Tuesday, December 31, 2024
Former President Jimmy Carter dead at 100
Jimmy Carter: His image vs. the reality I experienced covering his 1976 campaign
Ask the Venezuelans how great an ex-president Jimmy Carter was
Saturday, December 28, 2024
Thursday, December 26, 2024
Wednesday, December 25, 2024
Stolen valor: Another downward revision in the Biden jobs numbers and it's a doozy
Friday, December 13, 2024
This is what happens when bureaucrats who have never run a business make rules for the rest of us
A running list of ‘intelligence community’ screwups
Thursday, December 12, 2024
The Cult of Credentialism
Sunday, December 8, 2024
IRS' Armed Division Expands To Largest Level In A Decade
Friday, December 6, 2024
FEMA packs up from North Carolina, leaving behind a whopping 19 trailers for survivors
Wednesday, December 4, 2024
Monday, December 2, 2024
Flashback: Adam Schiff said pardons in which the president is directly implicated could be an ‘obstruction of justice’
Birthright Citizenship: The 14th Amendment Does Not Apply to Illegal Aliens
Birthright Citizenship: The 14th Amendment Does Not Apply to Illegal Aliens
Wednesday, November 6, 2024
President Trump ‘the convicted felon’ gets to vote… thanks to a relatively new Democrat law
Tuesday, November 5, 2024
Project 2025 Promotes Freedom
Sunday, November 3, 2024
The $15 Billion Biden-Harris Scandal Nobody Is Talking About – Issues & Insights
Saturday, October 5, 2024
The Democrats' War on Western North Carolina
Thursday, September 12, 2024
Democrat Platform Says America Was Built on Stolen Land

Democrat Platform Says America Was Built on Stolen Land
The DNC 2016 party platform began by claiming that "Democrats meet in Philadelphia with the same basic belief that animated the Continental Congress when they gathered here 240 years ago." Four years later, out went the Continental Congress and all of America. The 2020 DNC platform began with a politically fashionable 'land acknowledgement' asserting that America was an illegitimate entity...
Wednesday, September 11, 2024
25 Lies Kamala Harris Told In Her Debate Against Trump
Tuesday, September 10, 2024
Economists vs. Non-economists
Thursday, September 5, 2024
WSJ.com: FISA vs. Liberty
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Thursday, August 29, 2024
The fallacy that Biden’s been good for people’s retirement funds
Monday, August 26, 2024
The Late Susan Wojcickis Garage Reveals Judge Mehtas Lack of a Case
Math Confirms the Foolishness of Warming Alarmism
August 26, 1965, Executive Order 11241
Monday, August 19, 2024
Check out this great article on https://www.thegatewaypundit.com
This is the link: https://www.thegatewaypundit.com/2024/08/former-nih-head-francis-collins-confronted-behalf-covid/
Instead of targeting grocery stores, Comrade Kamala should go after the obvious price-gouging entities
Maybe we should examine how well Democrats controlled health care prices before we allow Kamala to destroy our country
Nightmare in Iowa: Three sequential wind turbine disasters leave millions of dollars in damages for one local farm family
Saturday, July 13, 2024
15 Lies Biden Told During His ‘Big Boy’ Press Conference
Friday, July 12, 2024
Woodrow Wilson Was Even Worse Than You Think
[Shared Post] A respectful response to never-Trump Republicans
Summer reruns: Intel officials wheel out the old 'Russia, Russia, Russia' canards about Russia influencing the election for Trump
The Ninth Circuit shoots down COVID vaccine
Monday, July 8, 2024
Joe Biden Is A Good Man? Please Don’t Insult Our Intelligence – Issues & Insights
Joe Biden Is A Good Man? Please Don’t Insult Our Intelligence – Issues & Insights
Sunday, July 7, 2024
Biden’s Pants-On-Fire Lie That Nobody Noticed In His ABC News Interview – Issues & Insights
Friday, July 5, 2024
Trump says he has ‘nothing to do’ with Project 2025 despite ties to MAGA allies
https://thehill.com/homenews/campaign/4756602-trump-project-2025-heritage-foundation/
Wednesday, July 3, 2024
What exactly are Biden’s achievements in his first three-and-a-half years?
