 (0.8).
    5. Republicans will win the Senate in 2022 (0.7).
    6. Russia will invade Ukraine in 2022 (0.55).
    7. China will invade Taiwan in 2022 (0.25).
    8. Fed declared inflation will exceed 10% in 2022 (0.25).
    9. Republicans will win at least 14 House seats from California (0.8).
    10. The 25th Amendment will be used to designate a new Vice President before the 2024 election (0.75).

    More later, maybe.

    Such a list of probability tagged predictions may be scored simply by taking the average of the ‘correct’ probabilities – i.e. probabilities that associate with the cases that come to pass.  For instance, in my list, if everything comes to pass with with Biden serving out a full term, Kamala does not resign, and China does not invade Taiwan, then my Nostradamus score – which ranges between 0 and 1 – would be (0.1+0.4+0.7+0.8+0.7+0.55+0.75+0.25+0.8+0.75)/10 = 0.58.

    Jo Ann and I wish all of our readers and correspondents a productive and healthy new year.

    [1jan22 update]  I just want to emphasize the reason for my #6 and #7 predictions.  Everyone in the world save America’s Democrat-prone electorate knows that the Team Biden is the weakest, most feckless, incompetent, and ignorant leadership the US has installed in the last 50 years (yes, even beating out the peanut farmer).  For either of Putin or Xi to invade would be a win for them ou two counts.  First, whatever our response, Americans tend to support their president during times of crisis.  That will assure a continuance in power of the weak and feckless Democrats.  Second, they get to achieve the next notch in their geo-strategic goals with the new territory they will then control.  What’s not to like in creating another crisis that Bumblebrain can’t handle?

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  • Ignorance that passeth all understanding

    George Rebane

    The Biden administration in attempts to climb out of its shithole of bad policies has the latest excuse for the inflation surge – it’s the fault of American businesses, big and small.  You see, they all got together and decided to start raising prices at the same time.  Another capitalist conspiracy if there ever was one according to our socialists cum communists (that has been their message for over a century now).  It is incomprehensible how the simple economic principle of supply/demand and its effect on prices (and economic behaviors) continues to elude them.

    This aspect of their profound ignorance ranks right up there with the Left’s eternal shibboleth that tax rates don’t affect economic behavior.  Where are their intellectual luminaries like Cass Sunstein, of Nudge (2008) and Noise (2021) fame, when Bumblebrain and his redheaded shill put out such garbage for national consumption?  It has never taken much between the ears to understand why socialism and widespread misery correlate so well – more socialism, more misery.  Assemble just a handful of their tortured tenets on human behavior, and you can not only write the economic histories of their disasters, but also predict the nature of the next disaster given their latest policy WIP.  Their BBB (Bring Back Blight) legislation, now in limbo, is a perfect redux of the Titanic’s last night at full speed in iceberg infested waters.

    As part of the carefully intended and hidden blights in the BBB, consider that one of its many disastrous provisions calls for the feds to subsidize the nation’s journalists’ salaries.  The wraps would finally come off these lamestream lackies of the Democratic Party – they would finally be put on the payroll to write the ‘news’ as dictated by the DNC – so much for the sham of a free and impartial press. (more here) The American electorate is judged to be in such dire straits that the Left no longer needs to hide or deny such fundamental transformations of America.

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  • The Success of Socialist Schooling

    George Rebane

    In the last Dark Days Diary (here) I highlighted a short dissertation on the spread of communism by a former KGB agent.  As we have frequently pointed out, and he confirms, the spread of that evil ideology is made possible by its acolytes initially gaining control of a target nation’s public educational system.  This is from the Marxist-Leninist playbook – ‘let me educate one generation of your youth to assure communism’s triumph.’  In the United States we are now educating the third generation with a curriculum that ranges between pure trash and insidious collectivist propaganda – e.g. Critical Race Theory.  And this is done in our public K-12 schools and also academe, which has for the most part eliminated all dissenting voices and thought on their campuses.

