If the New York Times is so sloppy...

A friend and a brother brought this and its implications to my attention. It's a brief retrospective of Walter Cronkite that appeared in the New York Times. What's disturbing is the long list of corrections that was made to the original article, reproduced here:

Correction: July 22, 2009
An appraisal on Saturday about Walter Cronkite’s career included a number of errors. In some copies, it misstated the date that the Rev. Dr. Martin Luther King Jr. was killed and referred incorrectly to Mr. Cronkite’s coverage of D-Day. Dr. King was killed on April 4, 1968, not April 30. Mr. Cronkite covered the D-Day landing from a warplane; he did not storm the beaches. In addition, Neil Armstrong set foot on the moon on July 20, 1969, not July 26. “The CBS Evening News” overtook “The Huntley-Brinkley Report” on NBC in the ratings during the 1967-68 television season, not after Chet Huntley retired in 1970. A communications satellite used to relay correspondents’ reports from around the world was Telstar, not Telestar. Howard K. Smith was not one of the CBS correspondents Mr. Cronkite would turn to for reports from the field after he became anchor of “The CBS Evening News” in 1962; he left CBS before Mr. Cronkite was the anchor. Because of an editing error, the appraisal also misstated the name of the news agency for which Mr. Cronkite was Moscow bureau chief after World War II. At that time it was United Press, not United Press International.

If the New York Times can make so many errors of fact, many of which could have easily been checked, what does that say about the regular news where you are relying on the newspaper to tell you something new, a piece of information that isn't already stored somewhere for you to check against?

Liberals shouldn't have followed Conservatives on partisan ten percenters

The Globe and Mail carried a story on July 30, Liberals slapping back against Tories' partisan flyer tactics, about how Liberal MPs have now also started to send out partisan "ten percenters" after complaining about the Conservatives' ten percenters to no avail.

Other Liberal bloggers have applauded this move, but I disagree.

The partisan ten percenters had been energizing and motivating Liberal party supporters and other voters. A lot of people were angry at these mailings, told us so, and I think we could have capitalized (were capitalizing!) on them to build up our own organization.

Instead, this is looking like out-of-control, pre-writ, partisan mud-slinging funded, unwillingly I am certain, by the tax-payer. It's not going to help us solve some of the structural problems with Canadian democracy like voters getting turned off by politics and disengaging from the political process. (problems that Conservatives are less concerned about, since it serves their interests)

My feeling is that Liberals are not going to realize a net profit by choosing this route. I can't see, for example, that it's going to help the Liberal party pick up members and supporters.

Rex Murphy's gaffe today

Rex Murphy's column in the Globe today, "So where's that global cooling alert?" was composed a bit hastily. He should have done a little research on global temperatures first.

Mr. Murphy failed to check measurements of global temperature before writing that, "things have gotten cool" and complaining that no meteorologists have spoken up about how solid the "theory of global warming" can be given that Toronto seems to be "having a Newfoundland summer".

Let's look at the actual measurements. The US National Oceanic and Atmospheric Administration's National Climate Data Center has data showing that this past June had the second highest globally averaged land and sea temperature ever recorded. How can that be given that those of us in the middle of North America have been experiencing a cool wet summer? Well, It turns out that other parts of the world - the north and eastern Pacific, north-western Atlantic, Africa, Southern Europe, and Siberia were much warmer than normal. Averaged over the globe, the relatively cooler interior of North America got canceled out and then some.

There has been no global cooling alert this summer because there hasn't been
any global cooling.

Cool here but globally the second warmest June ever recorded

The US National Oceanic and Atmospheric Administration's National Climate Data Center reports that this past June had the second highest globally averaged land and sea temperature ever recorded. Yet folks in many parts of Canada and the US experienced a cool and wet June.

This figure explains how it happened. It turns out that other parts of the world, the north and eastern Pacific, north-western Atlantic, Africa, Southern Europe, and Siberia were much warmer than normal. Averaged over the globe, the relatively cooler interior of North America got canceled out.

Of particular interest is the warmth of Siberia. That's where one of the feared tipping points could happen: melting permafrost could release large quantities of methane and carbon dioxide and accelerate global warming.

For more, read this post by Joe Romm

Wrong but very useful: the efficient markets hypothesis

Personal finance tip to folks who have some money saved up: Don't throw the baby out with the bath water by completely dismissing the Efficient Markets Hypothesis (EMH). See the end of this post for what I mean in practice.

I cannot resist commenting on an article in today's Globe & Mail (Taking Stock, Brian Milner) entitled, "Sun finally sets on notion that markets are rational". Milner is reviewing a new book, by Justin Fox, whose cover appears in the figure. In summary, Milner writes that EMH, "has finally been buried under an avalanche of unforeseen calamities, uncontrolled greed and other seemingly irrational behaviours it couldn't possibly explain."

What's this all about? Well, the idea behind EMH is that you can't beat the market. Efficient means that the price of an asset that you observe in the market is all you know and you can't predict the future price. Why? Because if a stock or some other asset is under-priced, somebody would take advantage of that and buy it, pushing up the price until there was no longer any profit to be made. So the prices you observe in the market are the "right" prices in some sense. Economists have thought quite deeply and extensively about this idea.

Now, we also know in practice that this hypothesis is wrong. But it is nevertheless an extremely useful hypothesis in the sense of the physicist Wolfgang Pauli, who once famously ridiculed a theory by saying that it, "wasn't even wrong". Let me give you an example of why we know this hypothesis is wrong. As a trader I would often get customers who were not interested in maximizing their profits solely in the financial markets. For example, they would tell me to buy X shares of a stock now. I might tell them if they took a few hours to work their order they could get a better price. They would come back to me and say, well, my staff is busy and they need to work on other important things, so I don't care if you buy X shares and drive up the price somewhat, just fill my order now, please. After I fill the customer's order, I'm 90% certain that the share price is going fall back down, contrary to the efficient market hypothesis.

So why is the EMH wrong but still useful here?

The answer is that anybody else looking at the market for the stock cannot know that the stock is going to rise or fall. They don't know if I'm finished with my order, or if I have a lot more shares to buy. Unless they can deduce something about what I am doing, the market appears to them to be efficient, meaning there is no profit, on average, to made by betting on the direction that the stock price moves. Furthermore, EMH is useful because it implies that you should always have a healthy respect for the market and the prices you observe in a freely trading, liquid market. It leads to the following rules, which I think of as the trader's practical version of the efficient market hypothesis (applicable to liquid markets):

The market usually knows more than you do. You will lose money if you casually think otherwise.

And a corollary,

Unless you do your homework, the best you can do is rely on the prices you observe in the market.

So, what practical advice can I give, especially to all those people who have some money saved up but have better things to do with their lives than worry about their investments? Well, I'm pretty confident (i.e. I would tell my mother to do this) that markets are still efficient enough to say, don't pay somebody to pick particular stocks, bonds or other investments. Invest passively in index funds that have low management fees. Think twice before spending a lot of your own time on stock-picking, market-timing or trading instead of on something else that might be more valuable to you and other people in your life.