When developing trading systems, one of the first things you have to deal with is a high level decision: are you designing a method that trades most or all of the time, or only sporadically? Both approaches are potentially valid, but they require different steps during system design. Continue reading
Monthly Archives: March 2013
It’s Official – I’m a Twit?!?
With the demise of Google Reader, it seems clear to me that the writing is on the wall for RSS as a push technology to connect people to this blog. Not that some people won’t continue using RSS, and I’ll keep supporting it, but clearly it’s no longer a way to reach many people. Which leaves me with two choices for an alternative: Twitter or Facebook. Neither seems particularly palatable to me, but Twitter looks like the better of the two in terms of being a simple, transparent pass through. Enter the new Off-Road Finance twitter account. My current plan is to simply use it to notify people when I’ve sent out a new article. So if you’re on twitter and follow this site, follow me to get the latest updates.
Does A Record High Dow Mean My Population Model Of Investment Pricing Is Wrong?
If you’ve been following this blog since the beginning, you may know that I take a fairly dim view of investment. If you haven’t read the linked article, you’ll want to do so before continuing or the rest of this won’t make much sense.
Today’s market news is that the Dow Jones Industrial Average (DJIA) made new record all time highs, eclipsing the previous highs from 2007. This is, as news goes, only sort of important The DJIA long ago ceased being particularly relevant when compared to the S&P 500. The concept of Dow industrials and comparing them to DOW transportation stock to generate market signals (that’s “Dow theory” for the uninformed) has more or less been laid to rest by modern confusion about what constitutes an “industrial” stock. For example Microsoft is part of the DJIA, but most of their products are licensed bits, not physical things delivered via a truck or rail car. As a result their delivery won’t trigger business for transportation firms, and the whole point of Dow theory really doesn’t apply. Given that, the DJIA is now pretty much a joke. It’s just 30 big US stocks. None the less, the DJIA lurches on like an unwanted extra in a zombie movie. And of late, it’s been lurching up.
Contrast the DJIA’s behavior to my theory linked above about investing in the US. The theory is basically that the supply of investments is proportional to working population and the demand for investments is proportion to late-career working population. In other words, the older the work force the more expensive/overpriced investments will be. My logic was that as the baby boomer demographic (by far the largest in the US) hit retirement in 2000 and on average started to divest assets, asset prices would peak and start to fall in real dollar terms. So a new high in the DJIA raises the question: am I flat out wrong? Continue reading