Archive for December, 2008

  • Madoff’s Campaign Contributions
    , December 15th, 2008 at 1:19 pm

    If anyone’s curious, Bernie gave a lot.
    In light of the Madoff scandal, I’d like to announce that I’m opening a new hedge fund. We’re doing Bernie one better by not having any auditors. The savings is passed on to you. Assuming you’re an early investor.
    Feel free to join us. The fund will be named Certified Asset Strategic Holdings. Just send me a check…you can make it out to our initials.

  • Harvard Forced to Make Do With Less
    , December 15th, 2008 at 10:27 am

    All the chappers down at Porcellian have been most dreadfully upset:

    It’s as if an heiress had lost her trust fund.
    At Harvard University, the talk of billion-dollar losses in its massive endowment has blown in a new age of austerity across the campus.
    Faculty, administrators, and students – who had been riding what one professor termed “the gravy train” for as long as anyone could remember – are suddenly living a different reality in Cambridge.
    The cuts are big and small. There are the hiring freezes that run to the core of the university’s mission. But there are also the cookies and soft drinks eliminated from small faculty gatherings. A noon-hour seminar series that used to provide catered lunches from local ethnic restaurants will now serve pizza.

  • Bernie Made-Off
    , December 15th, 2008 at 9:36 am

    Even by Wall Street’s standards, the Madoff scandal is stunning. It’s hard to imagine anyone with a better reputation than Madoff, and his entire enterprise was a scam. The wealthy enclaves of Florida are especially feeling the effects of Bernie’s downfall. Here’s the Palm Beach Post:

    Bernard Madoff didn’t accept money from just anyone. Clients ideally had to have at least $10 million to open an account with his New York investment firm.
    While such wealthy people don’t turn up just anywhere, the Palm Beach Country Club provided enough to make Madoff’s membership in the predominantly Jewish club worthwhile.
    On Friday, many of those who had considered themselves lucky to invest their millions with the part-time Palm Beacher were calling their accountants, their brokers and each other, wondering whether they had lost it all.
    “Everyone is in shock,” said Richard Rampell, a Palm Beach accountant. “They’re embarrassed. They don’t want to believe they got taken.”
    But, according to federal investigators, that’s exactly what happened.
    “It’s all just one big lie … basically a giant Ponzi scheme,” Madoff told senior employees this week, according to documents filed in U.S. District Court in New York City.
    The feds swooped in quickly and arrested the 70-year-old, who splits his time between a Manhattan apartment and a $9.3 million mansion on the Intracoastal Waterway just north of Flagler Memorial Bridge. The five-bedroom, seven-bath Palm Beach property once belonged to Herbert and Hilary Pulitzer.
    After he told the employees that he had lost $50 billion invested with him, investigators were afraid he would carry through with plans to give the $200 million to $300 million that remained to favored employees, family and friends, according to court documents.
    The $50 billion loss, if accurate, would be one of the biggest frauds in history. By comparison, when energy trading giant Enron filed for bankruptcy in 2001, it had $63.4 billion in assets.

  • Deconstructing Rushing Yardage
    , December 14th, 2008 at 2:18 pm

    For a nice weekend diversion, here’s another stab at pro football sabermetrics. I’m new at this, so if anyone’s interested in this subject, I’d welcome any feedback, particular with the statistical analysis.

    I wanted to look at rushing yards which is an interesting data set. I’m amazed at the wide dispersion of rushing gains in football. Basically, it works likes this—when running the ball, the key is to break out for a big gain.

    While this sounds obvious to anyone familiar with football, the numbers are pretty striking. Consider that roughly 92% of a team’s rushing yards come on just half its rushing plays. The other half accounts for just 8%.

    I could go so far as to say that we should no longer look at a rushing as the some total of yardage, but rather as a question, did the runner break out or not. I also wanted to see if a particular break out point could be identified.

    For my data, I went to FootballOutsiders.com and bought the play data sets for the 2005, 2006 and 2007 seasons (the final week of the 2005 regular season isn’t included). I then separated out the 40,000+ running plays.

    Here are some stats: The average run is for 4.24 yards. The median run is for 3 yards and the mode is for 2 yards. Both numbers suggest that the histogram has a strong rightward tilt.

    What I wanted to do was construct a running play as a series of odds. Think of it as a probability game. If you gain one yard, what’s the probability that you’ll gain at least one more. Let’s say you pass that threshold and now have a two-yard gain, what’s the probability that you’ll gain at least one more. As I expected the probability that you’ll gain one more yard increases the farther down the field you go. In other words, rushing gains accelerate.

    Here’s a graph of what rushing gains look like. The chart shows: if you can at least X yards what are the odds you’ll get at least X+1.
    image749.png

    As you can see, as the running back breaks out, the yards are increasingly easier to gain. Gains beget more gains — that’s the key. (If you’ve notice a stock market equivalent, then you’ve probably read this blog before.)