    Historian and classicist Victor Davis Hanson makes the extensive case (here and here) that this onerous task is being carried out by teachers’ unions and faculty associations which have wholeheartedly embraced the goal of a socialist world order.  Their success can be measured by the fraction of our graduates who are profoundly ignorant of their American heritage and equally lacking skill sets which enable their entry into a productive workforce.  A disturbing share of them find work with government as the employer of last resort.  There they immediately fit in with the correctly thinking and compliant deep state extension of the Democratic Party, doing its work no matter who currently happens to control Congress or reside at 1600 Pennsylvania Ave.

    For the Left, this fortuitous outcome is to a large extent the fault of our ‘go along to get along’ Republicans.  Over the years they, as the conservators of our Constitution, have shown little interest to understand and a backbone to resist the nation’s ratcheting of anti-American public policies.  The Republicans appear to measure their political progress by how good they feel when grumbling and griping about the Left to their likeminded constituents in cloistered gatherings.  These pity-party nodding sessions motivate only a trickling of attendees, if that, to take an active stance to counter the encroach of socialism in their communities.  The rank-and-file Republican then returns to his homestead to continue living a productive and non-contentious life minding his own business.

    The only plausible road back (from beyond the tipping point to the Great Divide) is to regain local control of educating our children.  Rebane Doctrine has long taught that to do this is to change education policy so that in the public funding of education the money follows the student, and parents determine where the students are schooled.  This calls for a restructuring of our education industry into a more open-market, capitalistic format, and away from the rank socialist structure of today.  In the main, K-12 education should be available to parents in the same manner as is the choice of a college education.  This means that schools would become transparent for-profit institutions that make their performance (quality of their product) accessible to their clients.  Overall, given today’s cost of education, such a change would significantly reduce costs, and increase the relevance and quality of the delivered education.

    Our leftwing knows that Sapir-Whorf’s theory of language enabling thought (q.v.) is correct as was made public by Orwell and put in practice on a national scale by Mao et al.  Today’s public educated true believers can neither believe in the existence of alternative ways to organize a beneficial society, nor understand where our nation’s present path is taking us (e.g. evidence of that abounds in these pages).

    No one knows the truth of all this more than does our Democratic Party which has viewed their support of socialized education as required maintenance of their private manufactory of an ever-increasing horde of compliant constituents and unquestioning voters.  The last thing our Left will tolerate is making school choice possible and letting parents decide where their children will be schooled.

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  • Sandbox – 27dec21

    [Well, the old year is going out like a lion.  The whole county got plastered with its biggest snow storm in years, and there's more to come.  Power went out 1215 this morning, and our new 24KW powerbox has been humming along ever since.  Everybody will be ordering propane.  Time to hunker down, stay warm, and pray for RAIN.  gjr]

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  • When Teenagers Worked

    George Rebane

    [This entry is posted as part of an occasional addition to RR’s My Story category as an expanding part of my autobiography.  It may be of limited interest to readers as a period piece describing part of an America that sadly is long gone.  It was an epoch that goes a long way to illustrate today’s generational differences in our culture, values, mores, and sense of nationhood.]

    I was a teenager in the 1950s and we all had jobs in addition to home chores, school work, and after school activities (I played basketball).  We lived in the rural outskirts of Indianapolis before moving to California in 1957.  I did odd jobs for neighbors throughout the year and was much in demand because my dad and school shop classes had taught me to do almost everything required to build/repair a residential house.  But my first regular work was as a field hand for Jack Maschmeyer, my school bus driver who along with his wife Mary ran a small truck farm growing specialty crops a couple of miles from my house.

    The farm work started in late April and lasted through September.  I got to Jack’s farm on my bike, and was there joined by three other teenagers.  The four of us made up the vetted and proven core team of field hands that enabled the Maschmeyers to run their operation.  Jack was a no-nonsense ‘Dutchman’ (WW1 veteran) who taught his charges carefully and put them through a probationary period before being welcomed as a permanent member.  While we did many stoop-labor tasks and harvested several kinds of crops (e.g. field tomatoes, cantaloupes, strawberries, …), our main work always included the daily cutting of about 5 acres of asparagus, an amazingly fast-growing plant – we would always hear the hiss from the field as we prepared to go home in the evening.  The white noise came from countless new spears pushing up through the dried husks of previously cut spears.

