But first . . .
JULIA AND JULIE
Nothing blows up, so you may not like it (a trailer for 2012 preceding the feature has everything blow up – it’s the end of the world and only John Cusack seems likely to survive), but Julia and Julie is great fun.
THAT SPECULATIVE BASKET – AVNR, JAV, PARS
Suggested last week, two of these three little drug stocks reported their results yesterday.
JAV’s reported ‘p-value’ was 0.053, JUST missing ‘statistical significance’ on its primary endpoint. (As I understand it, there has to be less than a 5% chance good results could have been more than random. And here there was a 5.3% chance. Oops.) (Then again, I never took statistics. If I have said this wrong, I have a terrific readership to correct me.) Technically, this is a “failed” study and the stock closed at $1.48, down from last week’s $1.90 or so. So you could sell without too horrible a loss. Then again, some of the secondary endpoints apparently were statistically significant. I’m told it’s possible that they can file this data along with other studies and make a case. Also, there is a second product that they expect to file for approval this year. So, being stubborn by nature – and having gambled only money I can truly afford to lose, I’m holding on.
AVNR reported success and the stock jumped as high as $4.09 from last week’s $2.20 before falling back to $2.87. I had put in a ‘good til canceled’ order to sell some of mine at $3.90 – so by the time I turned on my computer yesterday morning, it was already done. In hindsight, I guess I should have put in to sell all of it at $3.90. But having sold some, I’m in no special rush to sell the rest.
PARS, the third leg of our speculative stool, isn’t expected to report its results until next month.
HOW MUCH TO BET
Chris Hanacek: ‘When you post a tip and caveat ‘only with money you can really afford to lose’ this may be selling it short. What do you think of using the Kelly formula as a basis for deciding how much of my “money I can lose” to allocate?’
☞ I had not known about the Kelly Formula, and now that I’ve researched it, I need an Advil.
That sort of calculation may be worth doing for something as regular as a series of basketball games or blackjack games, where you know the exact pay-off if you win, the exact loss if you lose . . . and you know, at least more or less, the odds of winning . . . and you know when the game ends.
And even with stocks, it may be helpful to the math majors in the crowd. But I think most of us just have to do it ‘by feel.’
First off, really do ‘play’ only with money you can truly afford to lose. Which generally means not playing at all: most people on this planet, especially these days, have no such money.
Second, especially if it took you a while to build that cache of play money – not $500, say, but $500,000 – for heaven’s sake, obviously, don’t ‘bet’ it all on one stock (or one anything else), ever.
Just what portion of your play money to bet on any given position is what Chris is suggesting the Kelly formula might help quantify.
But for me, the real mental effort should probably go into trying to judge the ‘inputs’ of the Kelly formula rather than actually working it through. If your judgment is good in assessing the contours of the bet, you are miles ahead.
What are the odds of a 50% gain? A double? A tentuple? A 50% loss? A total loss? And so on. If you actually could know these things (and you can’t), you could figure exactly what a bet was ‘worth’ – and how well worth making.
Everyone is different.
If I were 30, earning big bucks and able to set aside $1,000 every quarter for this kind of thing, I might bet the full $1,000 on a single stock, even though that were, at first, 100% of my play money. No point in splitting it five ways, and no harm in losing it all.
But if I were 60 and had built a $250,000 kitty of play money, I certainly wouldn’t put more than a fifth of it into any one thing – and generally nowhere near even that much.
And now . . .
YES! YES! YES! YES!
In The New York Times and on his blog,’ David Pogue has “been ranting about one particularly blatant money-grab by American cell phone carriers: the mandatory 15-second voicemail instructions.’ In small part . . .
These messages are outrageous for two reasons. First, they waste your time. Good heavens: it’s 2009. WE KNOW WHAT TO DO AT THE BEEP.
Do we really need to be told to hang up when we’re finished!? Would anyone, ever, want to ‘send a numeric page?’ Who still carries a pager, for heaven’s sake? Or what about ‘leave a callback number?’ We can SEE the callback number right on our phones!
Second, we’re PAYING for these messages. These little 15-second waits add up-bigtime. If Verizon’s 70 million customers leave or check messages twice a weekday, Verizon rakes in about $620 million a year. That’s your money. And your time: three hours of your time a year, just sitting there listening to the same message over and over again every year. . . .
☞ If you’re mad as hell, you don’t have to take it anymore. Read David’s full post and join his crusade!
Quote of the Day
Oil's been discovered in hell! shouts a stockbroker at the Pearly Gates. All bolt; he follows. I know why THEY'RE running, St. Peter says, but why you? Who knows, says the broker. Maybe there's something to it!~old joke
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