    Here are a few items I need to mention. There’s an unusual depression and spike at the 9- and 10-year mark. That’s probably due to NFL accounting which creates an unusually high number of 9-yard gains (plays that are just short of a first down). For my purposes, I’m side-stepping that issue since it’s not what I’m looking at nor does it seem to have an impact of the trend I’ve found.

    You’ll also notice that the data become much more volatile as the run goes down the field. This is due to less data. For example, the outlier at the 76-yard mark (80%) is simply due to three runners being tackled there. Remarkably, Fred Taylor accounted for two of those runs! I should add that the graph refers to runs that are stopped, not touchdowns.

    The hardest yard to gain is going from 3 yards to 4 yards. That’s just a 78.00% chance. But 4 to 5 is 78.11% so it’s not much better, and 5 to 6 is 78.52%. After that the yards are increasingly easier to gain. It would seem that the defense dominates 18 feet behind the line of scrimmage. After that, the field slowly turns in the runners favor. Runs of 7 or more yards make up about 20% of all runs but 60% of all yards gained.

    Here’s a histogram of the rushing gains with a log scale. I had to exclude the extremes since the ones and zeros don’t work well with a log scale.
    image750.png
    It’s that long, fat tail that’s so, so important.

    Here’s a spreadsheet of my data.

  • Peter Cook & Dudley Moore
    , December 13th, 2008 at 2:52 pm

    Not terribly mature or safe for work.

  • Contrary Indicator
    , December 12th, 2008 at 4:01 pm

    Harry Reid’s market call from yesterday: “I dread, Mr. President, I dread looking at Wall Street tomorrow. It’s not going to be a pleasant sight.”
    yhoo121408.png
    Perhaps he was short.

  • Think You’re Having a Bad Day?
    , December 11th, 2008 at 2:54 pm

    It could be worse:

    Visa CEO loses his credit cards
    Imagine running the world’s largest credit card network, and not having your own plastic.
    That’s what happened to Visa Inc Chief Executive Joseph Saunders.
    He spoke Thursday morning at a Goldman Sachs financial services conference in New York, and had come from San Francisco, Visa’s headquarters.
    Unfortunately, his credit cards didn’t make the trip.
    “I’m supposed to start off, and say that I’m very happy to be here, and I guess I am. But it’s 4:15 in the morning as far as I’m concerned, and I lost my wallet on the way here,” Saunders said. “It’s rather embarrassing when somebody steals my credit cards.” The comment prompted laughter.

  • Truth in Advertising
    , December 11th, 2008 at 10:47 am

    450mcdonalds11_billboard1.jpg
    I’ve never understood the appeal of Starbucks. This McDonald’s ad sums it up pretty well.

  • First Jobs of The Richest American Entrepreneurs
    , December 11th, 2008 at 10:35 am

    I like reading lists like this:

    John D. Rockefeller
    Greatest Wealth – $318 Billion at age 74
    First Job – Book keeper
    Andrew Carnegie
    Greatest Wealth – $298 Billion at age 68
    First Job – Textile laborer
    Henry Ford
    Greatest Wealth – $188 Billion at age 57
    First Job – Machinist
    Warren Buffet
    Greatest Wealth – $62 Billion at age 77
    First Job – Newspaper delivery boy
    Bill Gates
    Greatest Wealth – $57 Billion at age 53
    First Job – Congressional page
    Sergey Brin
    Greatest Wealth – $18.7 Billion at age 35
    First “Job” – Student
    Michael Dell
    Greatest Wealth – $17.3 Billion at age 43
    First Job – Dishwasher for a Chinese restaurant
    Steve Jobs
    Greatest Wealth – $5.4 Billion at age 53
    First Job – Gopher at Hewlett Packard
    Oprah Winfrey
    Greatest Wealth – $2.7 Billion at age 54
    First Job – Part time radio news broadcaster
    Mark Cuban
    Greatest Wealth – $2.8 Billion at age 50 (and probably half of that after his divorce)
    First Job – Bartender
    * All financial figures based on 2008 US Dollar Value

    Personally, I think being a gopher at Hewlett Packard could have been cool.

  • T-Bill Yields Go Negative
    , December 10th, 2008 at 1:55 pm

    Here, take my money. I’ll pay you.

    Treasuries rose, pushing rates on the three-month bill negative for the first time, as investors gravitate toward the safety of U.S. government debt amid the worst financial crisis since the Great Depression.
    The Treasury sold $27 billion of three-month bills yesterday at a discount rate of 0.005 percent, the lowest since it starting auctioning the securities in 1929. The U.S. also sold $30 billion of four-week bills today at zero percent for the first time since it began selling the debt in 2001.
    “It’s the year-end factor,” said Chris Ahrens, an interest-rate strategist in Greenwich, Connecticut, at UBS Securities LLC, one of the 17 primary dealers that trade directly with the Federal Reserve. “Everyone wants to be in bills going into year-end. Buy now while the opportunity is still there.”