    Cutting asparagus with speed and accuracy was the most skill-demanding job on a truck farm; a bad cutter was slow and usually destroyed the following day’s crop by imprecisely making broader thrusts with his V-bladed knife than was required to harvest the mature spear which had grown about a foot in the past 24 hours, and was packed cheek-by-jowl with the immature spears for tomorrow or the next day.  Jack hired no bad cutters; these came and went real fast when we had turnover.  Mary always sent us boys home with some produce, usually a bunch of freshly cut asparagus which my mom didn’t know how to cook – she boiled it to death, which was the Nordic way with most vegetables.

    But the point I want to make here is that America’s society worked because teenagers also worked.  We did countless jobs that included paper routes, yard work of all kinds (this was before Mexican gardeners), house chores, clean-up and construction jobs, etc.  Suburban America’s yards looked good because the local teenagers kept them that way within win-win compacts with neighbors.  There was no concern for child labor laws, regulations, wage levels, age restrictions, workers comp and liability insurance, … .  The work contract was between the neighbor-in-need and the kid looking to work.  Relationships were struck that lasted for years, usually until the young person’s school required transitioning to more serious jobs like farm work or clerking in local stores (Jo Ann’s teenage jobs).

    (more…)

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  • Christmas – 2021

    Behold, a virgin shall be with child, and shall bring forth a son, and they shall call his name Emmanuel, which being interpreted is, God with us.  Matthew 1:23

    Nativity

    George Rebane

    [This Christmas message first appeared here in 2019 and was repeated last year.  It still bears repeating.]

    Another tumultuous year is ending with celebrations for peace and joy.  The Rebanes count themselves among the diminishing number of American Christians who still wish their family and friends, and RR readers of all persuasions a season of remembrance and reflection on what has been bestowed on this third planet, circling a modest star, making its way with billions of similar stars in a galaxy that populates this universe with uncounted trillions of other such galaxies.  Christmas still reminds many of us that we are among the blessed in our seeming insignificance.

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  • Scattershots – 22dec21 (updated 29dec21)

    George Rebane

    Here’s the FDA approval of an Ivermectin wannabe that is touted by the conservative Daily Signal.  And here from Blaze is a more sobering look at the new pill therapeutics that discusses their problems and shortcomings, among them price.  Meanwhile IVM has all the proven requirements for an early stage pill to minimize subsequent Covid morbidity, and a medicine that is widely available, off-patent cheap, and doesn’t have the feared side effects of the recently rushed remedies from big pharma.

    [24dec21 update]  Here is a gun culture that would give our totalitarians (aka Democrats) sanitary problems in their shorts.  And it's all made possible, as always, by the society's civilized culture; something that has been destroyed in America, the land of the formerly free.  (H/T to reader)

    [26dec21 update]  Weather guessers (aka meteorologists) have no shame.  This becomes clear to anyone who attempts to use winter weather forecasts for planning purposes.  Their models are totally deficient in their attempts to predict impactive weather events like rain or snow.  Their unabashed predictions over the last five days for the imminent onset of heavy snow have witnessed a steady sequence of rollbacks without once diminishing the “100%” probabilities they continue to attribute the snows’ onsets that are only a few hours in the future.  Bottom line – no can do, but will continue publishing unabated bullshit hour after hour as the days pass.  So, the tribe that can’t hack getting major weather changes only hours away, still insist that their ‘science’ allows them to predict global temperatures 50 years from now to within one degree Celsius.  And then there are the millions of true believers out there eating it all up – don’t get me (re)started.

