Some serious research, pointed out to me by FT Alphaville, showing that the 2010 Soccer World Cup had a marked impact on JSE trading volumes, patterns and correlation with global markets.
I’m not sure what to do with this information, but it’s remarkable all the same.
The Make a Million competition, as I’ve mentioned before, is an awful idea. It doesn’t promote investing or even “normal” trading, but rather massive, speculative risk-taking trading because the prize for performing well is nothing and the prize for performing best is significant.
I’m continually disappointed that Moneyweb continues to partner with this distraction.
As I’ve done in the past, I’ve analysed very quickly some of the results of the most recent competition. As background to that, the basic rules are:
So let’s be clear, there are no long-term investment learnings here.
The winner did return 165.5% over 3 months, which is not an impressive performance even though it might look like it. The point is, given the volatility of the investment universe available for the competition and the encouragement towards rampant risk-taking, it’s entirely pedestrian performance. It’s very likely an individual’s performance will be good given the wide range of possible outcomes.
Let’s look at some other statistics
| Average performance | -18.4% |
| Annualised average performance | -73.4% |
| Proportion making a profit | 26% |
| Total amount won | -R1 020 762 |
| Standard Deviation of performance | 48.0% |
| Annualised standard deviation | 96% |
These are not performance statistics of which to be proud. They are similar to the losses incurred in prior competitions.
So in short, the competition cost the entrants in total just over a million rand. Losing a million rand is a great way to Make a Million.
The world’s population is now estimated to be 7 billion. That’s a big number, but with slowing growth rates (and negative population growth in several developed countries) the most headline grabbing stories of rapid overpopulation are nothing more than echoes of the same stories of the last few thousand years.
Some of the stories around in the news did prompt me to take a look at the South African population pyramids as estimated by Stats SA. Now these figures are extrapolations based on demographic models and the results of the 2001 national census.
As an actuary interested in economic policy I was disappointed with myself that I was surprised by the shape of these pyramids. Some striking messages to say the least.
population pyramid all
The overall population pyramid is relatively typical of developing countries with a significant portion of the population under 15 and a significant majority under 35. The growth rate is clearly already slowing, but a surge of youth, many to poor families with limited prospects for good education is still working its way through our population ranks. Continue reading
I really struggled when Health Minister Aaron Motsoaledi announced (many sources, but here is one) that private healthcare costs have increased by 121% over the last decade.
He continued: “Over the past decade, private hospital costs have increased by 121%, while over the same period, specialist costs have increased by 120%.”
Anyone who measures growth over long periods without using compound annual rates can’t be taken seriously. Abusing numbers for shock value is a sure sign of a weak argument or a lack of appreciation for long-term issues.
121% over nine years (2001 to 2009) equates to an average cumulative annual growth rate of 9.2%. Now medical price inflation of 9.2% is high given inflation over the period and modest real growth in GDP and salaries. But 9.2% tells a very different story to a layperson than 121%. The 9.2% is more useful, more comparable to inflation, more easily able to be understood. 121% is more shocking.
I was really encouraged to read this in a story, quoting Matlala from HASA:
He pointed out that while the green paper said private healthcare costs had increased 121% between 2001 and 2009, this should be contextualised against the backdrop of contributions to public healthcare increasing by more than 100% over the same period.
“Even the price of bread has increased 111% over the decade… We have to face up to the fact that the cost of living has gone up, including healthcare,” Matlala said.
Finally, someone quoted acknowledging that the 121% figure is utterly misleading.
Incidentally, 111% over 9 years is equivalent to an 8.7% annually compounded growth rate, just 0.6% per annum below healthcare cost increases.
From a TimesLive article on looting:
A millionaire’s daughter, Laura Johnson, 19, was remanded in custody when she appeared in court in Bexley near London after being arrested behind the wheel of a car filled with stolen electrical goods and alcohol worth about £5000 (R56385.90).
So the goods were worth about GBP50,000 GBP5,000 (a good round number for an estimate) but worth exactly R56,385.90. Yes, and 90c.
Accuracy is often important. Precision is sometimes important. Pretending to have either is silly.
So the NHI is predicted to cost R125bn in 2012 rising to R214bn by 2020. I need to dig into this more, but I researched on StatsSA website: 2009 personal income tax raised as R154bn. This excludes SITE, but still asks a very specific question about affordability.
South Africa’s unemployment is a different creature from that in the US and in the developed world’s papers at the moment. We don’t have a cyclical lack of demand (although demand isn’t as robust as I’d like). We have massive, unmanaged structural unemployment in large sectors of the economy.
I say “in large sectors of the economy” because it isn’t true to say that we have universal unemployment. In fact, a feature of structural unemployment is that it usually is not uniform throughout the economy (like cyclical unemployment often is). I don’t know any actuaries or engineers who are unemployed for more than a brief period between jobs, and usually the jobs start and end back to back. There will be other examples too.
Interesting that 75% of our unemployed are “unskilled”. (I heard this on the radio, so I don’t know that the number is correct or it’s source, but it does map to my previous analysis based on census showing unemployment by education level attained.
Supply and Demand for Labour
Economic growth isn’t the only solution to unemployment; in fact it’s not even necessarily a solution. Prior periods of strong economic growth added jobs only very slowly. We have massive, structural unemployment in this country. We are making some of the right noises with our government’s new jobs plan and jobs fund.
However, given the obvious relationship to education, why don’t we take the problems of our education system seriously? Continue reading
I really enjoyed Paul Krugman’s analysis of differences between French and US GDP per capita. (It’s very short and very readable.)
In short, the French are less productive than the Americans, they just work less (for good and bad reasons). This highlights the dangers of using measures and analytics lightly without understanding/allowing for other differences.