Recalling segregationist Biden
Tuesday, July 2, 2024
WSJ.com: The Constitution Protects ‘Fake Electors’
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TROJAN HORSE: North Dakota Gov. Doug Burgum’s History of Selling Out to China, Kowtowing to Bill Gates, Supporting Transgenderism, Hating Trump is Revealed
Friday, June 28, 2024
Check out this great article on https://www.thegatewaypundit.com
This is the link: https://www.thegatewaypundit.com/2024/06/trump-campaign-fact-checks-biden-real-time-here/
Top virologist says long covid is real – and it’s caused by the vaccine
Thursday, June 27, 2024
About Those Economists Terrified of a New Trump Term
Whatever you do, don't take stock advice from these guys
Wednesday, June 26, 2024
Whatever you do, don't take stock advice from these people
Sunday, June 23, 2024
Wednesday, June 19, 2024
Why do people think Cleopatra was black?
Monday, June 17, 2024
The Unvarnished Truth About That ‘Blockbuster’ Jobs Report – Issues & Insights
Sunday, June 16, 2024
Hugo Black and Democrat Racism
Thursday, June 13, 2024
Sorry, Nancy, Trump had no role in inciting the J6 riot
Sunday, June 9, 2024
Have *Any* Jobs Been Created Under Biden? – Issues & Insights
Sunday, June 2, 2024
The Wall Street Journal Digital Replica Article
thevanx@gmail.com sent you this article.
Comment:

THE INTELLIGENT INVESTOR | When Past Performance Doesn't Even Predict Past Performance JASON ZWEIG Wall Street likes to tout returns it didn't actually produce. You need to ask some important follow-up questions. This past week, the Dow Jones Industrial Average, born on May 26, 1896, turned 128 years old. Let's pour the Dow a drink from the fountain of youth and see what happens. I'll give you a hint. The lesson here isn't only about markets, but also about marketing—in particular, what's called backtesting, a statistical dirty trick that's central to Wall Street's marketing playbook. And we can use the Dow, which this year has been drastically underperforming its younger cousin, the S& P 500, to help explain how the pros try to pull the wool over your eyes. Consider the way the indexes are constructed. The Dow is priceweighted: The higher a company's share price, the more it contributes. Stocks in the S& P 500, by contrast, are weighted by their total float-adjusted market value: share price multiplied by the number of shares that trade publicly. (The Dow, originally owned by Dow Jones, publisher of The Wall Street Journal, is now owned by S& P Dow Jones Indices, but two Journal editors sit on the index committee.) So Boeing, for instance, is 2.9% of the Dow. That puts it barely behind Apple at 3.3%—because Boeing's $172 share price is close to Apple's $190. That's why Apple doesn't have a huge impact on the Dow. But Apple's adjusted market value, $2.76 trillion, is 28 times greater than Boeing's $98 billion. This makes it far more meaningful to the S& P 500. Add up the share prices of the Dow's 30 stocks, and you get something like $5,850. A new stock at $1,000 a share would constitute 17% of the basket—single-handedly unbalancing the entire benchmark. That's what Howard Silverblatt, senior index analyst at S& P Dow Jones Indices, calls "1896 mathematics." It effectively precludes the Dow from adding such stocks as Eli Lilly (recent price: $815, up 40% year-to-date) or Netflix ($648, +33%). All this got me thinking: How would a fantasy Dow consisting of the 30 highest-priced stocks have performed? Let's call it the Supersized Dow. Out with Intel (share price: $30), Verizon Communications ($40) and Cisco ($46). In with NVR ($7,455), Booking Holdings ($3,755) and 28 other stocks with supersized prices, including Lilly, Netflix and Nvidia. Over the past 10 years, this Supersized Dow would have returned an average of 30.2% annually, versus 11.4% for the real-world Dow and 12.8% for the S& P 500, according to John Jacques of AJOVista, an investment firm based in Boston. A $10,000 investment would have mushroomed to almost $140,000 in the Supersized Dow— but