    [27dec21 update] VDH's The Dying Citizen (2021) is a tour de force from a scholar and keen observer of the human condition that is not his first, nor will it be his last.  In Hanson's included essay on the progressivists' plan for global governance, I extract the following – "In sum, globalization rests on a few poorly examined laws: those who draft globalized rules for others have the resources to navigate around them.  Discussions of abstract cosmic challenges – achieving world peace, cooling the planet, lowering the seas, dismantling secure borders – are psychological ways to square the circle of failure to solve concrete problems at home from war to poverty.  Wealthy tech workers in San Francisco hold frequent conferences and symposia about addressing water, sewage, and disease in Africa, but the have demonstrated no ability to address California's own fetid city streets, which are home to over three hundred thousand homeless and rife with medieval diseases, refuse, excrement, and rodents.  In addressing such existential and age-old challenges, we are left where we started in Western civilization: the only means are transparent decentralized local governments, audited by a free and disinterested press and acting under the aegis of a constitutional, consensual republic, serving only at the pleasure of a voting citizenry." (emphasis added)

    [29dec21 update]  To become an actuary is hard, so reports the 29dec21 WSJ in ‘Want to be an actuary?  Odds are you’ll fail the test.’  “Insurers need experts to calculate risks.  Among those number-crunchers’ riskiest endeavors are the tortuous exams for credentials.” Actuaries do all kinds of quantitative risk assessment work for insurance companies, M&A consultants, corporate investment activities, etc.  The two professional credentialed actuary levels are Associate and Fellow.  Passing multiple tests are required for each, the toughest being on probabilistics.  The tests are usually taken multiple times by successful candidates to get passing scores – even then only 15% of those attempting make it to Associate, 10% make it to Fellow.  Here’s one of the toughies on probabilistics.  “An urn contains 10 balls: 4 red and 6 blue. A second urn contains 16 red balls and an unknown number of blue balls. A single ball is drawn from each urn. The probability that both balls are the same color is 0.4720.  Calculate the number of blue balls in the second urn.”  Give it a try and post your answer in the comments.  I’ll post the correct answer after we see a few attempts (or not).

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  • Covid Policies and Continued Testing (Addended; updated 22dec21)

    George Rebane

    Governments here in America and around the world are fumbling around with Covid response policies as every new variant is discovered and infection cases surge and retreat.  People continue to be assured that the public agencies and their political leaders are “following the science”, even when there is no evidence of such following presented or demonstrated.  But as we have all experienced, the government agencies, ‘experts’, and politicians are all over the place with their advice, prescriptions, and mandates.  It is clear that neither the national nor global collective knows how to properly respond to the pandemic (e.g. here)  More disturbing are the ongoing subterfuges that leak out in the media and online.  An extremely revealing and disturbing interview is by Tucker Carlson of Robert Kennedy Jr, author of the current best seller The Real Anthony Fauci (2021).  It has been pulled by YouTube and FN, but is still available on Bitchute here.

    In my many-years experience with healthcare decision making, I have found that practitioners in the medical industry are profoundly ignorant of uncertainty, risk, utility, estimation, and in general critical interventions that are affected by uncertainties (i.e. depend on probabilistics).  This assessment applies especially to the physicians with whom the patient interacts.  These people are uniformly condescending or arrogantly hubristic in how they hide their ignorance of the maladies in question, and what is required for the lay patient to make a reasoned and understandable decision.

    Perfidy aside, nowhere is such practice more visible to the technically trained than in the field of public health.  A current posterchild demonstrating this is how little and erroneously we are informed about Covid testing.  We are told that testing is somehow critical to reducing the spread of the disease – the more testing the better.  Tests are communicated to the layman as consisting of one uniform process that somehow reliably determines your infection status AND your ability to infect others.  Science tells us nothing could be further from the truth.

    Ignorance of causes and effects should be usefully represented quantitatively.  Such ignorance is no excuse for avoiding quantitative decision support techniques.  For example, here is an AMA article that talks about test types, dependers, and whyfors, but gives you no information about the involved probabilistics (e.g test sensitivities and specificities) for decision making.  Today machines can be designed to incorporate more knowledge than any one or group of practitioners can manage in literally any specific domain of expertise.  As a consequence, where such technology is applied, AI-based decision support systems outperform their human counterparts every time – and this is specifically the case in medicine and healthcare.  Here is Nobelist Daniel Kahneman on AI bettering human decisions. (here and here)

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10 comments on The Beta-Rho Sham? (Addended)