Archive for June, 2009
Tradable and Non-Tradable Goods
There is a further point, which is that clear differentiation has to be made between tradable and non-tradable goods. PPP may not hold for non-tradable goods such as services. The dry world of economics is frequently best explained through example and anecdote. Thus, a haircut might be cheaper in New York than London (most things [...]
Reasons for “Misalignments”
Exchange rates which do not reflect the PPP value are said to be “misaligned” and it is assumed therefore that they have to revert towards PPP. Such misalignments are seen as being caused by temporary distortions, either to the price of the good or the exchange rate, which should quickly be eliminated by a rational, [...]
DEVELOPMENTS IN THE FINANCE SECTOR
Risk is an everyday hazard that faces banks, funds and insurers. It can usually be mitigated, but it is rarely eliminated completely. There are some cases where a positive “hazard” is a very good thing to have – each business faces a risk or probability of making profits. Millions of people buy lottery tickets each [...]
Forensic accounting
Forensic accounting is a potentially rich source of value-added in financial environments. Part of forensic accountancy is an art, part science and the rest is detective work. There are three ways in which it can provide a valuable service in organisations:
1. Investigate a case post facto to see where a loss has occurred within the [...]
RISK COUNTERMEASURES
Once detecting operational risk conditions is in existence, we can think about deploying risk countermeasures. Could any CEO shark engineer himself some huge pay-off based on undisclosed benchmarks?
Frankly, yes and no. Yes, they could get away with it easily in the old days. General Motors was a classic example where the head of a modern [...]
General Observations
The stock market is likely to be on firmer footing when strength in the daily- and, weekly-based advance-decline lines confirm strength in the various indices that reflect different sectors of the stock market. In other words, new highs in indice such as the Standard & Poor’s 500 Index should be confirmed by new highs in [...]
Relating to Advance-Decline Breadth Data
In a general sense know of no really firm parameters–certain observations can be made regarding the relationships behveen the movements of the daily and weekly advance-decline lines (internal market) and the various weighted market indices (external market). The Value Line Arithmetic Index, an unweighted index that includes all the issues in the Standard & Poor’s [...]
Pre-Bear Market Comparisons
It is interesting to compare the results of the 1971-2000 period to the 1971-2004 period, which includes the bear market of 2000-2002. Using the 90% (buy) and 80% (sell) parameters between 1971 and 2000 would have produced rates of return while invested of 34% and maximum drawdowns of only 8.6%, with 72% of trades profitable. [...]