Archive for September, 2006
The Dow Jones Industrial Average traded briefly over it’s record high today, while the tech-laden NASDAQ Composite remains significantly less than half of it’s record high. In keeping with today’s trend data theme, here are some interesting comparisons:
The Dow broke even today (2,449 days after it’s record high). The NASDAQ is still down almost 50%. This data has been used for everything from explaining away bad investment strategies to arguing against the privatization of social security.
Obviously, the first thing one notices is the 377% gain in the NASDAQ between 1/1/96 and 3/10/00. But let’s focus on a few other data points as well: First, note that the NASDAQ’s net gain from 1/1/96 to today is 112% (just over 10% per year), which almost equals the more conservative DJIA’s 124% gain (11.5% per year) in the same period. Second, note that at the NASDAQ’s lowest point, 10/9/02, it was still 5% above it’s value on 1/1/96. Finally, note that Alan Greenspan’s famous “irrational exuberance” speech, in which he warned that assets may be overvalued, was given on December 5, 1996, when the DJIA was 6,381.94 and the NASDAQ was 1,287.68 (both roughly half of what they are today).
And yet, the same sorry tale continues to resonate over many beers in many different Wall Street bars: You invested $1,000 in a NASDAQ index fund on 1/1/96. On 3/10/00, it was worth $4,769. On 10/9/02, it was worth $1,052. Although you’d made 5% on your money (a paltry 0.75% per year, but still a gain), you cried to your friends about how you’ve lost your life’s savings. Now it’s 9/25/06, and your original $1,000 is worth $2,124, representing a very respectable 112% gain (more than 10% per year). Still, you cry to your friends about how risky the market is because your portfolio isn’t worth $4,769 like it used to be.
One more graph to illustrate another subtle point. By the end of 2002, the NASDAQ was significantly behind the DJIA, but today they’re just about even. The graph of both markets since 1/1/03 looks like something out of 1999. Well, OK, 1998:
A 62% return from the NASDAQ (16.5% per year), as compared to 34% (9% per year) for the DJIA.
The bottom line: the last ten years have been a roller coaster in the market, to be sure, but at the end of it all, total returns have hovered around a nice, healthy 10% or so. The volatility in between means that some people got lucky and made a killing, and others got unlucky and got killed.
But everyone remembers the lofty peaks, and the psychological loses are much, much harder to make back than the financial ones.
I’ve been playing around with trend data lately, and have discovered some interesting relationships that may provide a little context to current events. For instance, compare the historical price of oil to President Bush’s approval ratings throughout his presidency:
The correlation between the two datasets is -81.14%. In other words, over the last five and a half years, every time the price of oil has dropped $1, the President’s approval rating has increased by 0.8% (and vice versa). For the real statistics geeks, the R-Square value is 65.84%, suggesting that 65% of the movement in Bush’s approval ratings are explainable by the price of oil.
Now, I’m no statistician (two intro courses in statistics at The Wharton School were enough to sway me away forever), but I know enough to avoid confusing correlation with causality. This is not proof that the price of oil directly affects Bush’s approval ratings. It merely suggests that the historical data suggests a relationship. There is always the chance that this relationship is purely coincidental.
That said, (and based solely on my own opinion now, not the statistics), I think there is a causal relationship here. When the price of oil drops, the stock market tends to rise and the price of a gallon of gasoline tends to fall. These items have real world impact on most Americans and when they’re all moving in the right direction, I can easily imagine it affecting their attitude towards their president and their responses to polling questions.
What’s most surprising to me here is the extent of the correlation. If this data does reflect causality, then it means that each new opinion poll on the President’s job performance is not the stark referrendum on the Iraqi war, the erosion or our civil liberties, or our treatment of foreign detainees that one side or the other (depending on what the data says) claims it to be. Instead, around two thirds of any movement in the polls is tied to the price of a publicly traded commodity which is, at best, only indirectly controlled by the President himself.
Check this out:
Jack Neal briefly became the proud owner of a pink convertible car after he managed to buy it for 9,000 pounds ($17,000) on the Internet despite being only three years old.