to less than $34,000 in the S& P 500. What's the catch? Why can't you pulverize the market just by buying the stocks with the highest share prices? Because of backtesting. The Supersized Dow would have outperformed only if, at the beginning of the period, you bought the stocks that happened to have the highest share prices at the end of the period— something no one could possibly predict. If, 10 years ago, you had bought the stocks with the highest share prices then, you'd have underperformed the S& P 500 by an average of 1.3 percentage points annually. That assumes you adjusted the portfolio each Jan. 1 so it held the 30 highest-priced stocks as of that date—as would be logical if you tried this in real time. You also had to trade for free, reinvest all dividends and pay no taxes. By backtesting—applying hindsight to past data and pretending that a hypothetical portfolio had been run that way all along—financial marketers can make outperformance look ridiculously easy. Take the five target-date funds run by Brandywine Asset Management of Thornton, Pa. These funds seek greater risk when savers are young, scaling back as investors approach or exceed retirement age. Brandywine's funds use put options, which go up when stocks go down, to try mitigating losses in a market crash. In theory, that can provide an edge. If you'd invested $10,000 in January 2013, you'd have had $23,091 in Brandywine Target Retirement at the end of March 2024—but only $16,064 in its average competitor, according to the firm. The only trouble is, you couldn't have invested in the fund in January 2013, because it didn't exist. That track record is backtested and largely hypothetical. The fund didn't begin operating until October 2023. The past returns show how the fund would have performed if it had existed ever since January 2013, partly based on other accounts Brandy--wine ran at the time. From July 2018 until May 2020 and again in March and April 2023, the firm didn't have actual ![]() ![]() results from the strategy, so those periods are simulated, says Brandywine's chief executive, Michael Dever. "If you're managing money, the only thing that matters is accuracy," says Dever. "We think we've come up with a very accurate representation of what we expect to be able to achieve performancewise." Since its launch in October, the fund has outperformed its benchmark by 2 percentage points with less fluctuation, according to Brandywine. "So far it's been doing exactly what the back performance says it should," says Dever. "We'll know for sure in another 10 years." The Brandywine funds are only the tip of the backtesting iceberg. Asset managers often roll out exchange-traded funds based on such factors as "liquidity" or "revenue" that appear to have worked in the past, but flop in the real world. Insurance companies have sold billions of dollars of annuities, universal life and other products linked to customized indexes with high past "returns" that soon fade. Of course, you can't completely ignore the past when you project the future. To protect yourself against backtests that foretell nothing, ask questions like these: If this idea is so great, why weren't these guys using it at the beginning of the period instead of only at the end? Why wasn't everybody using it? How long has the strategy actually been used, and with how much money? Has it been tracked over even longer periods than reported in the backtested data? How many other strategies were backtested but abandoned? Do the past numbers include trading costs? If the answers don't make sense, don't invest. |
|
This site provides a digital replica of the print newspaper and is intended for the personal use of our members. For commercial reproduction or distribution of Dow Jones printed content, contact: Dow Jones Reprints & Licensing at (800) 843-0008 or visit djreprints.com. |
Copyright 2017 Dow Jones & Company, Inc. All Rights Reserved.
The Wall Street Journal Digital Replica Article
thevanx@gmail.com sent you this article.
