Sunday, February 22, 2009

Near collapse late last year

Found this from,

Rep. Paul Kanjorski of Pennsylvania explains... a 'tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars.'
Along with potential consequences.

Friday, February 20, 2009

Opposite George!

Opposite George, from Seinfeld. There's so much truth to this, and humor!

Part 1/3

Part 2/3

Part 3/3

Thursday, February 19, 2009

Pickens energy fund loses 97%

Yeah, it is that bad. link

The lesson here is that only during high volatility periods such as now, can we start distinguishing between the genuinely skilled and the lucky or charlatans.

Recalling the past decade, whenever central banks lower interest rates, inflation slowdown has always ensued. Of course this happens because less new money becomes created in the form of interest off debt. Then if inflation slows, it is only logical that commodity prices, including energy, lower.

Some people focus so much on the hardcore, esoteric econometrics that they miss the obvious, simple signs in plain view.

Sunday, February 15, 2009

More toxic assets in EU

£16.3 Trillian

You know what that means? More borrowing, even worse credit sentiment toward these nations' treasury securties. Countries like Italy and UK have taken it pretty hard as it is, now we know it's worse.

The next logical question would be, how does one exploit this information for profit?

The EU banks will demand more "bailout" capital from respective governments, who raises it by further borrowing. As debt (supply) grows, investors will demand higher interest rates, therefore inflation will likely jump on the upside. It's either that or taking loss of power for existing economic, political structure.

So, in the interest of existing bankers and politicians, an accelerated inflation will likely unfold. Plenty of investment vehicles have high correlation to the rate of inflation, commodities, interest rate futures, or even real estate (but I would not advise it).

Oh yeah, the point remains, EU's kinda screwed.

Saturday, February 14, 2009

Evil speculators keeping oil prices down!

Saw this today at elitetrader by Cutten,

... price has fallen over 75% in a mere 6 months, clearly this cannot be because of underlying supply & demand factors alone, so it must be speculation... Why isn't any government holding hearings to investigate this shocking state of affairs?
The hilarious sarcasm won me over. What happened to the politicians and loudmouths screaming $200 a barrel?

Remember Goldman Sachs pumping up oil around May 08? These mainstream media press releases can serve as awesome dumb money sentiment. Anyone capable of critical thought would have seen the oil decline that day.

Sunday, February 8, 2009

Stock Index Predictions with Machine Learning

The NIKKEI225 empirical tests from "Forecasting stock market direction with support vector machine" is pretty cool. The document also contains a very basic, easy to follow explanation of SVM theory.

They tested a 1-week directional forecast accuracy against some existing quantitative means:
RW (Random Walk)
LDA (Linear Discriminant Analysis)
QDA (Quadratic Discriminant Analysis)
EBNN (Elman Backpropogation Neural Network)

NIKKEI 225 Forecasting model:

The tested data ranges from Jan. 1, 1990 to Dec. 31, 2002, a total of 676 weeks tested.

Input variables:
t= week of directional forecast, so
(t-1)= 1 week prior to t

1) S&P(t-1): Value of US S&P500 at (t-1)
2) jpy(t-1): Value of JPY/USD at (t-1),
3) N(t-1): Value of NIKKEI225 at (t-1)

NIKKEI225 1-week Direction Forecast:
F(t)= [S&P(t-1), jpy(t-1)]

Accuracy results:

RW- 50% (we all know the market isn't random by now right?)
LDA- 55% (the market does not move linearly)
QDA- 69% (predictions become dramatically better once we assume nonlinearity)
EBNN- 69% (Neural Networks indeed offer an edge apparently)
SVM- 73%

According to Wang, Nakamori, and Huang, SVM has a critical advantage aginst other methods, Structural Risk Minization. SVMs overcome problems from "overfitting" since most other machine learning methods only seek to minimize Empirical Risk.

Pretty cool huh!

Thursday, February 5, 2009

500 Million American jobs? Whaa?

FYI, the US population is roughly 300 million and the entire workforce less than 150 million. Are American politicians running a "who's dumber" competition?

Wednesday, February 4, 2009

Fed quietly moves another $2T

American taxpayers should be outraged and demand punitive actions. This is money laundering (AKA federal crime warranting many years in the federal penn) if attempted by a private citizen.