I could so see my kids doing this, it’s not even funny…
Last week, I marveled at The Daily Show’s ability to book Bill Clinton as their guest.
Last night, John Stewart announced that tonight’s guest will be President Pervez Musharraf of Pakistan. I’m quoting from memory here, but Stewart said something to the effect of:
Our guest tomorrow night will be President Pervez Musharraf of Pakistan. The actual President of Pakistan. Why this is, I have no idea…
When I think about the planning that went into Musharraf’s book launch, it absolutely boggles my mind that a sitting president of any country, let alone one that is deeply allied in a war with major world powers like the U.S. and Britain, could possibly have this kind of time on his hands.
First, he wrote the book (or at least we assume he wrote it), and included salacious details that would play well to American audiences. Then he coordinated its release with his trip to New York for the UN General Assembly. Then, he recorded an interview on 60 Minutes, leaking one of his salacious claims, and got them to air it right around the time he made his keynote speech to the UN. Then, after creating the controversy, he remained in New York long enough to do several additional interviews after the book’s release (including The Today Show and The Daily Show with John Stewart), guaranteeing that the interviewers would say something like “there has been much controversy lately about your claims regarding Richard Armitage,” followed by quotes from the book itself. All he has to do now is sit in his chair, smile, and make tell a few stories, and his book will sell millions of copies. Not only that, but he’s probably also improving the American people’s perception of Pakistan in the process.
Impressive piece of marketing. The guy should run for office one day…
Under the new plan, travelers may carry drinks and other items purchased in the secure areas of the airport. They also may bring travel-size lip gloss, hand lotion and other toiletries of 3 ounces (90 ml) or less that will be subject to screening and then placed in a small clear plastic bag.
The bad news: The Deputy Homeland Security Secretary is a gentleman named Michael Jackson. As such, liquids will only be allowed on the plane if the passenger wears a single white glove, travels with a companion who will hold an umbrella over his/her head at all times, and is willing to board the plane backwards while grabbing his/her crotch.
The things we do for safety…
President Pervez Musharraf of Pakistan is accusing the United States of threatening his country in the days just after 9/11/01:
In an interview to air Sunday on CBS-TV’s ’60 Minutes’ program, Musharraf said that after the attacks, Richard Armitage, then deputy secretary of state, told Pakistan’s intelligence director that the United States would bomb his country if it didn’t help fight terrorists. He said that Armitage had told him, ‘Be prepared to go back to the Stone Age.’
Armitage denies the accusation. President Bush says the first he heard about it is when he read it in the newspaper. Tony Snow, the White House Press Secretary, says the U.S. Policy was to ask Pakistan to make a choice – support us or support the Taliban and Al Qaeda – not to issue bomb threats.
President Musharraf was asked for more information on the issue, but declined to give any. You’ll never guess why. Internal Pakistani politics? No. Concern over the ramifications of straining relations with the United States? Wrong again. Concern for Pakistani national security and/or the release of classified information? Good guess, but no cigar. Here’s the reason:
Musharraf declined to comment and cited a contract agreement with a publisher on an upcoming book.
So let me see if I got this straight: the sitting president of a country we’re counting on to catch Osama bin Laden and defeat the Taliban & Al Qaeda accused a former U.S. official of making what he calls a “rude remark,” all in order to drum up business for his upcoming book? And this right after Hugo Chavez of Venezuela sent Noam Chomsky’s book to #1 on Amazon’s Best Seller List.
Remember the good old days when the most powerful person with a book club was Oprah?
Studio 60, the latest Aaron Sorkin drama, debuted last night on NBC. The premise is a backstage look at the people who produce a live sketch comedy show (read: Saturday Night Live) on the NBS (read: NBC) network. There’s even an announcer with a distinctive voice (read: Don Pardo) and a snappy combo band (read: G.E. Smith and the Saturday Night Live Band). The show’s executive producer (read: Lorne Michaels) gets fed up with the Standards & Practices board during the taping of a live episode, and goes out on stage and rips the network to shreds. He’s immediately fired and replaced by two former Studio 60 writers, one of whom just ended a romantic relationship with one of the show’s stars, and the other of whom has just lost a movie deal over a failed drug test. Not only that, but the woman who hired them has just assumed the role of Network President, and her brand new boss (the Network Chairman) fired them some time earlier over creative differences.
