Wednesday, October 29, 2008

Houston Rockets: Is It Time Yet?

Time to get out of the first round? Yes. Time to win the NBA championship again? Maybe.

I can’t wait for the season to start. Last year “we” won 55 games, about what I expected, and would have gone deeper into the playoffs if not for injuries to Yao, Battier and “Skip” (Rafer Alston). This year, the team could win 55-60 games, and has a legitimate shot at the NBA championship – IF it can avoid injuries.

Why is this year’s team better than last year’s? The short answer:
1. The addition of Ron Artest, Brent Barry, and Joey Dorsey
2. The added experience of 2nd year players Luis Scola, Aaron Brooks and Carl Landry

The impact of these changes is pervasive. How will the team be better? Let me count the ways:
1. A deeper team: Last year, there was a significant drop-off when any starting player was injured. This year’s team is better able to withstand injuries. The Rockets 6th through 10th players may be the best “2nd team” in the league.
2. A more flexible team: Partly because of the above, and partly because of the versatility of the players, coach Adelman has many more options for creating favorable match-ups with opposing teams (and avoiding unfavorable match-ups). Almost every player in the regular rotation can play at least two positions; at least one, Artest, can play three positions.
3. A third option: Often, championship teams, last year’s Celtics for example, have three big-time players. Now the Rockets do too. Last year, the team had great difficulty scoring when Yao and T-Mac were off the floor. I don’t expect that to be the case this year.
4. Even better defense: We’re adding a former defensive player of the year, Artest, to a team that was already among the best defensive teams in the league.
5. Better 3-point shooting: This was a deficiency last year. The addition of Barry and Artest, and the maturation of Brooks and Luther Head should help considerably.
6. A more physical, competitive team: While last year’s team had a lot of talent, some people accused the team of being “soft.” No team with Artest and Dorsey is going to be soft. Similarly, Artest brings a new level of competitiveness, and “attitude.”
7. A better mid-range game: In previous years, opposing teams have been able to cheat off the power forwards and double Yao. If Scola and Landry keep shooting as they have been in pre-season, it will open up the middle more for Yao.
8. More play-off experience: Artest and Barry have both gone to NBA championship games with other teams. This should help as the team moves deeper into the playoffs.

Don’t get me wrong. There are still some issues. One concern is the lack of height inside – aside from Yao. Luckily, the forwards “play bigger” than they are. Still, there are potential problems matching up with forwards such as Kevin Garnett and Tim Duncan.

In addition, there are the “wildcards.” Can this year’s team develop the same “chemistry” that it had last year? Will the team ever master coach Adelman’s offense? The fact that Artest has played for Adelman before should help. Another wildcard is Artest himself. He has a history that some fans find worrisome. Let’s hope it remains just that – history. He’s older, and presumably wiser, now -- and it’s a contract year.

The biggest wildcard of all is injuries. T-Mac, Battier and Aaron Brooks may be weeks away from being full strength – and the season hasn’t even started! There’s a chance T-Mac never completely regains his old form, and Yao has missed significant time each of the last three seasons.

So what’s the bottom line? What’s my prediction? There are some really talented teams out there, starting with the Lakers, Celtics and Hornets. There is no way I can predict an NBA championship. I do have one prediction though – it’s going to be fun!

Sunday, October 26, 2008

Stock Market Earnings Growth History and a Worst Case Scenario

In 100 Years of Stock Market History, I observed that rarely does the stock market, as measured by the DJIA (Dow Jones Industrial Average) or S&P 500, fall significantly below its 25-year moving average, even during bear markets (see graph below). That the October 10 close was in that general area was comforting, suggesting that we might be at, or near, the bottom. On the other hand, the graph makes it clear that we might not be; during the Great Depression following the 1929 stock market crash, the market fell significantly below the moving average. (Note: the graph below is as of October 2008; the graph in the 100 Years post is updated approximately monthly.)


Graph of DJIA (Dow Jones Index) since 1900 with 25-year moving average
Dow 25-Year Moving Average
Since the future is, by definition, unknowable, strategic planners like to develop planning scenarios. Typically, one develops 3-5 scenarios covering a wide range of possible futures. This post begins to develop one such scenario

Tuesday, October 21, 2008

The Presidential Campaign

Our leaders used to be the most respected leaders in the world. Now, our candidates routinely appear on late night TV and make fun of themselves. How is that supposed to convince us that they are the most qualified candidates to hold the highest elective offices in our country? Can you imagine FDR or Eisenhower doing anything analogous in their day?

I’ve watched most of the debates during the presidential campaign, as well as the debates during the republican and democratic primaries. Watching reminds me so much of buying tomatoes. The tomatoes are never anywhere near as good as they look – but I keep hoping, and buying, and being disappointed. Still I manage, somehow, to convince myself that the next one is going to be better.

Now we’re to the point where every major televised campaign event must be followed by analysts that tell us how much of what we have just heard is true. These are candidates for the leaders our country, and, maybe, “the free world” – and we can’t believe what they say?

Am I the only one that thinks this is embarrassing? Just wondering.

Sunday, October 12, 2008

100 Years of Stock Market History (log graph)

In times of turmoil, such as a financial crisis, I look for one of those big charts with an arrow that says, “You are here.” It is in that spirit that I offer the following long-term log graph summarizing over 100 years of DJIA (Dow Jones Industrial Average) performance / history. I will defer most of my analysis until later, and for this post rely mainly on what one of my statistics professors used to call “interocular trauma.”

