The Silicon Ball of Finance

Recently I posted a story here about complex algorithms being used to predict acts of terrorism and advise military and state leadership in the conduct of matters of diplomacy. An obvious extension of using such sets of mathematical formulas would be to predict how to win the lottery, as I mentioned in that post.

My view of the lottery, though, has changed since I devised my original concept on the matter: The lottery is a tax on poor people and those with a lesser amount of economic and financial knowledge.

What the lottery-winning seeking public should do, instead, is to use the stock market.

So, without further ado…who is better in the game of investments: A computer or a person?

Let’s start by defining a couple types of investing: There are those that believe in and practice the fundamentals: Observing P/E ratios and, essentially, applying a series of formulas to a company, an industry, their stock picks, etc. Fundamentals’ investing is in my opinion, just that: The fundamentals of investing.

Take a man like Warren Buffet: He is the epitome of someone who believes in behavioral finance. When I was much younger I remember a commercial for some large Wall Street Trading firm which stressed that after they looked at a stock, they would go and investigate it in-depth: Interview managers, examine infrastructure, and perform other in-depth activities which filled in the blanks that a fundamental stock pick couldn’t do.

The comparison and contrast is a simple one: Fundamental investing is a very logical, linear, rational method of investing. Behavioral investing, on the other hand, has a million shades of human emotion involved and, therefore, is open to the irrationalities which we are prone to as humans.

And that’s it: A computer program which attempted to account for the human aspect a investing would need to be exceedingly complex.

The odd part of this whole stock market thing? The irrationalities which incite risk in the system is why the stock market goes up as much as it does over time and is why any money put into the stock market as a portion of Gross Domestic Product adds to GDP by factor of 400 percent; in other words, when constructing the value of GDP if you put $100 into it as a form of investments—anything in the stock market—it is calculated to increase as a portion of GDP at a rate of 4 to 1, making that $100 investment worth $400 in terms of GDP; contrast that against the 1:1 ratio of government spending.

The Technology Factor

Technology is a wonderful thing. “One machine can do the work of fifty ordinary men,” American writer, publisher, and artist Elbert Hubbard once said. The use of technology can certainly, as history has shown, be used to add more value to our daily business, squeeze more productivity out of our resources, and get more done with what we have than we might have once through possible. In the hands of the adequately skilled leader, the limits of technology are only limited to the boundlessness of creativity.

From the most basic perspective, the time savings, efficiency and commoditization of routine tasks and services allowed by computers and other pieces of technology has been able to free many the business leader to focus on the more pressing, creative, problem-solving, and desirable aspects of our trades or businesses. Computers, however, being the blessing that they are can also cause headaches or lack of productivity if they are not correctly tailored and utilized in the capacity that meets the missions of the business concern. When looking at computers, for instance:

1. Get a computer that meets your needs: Word processing? Spreadsheets? Financial management? Presentations? Personal information management? Sales management? At the very least, make sure you use a suite of programs designed to protect your computer against “malware:” The general type of malicious computer software which includes viruses, spyware, Trojan horses, and the like. While there are many programs that you pay for on the market, my experience shows that you can also achieve the same level of protection from the right mix of free programs. For instance, at home I use AVG Anti-Virus Free, Windows Defender, and Spybot Search & Destroy. This has been able to hedge against any malware problem I have on my computer at home, and what I’ve seen with others using these.

2. Organize your computer. Investing some time now on organizing your computer will very much add to your efficiency and productivity later. Be descriptive enough with your titles in order to convey your message to yourself or others. Be certain to use a system that is logical and makes sense to you.

3. Keep email short and direct when you send it. When you receive it, scan messages by subject header. Only give your email address out to people as necessary to avoid unsolicited junk or “spam” email. Designate a discrete number of times in the day, usually 1-3, to review and respond to emails. Studies have shown this to be the most productive approach.

Three ways that your computer can do for you to make your life easier:

1. Internet faxing services can remove your need to have fax machine in your office; instead, with the use of email (and possibly a scanner), you can have people fax you and you can also fax other people! These services include, but are not limited to: eFax, MyFax, RapidFax, Metro Hi Speed, FaxAge, FaxMicro, Send2Fax, and SRFax. Not sure if you want to pay? Try advertising-supported FaxZero!

2. VoIP, or Voice Over Internet Protocol, allows you to escape the confines of traditional phone plans and call anywhere using your broadband Internet connection in conjunction with your existing phone system, or simply a headset attached to your computer. The latter would find you using a program & service called Skype. The former, using your own phone system, will find you either using a local Internet provider or services such as Vonage, 1TouchTone, Verizon VoiceWing, or Lingo, for example. Want to know who ranks the best? Visit here.

3. The podcast is an excellent and efficient way to stay connected with news, opinion, and entertainment on the run. Essentially podcasts are just “radio on demand” programs from anyone with a few pieces of software to record, edit, and upload what they have to say to the Internet.

Next, how other parts of technology can play an effective part in the business leader’s everyday life.

The Wonderful, Whacky, Crazy Misadventures of Windows

Double your drive space. Delete Windows.

…Let me tell you: I’m about to. I currently have my computer booting on a 150 GB Raptor hard drive. This required me to move my Windows Vista and Windows XP Pro partitions onto partitions on the new drive, using the eventual method of reinstalling everything from the operating system to the suite of programs I use. A fun experience if you’re a someone like me, perhaps. It was still stressing, very stressing.

I’m down to one or two programs wanting to give me blue screens of death which I hope to solve by the weekend and image the partitions and……voila, I’ll be past my phase of wanting to delete Windows.

More of the usual stuff tomorrow.