My expectations were high, given how much I’ve enjoyed Sorkin’s work on The West Wing and given the presence of a few West Wing Alumni – Bradley Whitford, Timothy Busfield and Matthew Perry, as well as Tommy Schlamme and Chris Misiano (directors). Suffice to say, the pilot exceeded all of those high expectations.
The writing is sharp, brisk, and contains that under-current of wit that made The West Wing so good. Sorkin doesn’t just throw in a joke here and there, he adds funny lines in the middle of serious drama (example: Jordan McDeere, brand new network president, who says to her boss in a tense meeting, “Let’s talk about this in my office!”, stomps out into the hall, and then confesses to him that she doesn’t know where her office is). He also creates some genuinely funny sitcom-like scenes, without overshadowing the dramatic tone of the show (example: Perry’s character wins a writing award while he’s talking about his break-up with the Studio 60 star. Whitford hugs him (for winning the award), and Perry thanks him for being such a good friend at this, his time of need). That kind of “mis-understanding gag” is straight out of Three’s Company, but it’s subtle enough that it works in the drama.
And there’s plenty of drama. All of this subtle humor serves as highlights to some deliciously complex ironies that are weaved into ongoing story lines. For example, see if you can follow this: Perry’s character is hired because the previous producer lost a fight with the standards board, but we find out that he broke up with the show’s star because she offended his morality while promoting her album of religious Christian music, given that she’s a religious Christian and he’s not, and that he wrote the sketch the standards board found offensive, and that she sided with Perry on the sketch and has defended it to the press, even though it was called “Those Crazy Christians.” Insiders may also relish in the fact that the religious Christian who records Christian music is loosely based on another West Wing alumna, Kristin Chenowith, who Adam Sorkin dated at one time.
This kind of backstory gives the writers a great deal of meat to chew on as the show progresses. It also makes the characters very interesting very quickly. I found myself caring about these characters within minutes of meeting them, which is the bottom line when it comes to a good TV drama.
And this is a very, very good TV drama.
I’m a relative late comer to the juggernaut that is The Daily Show with John Stewart, having only watched it regularly for the last few months. So when I heard that Monday night’s guest was going to be Bill Clinton, my reaction was, and I’m paraphrasing here, “Seriously?!?!?” You can only imagine my surprise when Stewart introduced him by saying, “Please welcome back to the program…”
A couple of thoughts on the Stewart/Clinton interview, if I may (and heck, it’s my blog, so yeah – I may):
– Kudos to John Stewart. After Clinton touted the success of his current project, the Clinton Global Initiative, Stewart asked the former President three exceptional questions. First, given all of the initiative’s apparent success, he asked Clinton where he thought he did more good & had more fun: private life or public life. And then second, after discussing his good relationship with George H.W. Bush (Tsunami & Katrina relief) and Rupert Murdoch (a CGI sponsor), Stewart pointed out that it seemed easier to work across party lines when politics were removed from the equation, and asked if knowing this now made Clinton wish he had done things differently when he was in politics. Finally, in what Stewart is now calling “The Daily Show Seat of Heat,” he suggested that Hillary Clinton could very well run for President, and asked Bill Clinton what the key was to defeating her. Probing questions with no personal agenda and a touch of humor. Katie Couric, are you listening?!?
