Gongol.com Archives: February 2014

Brian Gongol


February 14, 2014

Business and Finance Interpreting stock charts the wrong way
Someone pointed out to CNBC that a chart of the stock market in 1929 looks a lot like the chart of the Dow Jones Industrial Average from 2012 until today. There are so many things wrong with this interpretation: First, there will be uncanny similarities and eerie patterns in stock charts all the time -- because they are fractal in nature. They can be self-similar at wide ranges of scale (that is, a minute-by-minute chart, stripped of the time scale, can look a lot like a month-to-month chart with the same number of data points). The prices mean nothing in isolation -- prices matter only in relation to fundamental matters of value (and, by the way, the DJIA of 2014 has virtually nothing in common with that of 1929 other than its name and the highly arbitrary way in which it is calculated). And, above all else, it is not really the "price" of the market in aggregate that counts, but rather the individual prices of many different companies, each in relation to its intrinsic value. People who look to charts like some magical set of tea leaves are only asking to be buffaloed by self-proclaimed wizards who know nothing but their own chart alchemy. The truth of the matter is that there are many over-priced companies in the US stock market right now, at a ratio of perhaps 2:1 over the number of under-priced or fairly-priced securities. But that's something far different from a market on the brink of a crash.

Agriculture Iowa suffered a big drop in farm income from 2012 to 2013

Business and Finance The importance of manufacturing to Africa's future

Business and Finance The danger of out-of-touch business executives

Computers and the Internet Wearable computing: Still finding its way in the world
Lots of users lose interest and stop using them after just a matter of months

News Time for "Le Selfie"
Nobody seems impressed by the decorum of the French press corps along for the ride to Washington this week

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