Joe Springer's  Instablog

Joe Springer
Send Message
It is very hard or impossible to time the broad market consistently — there are no famous investors that got rich by consistently knowing what the broad market would do next. This only makes sense, as there are just too many variables in the broad market. But there are many famous investors who... More
My company:
My blog:
The Wall Street Exclusive
  • Mathematica, What Is The Area For Circle Of Competence? 4 comments
    Jun 26, 2014 8:14 PM | about stocks: VO

    One of our core corporate enterprise business value ethics here at Joe Springer is to have an immeasurable circle of competence - not infinite, but always expanding.

    So when erudite commenter JasonC suggested Mathematica to check our retirement strategy we said - "let's learn this thing."

    Is that really what happened?

    No, we actually sent out a tweet hoping someone would do it for us.

    Alas, that has not worked, so we looked up Mathematica, saw that it is free to download a trial of the software, which you can do here, and we are off and running.

    Mathematica is installed, and after Googling some free info and diving in we have run our first ever function:

    We will use the comments here to track our progress...install and learn with us (and get ahead of us and teach us!)!


    First got to figure out what we're trying to model. What we need is sort of out there, this gets close but annoyingly does not give full control of all the variables. No matter, we were able to model 3.5% real return with annual $60,000 payouts:

    (click to enlarge)

    (click to enlarge)

    As you can see, there is about a 20% chance that retirees will either fall short of their 95th birthday by more than a decade, or become richer than when they retired.

    This is helpful, some commenters suggested rebalancing which we initially resisted, but it seems that we can trade some upside for an initial extra year or two position in liquid CDs. If the market goes up in the beginning, great, lock some in, we are not trying to get rich, just not die poor. If it sinks then the cash can be put to use...


    We are proud of ourselves - Jason C said:

    The right way to test the proposed system is the following.

    Use the past 10 years of daily total returns from the VO fund to create a distribution. Randomly draw 252 returns from that distribution and multiply them together to get an annual return. Do this over and over to create a distribution of annual returns to expect from VO. Basically we are creating a larger bootstrap sample using the assumption that the returns are not serially correlated (plus or minus), which is close enough for government work - we are not using any assumption that they are lognormally distributed etc...

    We (think we) have accomplished compiling "the past 10 years of daily total returns from the VO fund":

    (click to enlarge)

    Now to "Randomly draw 252 returns from that distribution and multiply them together to get an annual return," hmmmm...


    Random drawing, we are starting to like this:

    (click to enlarge)

    Update: We have been having the darndest time pulling just the daily change data out and leaving the dates in, but we had a small victory in plotting all the data, and we needed it, there is not sufficiently foul enough language for coding frustrations:

    (click to enlarge)

    Update: We are flustered, but we have a plan:

    (click to enlarge)



    You may question my methods, but look at this:

    (click to enlarge)

    "Sorority Simulator" got 8 views in 16 minutes, "S&P 500 Historical Data" got 1 view in 42 minutes. Clockwork.


    Ask and ye shall receive! We got a brilliant answer to our forum question, and JasonC posted help as well, love the internet!

    Stocks: VO
Back To Joe Springer's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (4)
Track new comments
  • Joe Springer
    , contributor
    Comments (2650) | Send Message
    Author’s reply » Check out the updates, coming along...
    27 Jun 2014, 03:43 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2650) | Send Message
    Author’s reply » Data plot update above, slow but frustrating, yet slow and annoying at the same time.
    27 Jun 2014, 12:01 PM Reply Like
  • sheldond
    , contributor
    Comments (1463) | Send Message
    Ahhh statistics............I am taken back to the computer lab with that one.


    Here at DCSIII investments we use SAS and SPSS....


    Scatterplots are so cool. I think we could make this a new modern art format.


    27 Jun 2014, 04:15 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2650) | Send Message
    Author’s reply » I'm really liking this, it is amazing when it works, at the moment I'm stuck but I think I have a fix..
    27 Jun 2014, 04:19 PM Reply Like
Full index of posts »
Latest Followers


  • $AMNF $3.8 million cash at end of Q1: Should be able to fund expansion
    May 27, 2016
  • Look $MIK vs other brick&mortars Retail selloff is buy in Amazonprotected MIK 16.3 PE DivCatlyst C
    May 11, 2016
  • $ADMP Adamis License Agreement with Allergan plc Subsidiary for Epinephrine Pre-Filled Syringe Carlo is a dealmaker
    May 10, 2016
More »

Latest Comments

Most Commented
  1. Fire Away ( Comments)
  2. I Am You See ( Comments)
  3. What Is Tonix Worth? ( Comments)
  4. Hooked On Tonix ( Comments)
  5. Seattle Super-Tonix ( Comments)
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.