Dow Jones 100-Year Stock Market History Chart


stock market history chart year-end 2012 (Dow Index closing prices since 1900 log graph)
Dow Index 100-Year History Chart


Stock Market Performance Since 1900 Has Alternated Between Excitement and Disinterest


Above is a graph of stock market (Dow Jones) performance since 1900 (click on image to enlarge it). It shows year-end closing prices through 2012. (See Yearly Returns for a bar chart of the returns each year.) While some describe this history as

Saturday, October 11, 2008

Who Is “Performance Systems International” (and why are they out to get me)?

There is something awry in the blogosphere.

On October 3rd, my blog had a visitor that showed on my traffic monitoring software as being from “Performance Systems International.” The fact that it appeared to be a “bot” of some kind was cause for celebration; maybe Yahoo or MSN had finally seen the light and recognized my existence?? Wrong.

Since that visit a little over a week ago:
1. I have had ONE visitor.
2. Google has stopped crawling my site. Prior to the visit from “PSI”, the site was being crawled every other day.
3. My “Disadvantages of Buying a House” post’s search rank in my benchmark search has gone from 116 to more than 1000. I stopped looking after the first 1000. (My benchmark is just a search that I run every week.) There is a reasonable chance the search rank is now infinite because,
4. The number of pages listed in a Google site search of my site has gone from 28 to 4. A cursory review suggests that all pages without links from other sites disappeared. The “Disadvantages” post is not one of the 4.
5. The page rank of my home page has gone from 4 to 0. The page rank of the “Disadvantages” post has gone from 3 to 0.

Theoretically, this could all have nothing to do with the visit from “PSI”. However, if you Google “Performance Systems International” you will find complaints from others who seem to have had very similar experiences to mine.

The Performance Systems International web site’s “contact us” page begins…
Please Note: We are not an Internet Service Provider (ISP). We are not affiliated with the ISP Cogent Communications, formerly known as "Performance Systems International". If you are trying to track down the usage of an IP Address beginning with "38." (38.xxxx.xxx.xxx), then you need to contact Cogent Communications. For information on how to report abuse to Cogent Communications, please see http://www.cogentco.com/us/cs_faq.php or to view their WHOIS entry click here.
Apparently, Performance Systems International has received many complaints, and the problem is not with them at all. Rather, the culprit appears to be someone who uses Cogent Communications as his ISP.

I have complained to Blogger and to Cogent, and have posted comments in several discussion groups. If anyone has any information on how to combat these attacks or how to recover from them, please leave a comment.

(Note: I realize that because of the web abuse it’s optimistic to think that anyone will ever see this post. However, just in case….)

My Summer Vacation

I’ve recently returned from my first vacation in several years – a week in Paris. This trip was a present to my niece, H (not her real name…), as a slightly belated reward for her graduation from med school in May. My first clue that this would not be my typical vacation should have been the difference in our choice of travel books. I chose The Eyewitness Guide to Paris; she chose another well-regarded book, The Riches of Paris, subtitled “a shopping and touring guide.”

I knew that shopping was one of her priorities, and that seemed perfectly reasonable. However, as a single man, apparently I had somehow managed to live my entire life without ever really understanding shopping. My uninformed view of the shopping process was: you need shoes, you go to a shoe store, you buy shoes, you go home. I understand now that is not “shopping.” At last count, we had visited 366,259 stores. I spent more time shopping in one week than I had in the previous 10 years combined.

When we weren’t out shopping for clothes, we were… shopping – for food. You can learn lot about a people by how they shop. Parisians’ love for food is reflected in their seemingly endless array of specialty food stores: boulangeries (bakeries), poissonneries (fish), fromageries (cheese), patisseries (pastry), boucheries (meat), chocolateries, and others whose French names I forget, such as fruit stands. (I know we have many of those as well, but not five of each within a five minute walk.)

My most memorable incident occurred while food shopping. Each morning my niece and I would shop for the morning’s supply of bread, cheese and fruit. We stuck to our favorite breads, but bought two or three new, to us anyway, cheeses each day -- and could have continued to do so for at least another month. The fruit that first caught our attention was figs – partly because there were so many, partly because there were so many varieties, and partly because I don’t remember ever seeing a fig in a store before. We tried a couple of different versions of figs right off the bat; they were nothing special. Another curiosity was a melon of some kind that was nearly as ubiquitous as the figs. On Friday, we decided the time had come to try one. When I asked to buy one (full disclosure: there was some pointing involved) the vendor’s response was “Pour aujourd’hui ou demain?” -- “For today or tomorrow?” ARE YOU KIDDING ME? I can think of nothing that is as representative of the difference between French and American attitudes toward food as that fruit vendor’s simple question.

Thursday, October 9, 2008

Sobering Comment

Today was still another terrible day for the stock market – and especially for General Motors. More than once, I heard a commentator say, “GM is fighting for its life.” That statement was especially poignant for me, and I expect for others of my generation who will never forget the old adage “As GM goes, so goes the nation.”

Hmmm....

Wednesday, October 1, 2008

Wall Street Bailout, or Main Street Rescue?

I was surprised Monday to hear that the House of Representatives rejected the “bailout” bill. The 777 point decline in the Dow suggests a few other people were surprised as well. On balance, I was in favor of the bill. How could 228 smart representatives disagree? What were these representatives thinking? As best I can tell, their reasons for voting against the bill fell into two broad categories, philosophical and political.

Philosophical Reasons for Voting Against the “Bailout “

The philosophical arguments against the bill seem to be based loosely on the belief that “bailing out Wall Street” somehow goes against the basic tenets of capitalism. Many people believe strongly that poorly run companies should be allowed to fail. Similarly, the “moral hazard” argument argues that those who have made poor decisions should suffer the consequences of those decisions.

Much of the economic theory that we think of as the “basic tenets” of capitalism is based on the concept of