On a random aside, one of my favorite authors from years gone by is Ralph Waldo Emerson. I know that Ugly is exploring Ayn Rand’s Objective philosophies and I suggest he read Emerson’s Essay on Self Reliance as part of his “spiritual” growth. If our young men miscarry in their first enterprises, they lose all heart. If the young merchant fails, men say he is ruined. If the finest genius studies at one of our colleges, and is not installed in an office within one year afterwards in the cities or suburbs of Boston or New York, it seems to his friends and to himself that he is right in being disheartened, and in complaining the rest of his life. ...

My wife owns Dodge & Cox’s Stock Fund (DODGX) and its been a great performer for her account. I just wish they offered it in my 401K! Despite the nice trending chart below, DODGX is not without its risks. I ran a quick Monte Carlo simulation and discovered quite a few nasty negative return outcomes for DODGX. In fact there’s 0.04% chance for a nasty -51% rate of return over the past 10 years. Did it happen? No, but its a possibility! ...

I posted about the power of Data Mining when analyzing your blog’s traffic and how to maximize your Google Adword advertising relative to your Adsense earnings, but I forgot to mention one critical thing! Search Engine Optimization (SEO)! SEO is just a process to organize your blog, or website, in such a way that you’ll end up at the top when ever an Internet user searches for something that is relative to your site. If you advertise your blog using a Pay Per Click method, like Google Adwords, then being ranked at the top of searches is really important as Ms. Danielle points out! It won’t come as a shock to readers of this blog that Data Mining can really help with your SEO! Techniques like associative analysis and cluster data mining are great ways to discover who’s clicking what on your site. Associative analysis is used to estimate the probability of whether a person will purchase a product given that they own a particular product or group of products. Cluster data mining, on the other hand, can identify the profile or group of customers that are associated with a particular type of Web site [via Data Mining and Business Productivity, by Stephan Kudyba]. These two techniques are critical if you want to maximize any e-business! Now here’s the caveat, before you can start data mining your site, you spend a few months gathering website statistics and data. However, this doesn’t preclude your ability to start optimizing your website for better web searching. Here are a 5 tips that I’ve been using that have had a great traffic impact in my blog’s short life. 5 SEO Tips: ...

For those of you who don’t like using YALE, now called RapidMiner, I offer you neural nets in Excel. A few years ago I came across a slow, but really cool neural net application written in Excel by a PhD student, Angshuman Saha. I’ve used this little spreadsheet to make quicky models and see curve relationships. It’s easy to use and the instructions are straight forward. Check out the author’s website, he offers a classification spreadsheet and other fun models. ...

When I was in MBA school, I had a professor who was always looking for a “hot stock” tip. He knew that I had my ear to Wall Street and asked me if there’s anything good to buy out there. At the time I remember reading something about Toyota and liking it alot. I told him that I was thinking of buying Toyota (TM) for my 401K. He did, I got distracted and didn’t, that was Fall 2003. This trip down memory lane was jogged when I went through Wallstrip’s archives and came across their Toyota video. I thought to myself, what ever happened to TM after my tip? The short of it was Toyota took off like a rocket, er car. ...

I’m in the process of merging and updating old posts with fresh insights and content. I dropped the AI part because what it really means is automation in this sense. Building blog traffic is always about writing great content and observing what Google’s AI does to get you to the top of the search results AI is just an algorithm that’s built on top of the existing data you have. In a sense you fit an algorithm, to the data instead of fitting the data to the algorithm. ...

In my Random Thoughts About Trends post from a few weeks ago, I wrote about my belief that Alternative Energy will become a long term trend. I did say that I didn’t know enough about this industry to pick a future winner. It’s rather confusing when you have all sorts of forms of alternative energy such as: solar, wind, bio-fuel, and who knows what else. I then stumbled across an old episode of Wallstrip that profiled Solar Energy. I thought to myself, this might be a good starting place to get some information about solar energy related companies trading at all time highs. Wallstrip highlighted First Solar (FSLR), Ascent Solar Technologies (ASTI), and Trina Solar (TSL). I did a quick check of these companies and found that First Solar has a PE ratio of 300+ and trades at $68, Ascent Solar has no earnings and trades at $7, and Trina Solar has a PE of 50+ and trades at $46. FSLR and TSL, from a valuation stance, are way too rich for me and they probably have a lot of a “hate oil” premium added to their share prices. ASTI has no earnings so maybe $7 is about right, then again maybe it should be lower! So what to do? Well I’ll do more DD (due diligence) on these three and work my way into this market place. Perhaps there’s a better and unloved company out there, waiting for its day in the sun! ...

I stumbled across a +45 minute podcast from the Royal Society of Arts yesterday which is highly entertaining, in a quantitative sort of way. The speaker that night was none other than Nassim Taleb, author of Fooled by Randomness and The Black Swan. It’s a fantastic listen to, especially when he talks about something called “Black Swan positive.” Black Swan Events (BSE) are outlier events, events that you never dreamed of occurring but they do. Sometimes these are negative events where the outcome is very bad for you. An example that comes to mind was Enron, no one saw it coming and neither did Arthur Anderson. I bet the Anderson people never dreamed that this single event, from a single client, could cause them to go out of business. ...

I went long $XLV in mid January 2007 for one of my personal IRA accounts. Its had its share of ups and downs but it doesn’t take a rocket scientist, or a fancy neural net, to figure out that health care is a long term bet. If you don’t believe me, look around for all the graying baby-boomers who want to desperately hold onto their youth. This time I’m holding XLV for a very long time and won’t be shaken out of it. ...

The inspiration for my S&P500 Volatility Timing model came from rereading portions of Mandelbrot’s book, The (Mis)Behavior of Markets, and trolling around the Internet for Nassim Taleb’s research work on risk. I think both guys push the envelope on truly understanding unseen risk and those pesky financial asteroids. Since my model is currently being developed, I thought it would be worth my while to truly learn and understand how historical volatility (HV) is calculated. I first searched the Internet for any free data downloads of HV but came across several pay for data download sites. ...