Cisco replaces GM

Christopher Browne cbbrowne-Re5JQEeQqe8AvxtiuMwx3w at public.gmane.org
Fri Jun 5 00:37:43 UTC 2009


On Thu, Jun 4, 2009 at 7:51 PM, Ivan Avery Frey <ivan.frey-H217xnMUJC0sA/PxXw9srA at public.gmane.org> wrote:
> Warning! Off topic leftist rant follows:
>
> That's why when I hear historical analysis of the DJIA (Dow Jones
> Industrial Average) my blood pressure goes through the roof. They don't
> take into account the fact that the analysis is completely bogus because
> companies get replaced.

I don't see anything notably "leftist" there...

I'm not usually considered on the "left wing of the bird," and I
consider the problems with the DJIA to be sufficiently serious as to
make it pretty much utter rubbish from an analytic standpoint.

After all:
- 30 members are too small to be a meaningfully stable portfolio
- As you observe, replacements lead to *large* changes in the
behaviour of the portfolio
- There are hard-to-observe and harder-to-grasp weighting factors
thrown in to account for differences in stock prices (stock splits are
the most obvious cause for need of this)

In effect, it's a big popularity contest, the stock market equivalent
to a beauty pageant, with aspects every bit as crass as the bikini
competition.
-- 
http://linuxfinances.info/info/linuxdistributions.html
Helen Rowland  - "One man's folly is another man's wife." -
http://www.brainyquote.com/quotes/authors/h/helen_rowland.html
--
The Toronto Linux Users Group.      Meetings: http://gtalug.org/
TLUG requests: Linux topics, No HTML, wrap text below 80 columns
How to UNSUBSCRIBE: http://gtalug.org/wiki/Mailing_lists





More information about the Legacy mailing list