Monthly Archives: August 2008

Unsophisticated Olympic Coverage

I have been remiss in my work on Weordan and in posting on this blog in large part due to watching the Olympics too much and at the times that I’m usually the most productive. I have seen the technical analysis done by NBC fail in two different situations which indicate a lack of technical aptitude. To a large degree, it reinforces the notion that while experience is respected, many people get a free ride based upon experience rather than real ability.

The most recent failure that I’ve noticed occurred during the Phelps 100m butterfly win. The people at NBC just stated that Phelps must have won by a fingernail. The fact is that the sensor in the pool is touch activated and can’t be sensitive enough to be triggered by a fingernail touch. Otherwise, water sloshing up against it would set off a false positive. It has to have a significant lack of sensitivity. Cavic might have touched first, but he didn’t touch hard enough to trigger the sensor. Because the sensors are there, the definition of finishing is touching the wall hard enough to trigger it.

The far uglier failure was with the gymnastics competition, especially the men’s. The difficulty portion of the scoring isn’t well calibrated between the events, especially in the men’s competition. This means that scores in certain events are generally higher than in others. Since the competitors are distributed between different stations, their scores aren’t comparable unless they are in the same group or until the end. As I was sitting there listening to the technical commentary where this was being explained and a guess was being made, I was wondering why they didn’t normalize the scores to get an idea of who was leading. This is often done when making fiscal or financial judgements, as different seasons are more active than others. The same could be applied to gymnastics, which would have made it easier to tell what was going on and actually enjoy the race instead of just wonder who was really ahead.

I would be extremely embarrassed if I were them.

One Strike Against Consumers

Our current economic situation is a result of two forces: commodity demand from the developing world, primarily China and India and an unrestrained appetite for profit today. Analyses like this one in the NY Times look at economic forces in terms of the symptom rather than the cause.

The rising prices of commodities like food, fuel and building materials have been largely driven by demand in Asia where large populations are seeing their disposable income increase. They could also be driven in some part by market speculation. There have been abnormalities in grain prices and there might be an oil bubble.

The housing bubble was driven by the same forces. The price of building materials increased due to increased building in Asia, as well as here and many other countries. Speculators got into the market buying and selling real estate as well as selling risky loans predicated on the notion that prices would go up forever, eliminating the risk of loss if they were to default. The primary driver was the large appetite for profit today and very little consideration for the future.

While there is some element of coincidence to our current situation, it really boils down to one real problem. The current investment and management climate is exaggerating the impact of major economic developments. It happened with the internet in the late 90’s then moved on to housing and commodities since then.