Comment:

THE INTELLIGENT INVESTOR | When Past Performance Doesn't Even Predict Past Performance JASON ZWEIG Wall Street likes to tout returns it didn't actually produce. You need to ask some important follow-up questions. This past week, the Dow Jones Industrial Average, born on May 26, 1896, turned 128 years old. Let's pour the Dow a drink from the fountain of youth and see what happens. I'll give you a hint. The lesson here isn't only about markets, but also about marketing—in particular, what's called backtesting, a statistical dirty trick that's central to Wall Street's marketing playbook. And we can use the Dow, which this year has been drastically underperforming its younger cousin, the S& P 500, to help explain how the pros try to pull the wool over your eyes. Consider the way the indexes are constructed. The Dow is priceweighted: The higher a company's share price, the more it contributes. Stocks in the S& P 500, by contrast, are weighted by their total float-adjusted market value: share price multiplied by the number of shares that trade publicly. (The Dow, originally owned by Dow Jones, publisher of The Wall Street Journal, is now owned by S& P Dow Jones Indices, but two Journal editors sit on the index committee.) So Boeing, for instance, is 2.9% of the Dow. That puts it barely behind Apple at 3.3%—because Boeing's $172 share price is close to Apple's $190. That's why Apple doesn't have a huge impact on the Dow. But Apple's adjusted market value, $2.76 trillion, is 28 times greater than Boeing's $98 billion. This makes it far more meaningful to the S& P 500. Add up the share prices of the Dow's 30 stocks, and you get something like $5,850. A new stock at $1,000 a share would constitute 17% of the basket—single-handedly unbalancing the entire benchmark. That's what Howard Silverblatt, senior index analyst at S& P Dow Jones Indices, calls "1896 mathematics." It effectively precludes the Dow from adding such stocks as Eli Lilly (recent price: $815, up 40% year-to-date) or Netflix ($648, +33%). All this got me thinking: How would a fantasy Dow consisting of the 30 highest-priced stocks have performed? Let's call it the Supersized Dow. Out with Intel (share price: $30), Verizon Communications ($40) and Cisco ($46). In with NVR ($7,455), Booking Holdings ($3,755) and 28 other stocks with supersized prices, including Lilly, Netflix and Nvidia. Over the past 10 years, this Supersized Dow would have returned an average of 30.2% annually, versus 11.4% for the real-world Dow and 12.8% for the S& P 500, according to John Jacques of AJOVista, an investment firm based in Boston. A $10,000 investment would have mushroomed to almost $140,000 in the Supersized Dow— but to less than $34,000 in the S& P 500. What's the catch? Why can't you pulverize the market just by buying the stocks with the highest share prices? Because of backtesting. The Supersized Dow would have outperformed only if, at the beginning of the period, you bought the stocks that happened to have the highest share prices at the end of the period— something no one could possibly predict. If, 10 years ago, you had bought the stocks with the highest share prices then, you'd have underperformed the S& P 500 by an average of 1.3 percentage points annually. That assumes you adjusted the portfolio each Jan. 1 so it held the 30 highest-priced stocks as of that date—as would be logical if you tried this in real time. You also had to trade for free, reinvest all dividends and pay no taxes. By backtesting—applying hindsight to past data and pretending that a hypothetical portfolio had been run that way all along—financial marketers can make outperformance look ridiculously easy. Take the five target-date funds run by Brandywine Asset Management of Thornton, Pa. These funds seek greater risk when savers are young, scaling back as investors approach or exceed retirement age. Brandywine's funds use put options, which go up when stocks go down, to try mitigating losses in a market crash. In theory, that can provide an edge. If you'd invested $10,000 in January 2013, you'd have had $23,091 in Brandywine Target Retirement at the end of March 2024—but only $16,064 in its average competitor, according to the firm. The only trouble is, you couldn't have invested in the fund in January 2013, because it didn't exist. That track record is backtested and largely hypothetical. The fund didn't begin operating until October 2023. The past returns show how the fund would have performed if it had existed ever since January 2013, partly based on other accounts Brandy--wine ran at the time. From July 2018 until May 2020 and again in March and April 2023, the firm didn't have actual ![]() ![]() results from the strategy, so those periods are simulated, says Brandywine's chief executive, Michael Dever. "If you're managing money, the only thing that matters is accuracy," says Dever. "We think we've come up with a very accurate representation of what we expect to be able to achieve performancewise." Since its launch in October, the fund has outperformed its benchmark by 2 percentage points with less fluctuation, according to Brandywine. "So far it's been doing exactly what the back performance says it should," says Dever. "We'll know for sure in another 10 years." The Brandywine funds are only the tip of the backtesting iceberg. Asset managers often roll out exchange-traded funds based on such factors as "liquidity" or "revenue" that appear to have worked in the past, but flop in the real world. Insurance companies have sold billions of dollars of annuities, universal life and other products linked to customized indexes with high past "returns" that soon fade. Of course, you can't completely ignore the past when you project the future. To protect yourself against backtests that foretell nothing, ask questions like these: If this idea is so great, why weren't these guys using it at the beginning of the period instead of only at the end? Why wasn't everybody using it? How long has the strategy actually been used, and with how much money? Has it been tracked over even longer periods than reported in the backtested data? How many other strategies were backtested but abandoned? Do the past numbers include trading costs? If the answers don't make sense, don't invest. |
|
This site provides a digital replica of the print newspaper and is intended for the personal use of our members. For commercial reproduction or distribution of Dow Jones printed content, contact: Dow Jones Reprints & Licensing at (800) 843-0008 or visit djreprints.com. |
Copyright 2017 Dow Jones & Company, Inc. All Rights Reserved.
