March 31, 2006


Measurement Problems

This bit, taken from an IMF working paper titled Progress in China’s Banking Sector Reform: Has Bank Behavior Changed? by Richard Podpiera, made me chuckle:

The reported NPL ratio for loans extended after 2000 has been approximately 2 percent in aggregate, dramatically lower than the NPL ratio for older loans (over 60 percent for some banks).

The striking difference between the reported credit quality of old and new loans suggests either a dramatic improvement of the underlying credit quality since 2000 or measurement problems.

- via Paul Kedrosky -


WordPress Theme Browser

I’m not the kind of person who frequently changes the look of his website, but if you use WordPress and you want a new look, check out Alex King’s WordPress Theme Browser

I use Chyetanya Kunte’s Plain Vanilla, which I think is one of the best themes out there.


Metals Roundup

The new highs list continues to be full of metals stocks, and I’ve featured quite a few metals-related companies in the Stocks to Watch posts recently, so I thought it would be useful to post charts of the metals themselves. Here are the weekly charts for Gold, Silver, Copper, Platinum, and Palladium:

GC

SI

HG

PL

PA


Notable New Highs — March 30, 2006

NNH 2006 03 30

March 30, 2006


Writing in a Language “Understanded of the People”

How I Write, by Bertrand Russell

Until I was twenty-one, I wished to write more or less in the style of John Stuart Mill. I liked the structure of his sentences and his manner of developing a subject. I had, however, already a different ideal, derived, I suppose, from mathematics. I wished to say everything in the smallest number of words in which it could be said clearly. Perhaps, I thought, one should imitate Baedeker rather than any more literary model. I would spend hours trying to find the shortest way of saying something without ambiguity, and to this aim I was willing to sacrifice all attempts at aesthetic excellence.

… all imitation is dangerous … A style is not good unless it is an intimate and almost involuntary expression of the personality of the writer, and then only if the writer’s personality is worth expressing. But although direct imitation is always to be deprecated, there is much to be gained by familiarity with good prose, especially in cultivating a sense for prose rhythm.

There are some simple maxims which I think might be commanded to writers of expository prose. First: never use a long word if a short word will do. Second: if you want to make a statement with a great many qualifications, put some of the qualifications in separate sentences. Third: do not let the beginning of your sentence lead the reader to an expectation which is contradicted by the end. Take, say, such a sentence as the following, which might occur in a work on sociology: “Human beings are completely exempt from undesirable behaviour-patterns only when certain prerequisites, not satisfied except in a small percentage of actual cases, have, through some fortuitous concourse of favourable circumstances, whether congenital or environmental, chanced to combine in producing an individual in whom many factors deviate from the norm in a socially advantageous manner”. Let us see if we can translate this sentence into English. I suggest the following: “All men are scoundrels, or at any rate almost all. The men who are not must have had unusual luck, both in their birth and in their upbringing.” This is shorter and more intelligible, and says just the same thing. But I am afraid any professor who used the second sentence instead of the first would get the sack.

I suggest to young professors that their first work should be written in a jargon only to be understood by the erudite few. With that behind them, they can ever after say what they have to say in a language “understanded of the people.”


Stock to Watch — Schnitzer Steel (SCHN)

The new highs list is once again filled with metals stocks. Schnitzer is notable because it moved above long-term, round-number $40 resistance on about twice average volume.

Schnitzer Steel Industries, Inc. engages in metal recycling, self-service used auto parts, and mini-mill steel manufacturing businesses in the United States. The company was founded in 1946 and is headquartered in Portland, Oregon.

SCHN


Notable New Highs — March 29, 2006

NNH 2006 03 29


Forfeiting Creativity in Pursuit of Profit

Sotheby’s Bets on a Windfall for Today’s Chinese Art, by Carol Vogel

Michael Goedhuis, a dealer with galleries in London and New York who was an early pioneer in the field, was studying the offerings at Sotheby’s the first day the art went on view. He called the sale “inevitable.”

“The market is fragmented, erratic, immature and deeply international,” he said. “Suddenly everyone is pouncing on Chinese art realizing that China is the dominant reality for the rest of history.” Mr. Goedhuis pointed out that the average price for work by the top 20 to 30 Asian contemporary artists is one-tenth of what their American and European counterparts command.

Are their American and European counterparts forfeiting ten times as much creativity? ;-)


Fakery, Hucksterism, and Puffery

When computers do the news, hoaxes slip in, by Randy Dotinga

Are “aggregators” like Google News providing the news - or are they diluting it with the fakery, hucksterism, and puffery that affects the rest of the Internet? … ‘The fundamental shift is that the media is no longer intermediating between the reader and the news source.’

Wouldn’t it be more correct to say the medium is no longer intermediating….?

March 29, 2006


How I Use the CBOE Volatility Index

In the old days it was possible to identify rampant fear in the market by using an absolute value for the VIX (I used 40). Since 2003 the volatility has been in permanent decline, so now instead of looking for extreme absolute values, I look for extreme relative values.

The CBOE Volatility Index (VIX) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world’s premier barometer of investor sentiment and market volatility.

Visit the CBOE to learn more about VIX.

The last time the Volatility Index spiked up to a relatively high value was in October 2005. The ISE Sentiment Index and my own MaoXian.com Sentiment Index didn’t confirm the spike so I didn’t buy anything, which turned out to be a mistake.

The strongest sector in October 2005 was, you guessed it, Energy.

XLE with VIX

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