– Kudos to Bill Clinton, who gave three excellent answers. At first, he dodged the first question – saying he was having more fun as a private citizen, making a quick joke, and leaving it at that. Later, though, in the midst of discussing something else, he found the thought he was looking for, stopped, and said to Stewart, “you asked me another question before” and then answered it. He said that he is doing more across a narrower scope of influence as a private citizen, but had a larger impact on the entire country as President. He reasoned that as a private citizen, he didn’t have to be distracted by the day’s headlines, but as President, he had the full force of the government behind him to affect change across a broader spectrum on a daily basis. Regarding the question about politics, he mentioned his disagreements with the current administration, but resisted the cheap applause from the liberal crowd, quickly adding that he has always been committed to having a good relationship with the current President (not just his father), and while he makes it clear when he disagrees with him, he always seeks to work with him constructively. He also praised some of the “rich, white males” that liberals often rile against, saying that the world owes Gates and Buffett a huge debt of gratitude for their extreme generosity. On the Hillary question, he gave a pretty lame answer (“get more votes than she does”), but then struck the right tone by saying he didn’t know if she’d run, or if she’d win if she did run, but that he thought she’d be a great President if given the chance. Can’t ask for more than that…
– Clinton comes off even smarter today than he did as President. After listening to Bush stumble through speech after speech for six years, just the fact that Clinton speaks in complete sentences is a welcome relief. And the fact that he’s willing to chain more than two thoughts together at a time (as he did when contrasting public and private life) is completely and utterly refreshing. The man is a deep thinker, he doesn’t need to hide behind soundbites or talking points, he’s well versed in the subjects he’s discussing, and he’s blessed with the ability to communicate his thoughts clearly without talking down to people.
– Given his raw abilities, it is such a shame that he could never control his private life as well as he controls his public persona, and that this failing will forever taint his Presidential legacy. But it’s gratifying to see him applying his strengths so well today. He seems poised to be the best ex-President since Jimmy Carter, and that’s a very good thing.
I finally got around to watching Bill Maher’s Real Time from last Friday night. The show is always provocative and funny, but this week’s offering had a couple of things worth commenting on.
First there was Gloria Steinem who, at one point, said this:
This world is divided into two kinds of people: those who divide people into two kinds of people, and those who do not.
I honestly don’t remember what she was talking about, but I think that’s just a fantastic line, so I felt the need to write it down.
Then there was Maher’s mid-show comedy bit. He usually stops his panel discussion for a Jay Leno-like comedy bit (fake products, phony headlines, etc.), before finishing off the discussion and moving on to the hilarious “New Rules.” This week, the bit was about Bush’s “seven minutes in the classroom,” a topic that Maher has relentlessly pounded for five years now. Apparently, the children who were in the Florida classroom with the President on 9/11/01 (now ages 12-15) were interviewed about their experiences that day. Maher quoted one of them as saying, “His face just started to turn red. I thought, personally, he had to go to the bathroom” and another as saying, “He looked like he was going to cry.” Then he mocked the President for crying and showed fake children’s drawings of the President peeing in his pants and planes flying into the World Trade Center.
I realize it’s a comedy show, and I’m not the kind of person who is easily offended, but this really bugged me. First of all, he conveniently left out some of the kids’ other quotes, like “You can’t judge a man on seven minutes. What he did is what he could do” and “I learned a lot. I learned anything can happen at any given moment.” Also, he glossed over the distinct change in tone from the original story to this one. Maher (and many others) have suggested repeatedly that Bush stayed in the school for seven minutes because he either didn’t comprehend the enormity of the attacks, or didn’t consider them important enough to disrupt his photo op. The kids’ version tells a very different story, though. I don’t think any of the released pictures from that day showed the emotional reaction that the children described seeing on the President’s face. This, coupled with the 9/11 Report’s description of why he sat there for seven minutes give us a pretty good sense of what was going through his mind at that fateful moment.
Finally, it just takes an unbelievable amount of chutzpah to mock the President of the United States for being moved to tears on September 11th. Given how much the rest of us cried that day, and given the fact that we weren’t responsible for the security of 300 million people at the time, I think we can spot the guy a few tears, no?
It’s the 10th anniversary of Tickle Me Elmo, and Mattel is celebrating with T.M.X. Elmo, as in “Tickle Me Extreme” Elmo.
The latest Elmo has ‘tickle spots’ on its chin, tummy and foot. When a child tickles Elmo once, the doll laughs, slaps his leg, falls down into a sitting position and then stands up while laughing.
The second time Elmo is tickled, the doll repeats that pattern, but then falls backward and starts kicking his feet while laughing. It then stands up and asks to be tickled again.
The third time Elmo is tickled, the doll goes through the first two patterns and then rolls over onto its tummy, thumps his hand on the floor, rolls onto his back and stands up again.
Next year, look for Epileptic Elmo…