Friday, May 31, 2024
Felon? Trump is in good company
Criminal Convictions and the Presidency
Sunday, May 26, 2024
The existential horror of Sonia Sotomayor’s life on a conservative court
Obama never kept his word on warrantless wiretaps
Wednesday, May 22, 2024
The Wall Street Journal Digital Replica Article
thevanx@gmail.com sent you this article.
Comment:

You Say 'Trickle Down' as if It's a Bad Thing By Steven E. Rhoads President Biden in his State of the Union ad --dress encouraged Americans to imagine a future in which "the days of trickledown economics are over" and the economy is built "from the middle out and the bottom up." That expression, "middle-out" economics, has bounced around Democratic politics for at least a decade. But how would it work? No one says. Politicians may scorn the trickle-down effect, but it is responsible for Americans' economic well-being. Even some prominent 20th-century liberal economists, including Paul Samuelson and Alfred Kahn, agreed that the innovation and investment that lead to capital formation are crucial to economic growth. Kahn once wrote: "The most powerful engine of productivity advance is technological progress, generated in large measure by expenditures on research and development and embodied in improved capital goods and managerial techniques." That process confers benefits on everyone, he added, "precisely by trickling down." When employees use better equipment and have better managers, they become more productive. This makes them more valuable to their companies and stirs competition in the labor market, causing their real incomes to rise. Sen. Elizabeth Warren (D., Mass.) sees the world differently. During her 2020 presidential campaign, she said the wealth tax she wanted to impose on billionaires would have no important cost to society. In her view, the tax would be reserved for "the diamonds, the yachts and the Rembrandts." Ms. Warren ignored an important point. It's the superrich who have the greatest ability to save and invest in businesses. For his 2019 book, "The Billion Dollar Secret," entrepreneur Rafael Badziag interviewed 21 self-made billionaires. He found that they generally derived more pleasure from investing in technologies to create new and improved products—a benefit to everyone—than from spending on personal luxuries. A good example is the smartphone. Wealthy Americans were among the first buyers of and investors in the product when it was a new technology. In time, costs dropped and smartphones became ubiquitous. Lower taxes for the rich spur investment, which is good for people of all classes. Politicians and the press mislead voters and readers when they claim that tax cuts for the rich don't benefit other economic classes. We all gain from new, improved products made possible by innovative startups funded by the wealthy. Excessive taxation, doubtless a feature of a "middle-out" plan, could deplete the funds that entrepreneurs use to start and sustain useful ventures. Americans shouldn't worry so much about wealth distribution. Instead, we should be grateful for how the wealthy enable entrepreneurial ideas to come to life, allowing everyone to prosper. Mr. Rhoads is a professor emeritus of politics at the University of Virginia. |
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This site provides a digital replica of the print newspaper and is intended for the personal use of our members. For commercial reproduction or distribution of Dow Jones printed content, contact: Dow Jones Reprints & Licensing at (800) 843-0008 or visit djreprints.com. |
Copyright 2017 Dow Jones & Company, Inc. All Rights Reserved.
Sunday, May 19, 2024
Bidenflation clocks in at 19.1% since Joe Biden took office
Saturday, May 18, 2024
Friday, May 17, 2024
WSJ.com: A Hunter Biden Debate, Finally
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