Nov
27
Robert Bacon, Horse Racing and Market Tactics, by Hany Saad
November 27, 2006 |
First let me preface my post by emphasizing that I am only posting this model because the analogy presented below ceased to exist within the sector (Canadian Banking Sector) subject of this model. I still believe that the model can provide a meal for lifetime with some modification and/or refinement. In this very simplistic model, I assume that all the Jockeys (CEOs) on top of the horses (Canadian Banking Stocks) are of similar skill set and reputation in the street (which in this case they actually are), I also assume that all the horses are of similar quality (the Bank Stocks are of equal fundamental quality, an assumption I make due to my inability to dig into fundamentals and pick favorites); and I also assume that every month is a different race.
In other words, Jan 1st to Jan 31st is the first race, Feb 1st to Feb 28th second race, etc…
A different model might want to consider Jan 1st to Sept 30th as the 1st race and Oct 1st to Oct 31st as the second since mutual funds report results then and since they own the biggest chunk of the sector under consideration. Another variation might regard the 12 months as one long race and each month as one lap in a 12 lap race and so forth.
For example, in the table below, at the end of January, BMO (Bank of Montreal) was the winner, followed by RY (Royal Bank) and so forth.
CM (Canadian Imperial Bank Of Commerce) was at the bottom of the list. Notice how the slacker for the first 5 races (CM) ended the year taking the lead.
My theory, playing on psychological biases and incentive is that given equal horses of same weight, speed, history, etc, the 2 jockeys with the most incentive to compete in a given race are the second horse that was so close to winning the previous race and the horse that came last since coming last race after race will cut into the jockey’s bonus that’s very highly correlated to where his pony ended in the overall race.
but, that needs to be tested …
This is how my racing form usually looks:
January - February | bmo | ry | td | bns | na | cm |
February - March | td | ry | na | bmo | bns | cm |
March - April | ry | td | na | bmo | bns | cm |
April - May | ry | td | na | bns | bmo | cm |
May - June | ry | na | bns | td | bmo | cm |
June - July | ry | bns | cm | bmo | td | na |
July - August | ry | bmo | bns | cm | td | na |
August - September | ry | bmo | td | cm | bns | na |
September - October | ry | bmo | cm | td | bns | na |
Year to Date | cm | ry | bns | td | na | bmo |
1 month | na | bns | ry | cm | td | bmo |
3 months | cm | bns | bmo | ry | td | na |
6 months | bns | ry | bmo | cm | td | na |
1 year | ry | cm | bmo | bns | td | na |
.
Comments
WordPress database error: [Table './dailyspeculations_com_@002d_dailywordpress/wp_comments' is marked as crashed and last (automatic?) repair failed]
SELECT * FROM wp_comments WHERE comment_post_ID = '264' AND comment_approved = '1' ORDER BY comment_date
Archives
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- Older Archives
Resources & Links
- The Letters Prize
- Pre-2007 Victor Niederhoffer Posts
- Vic’s NYC Junto
- Reading List
- Programming in 60 Seconds
- The Objectivist Center
- Foundation for Economic Education
- Tigerchess
- Dick Sears' G.T. Index
- Pre-2007 Daily Speculations
- Laurel & Vics' Worldly Investor Articles