Nov

19

 Umberto Eco, in his studies of mass media and culture, has an essay on popular new devices. His thesis is that they start out by being used by the wealthy and then get used by the common man, and lose much of their value from the law of diminishing marginal returns.

He uses the railroad and cell phones as examples. I have found that many new things like the smart phone have decreased their marginal productivity. Studies show that 30% of users sleep with their smart phone next to their bed. I have not had the displeasure of being interrupted in romance by a smart phone ringing yet and answered, but I am told it is common.

What are the implications of this for market analysis, especially of individual stocks.  I find that my past research which did not use "as is" files and was heavily dependent on compustat is deeply flawed. Indeed my approach seems flawed. I am trying to improve for the future. My kids seem to make money with their stock purchases based strictly on the future growth of popular products among the younger generation. I wonder how to improve.

Thomas Miller writes:

Maybe Peter Lynch was on to something although I don't see how his "method" can be quantified.


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3 Comments so far

  1. Ed on November 19, 2012 4:18 pm

    “I have not had the displeasure of being interrupted in romance by a smart phone ringing yet and answered, but I am told it is common”

    Nothing kills the mood like the programmed in ring tone of the in-laws

  2. Rick on November 21, 2012 11:12 am

    That is a big “heads up”…
    What kind of flaws are resulting from your use of Compustat?
    What is the time frame for your trades?

  3. Anonymous on November 30, 2012 1:43 am

    all the compustat data is retrospective and biased by deletions of companies no longer in file and the prices are not tied to reporting dates. i have not used the as is files recently but I am told that they elimanate many of these biases. while the weekly service was under the direction of sam, one can trust all their numbers and I would only use their printed service with the monday prices and fundamental data as reported there in hard form for a retrospective study that could have at least been implemented. one would not demean himself to talk about the biases of the 10 year man’s data with earnings included that werent even reported in the early years. vic

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