Update on the last 2 weeks

Been flat out with university work the last couple of weeks as mid semester exams draw closer. I've got a 40% exam on Saturday, 25% assignment due Tuesday and a 40% exam also on the Tuesday. Naturally I'm flat out and I've spent every day since Tuesday at uni (even Saturday and Sunday)!. All this preparation should pay off but I suppose I'll see in a month or so when the results are released.

Extracurricular activities have been going well but I'm finding myself having less and less time for them. It really is eye on the prize in regards to university studies so I'm not too worried about falling slightly behind in my other interests. The article I was writing for chart patterns in technical analysis was published at the start of this month, the link is HERE. I'm currently putting together my ideas for the next one and I'm really enjoying writing now days (compared to how much I loathed it in high school).

Lastly the networking event I organised for the society I'm working with, BSPA (Business School Post-Graduate Association), went great. Meeting more and more people with similar interests and who have the same career aspirations as me.

That's all from me. I'll post about how all the exams went next week! Until then watch the video below, it's hilarious! (also there are heaps more made by them, credit to Taco for showing me them).

Solution to the Probability Problem

When most people read this question (including me) they tend to assume is very straight forward and has a simple answer. The logic is "Since there are now only two stocks left, one of which is the dog and the other is the ten bagger then there is a 50/50 chance of being a winner. Therefore, staying with your original selection or changing to the other provides the same probability of winning".

This is actually incorrect. In actual fact by having a policy of swapping if given the option then you have a 2/3 chance of winning. To illustrate this simply I'll call the stock C the winner.

Now imagine that the stock you selected was A. This would mean that Colin would tell you that B is the dog and give you the option of swapping. If you were to swap you would win (swap to C the winner) and if you were to stay put (on A) you would lose.

If you had chosen stock B then Colin would have told you stock A was the dog and given you the option to swap. If you were to swap (to C) then you would win and if you were to stay put (on B) you would lose.

Lastly if you had picked C then he would have either told you that A or B were the dog and given you the option to swap. Regardless of which one he called the dog you would lose if you swapped (to A or B) and win if you stayed put (on C).

So what this means is that if you had a policy of always swapping then you would win if you initially chose A or B and lose if you chose C. If you had a policy of staying put then you would win if you initially chose C but lose if you chose A or B. Given that you have an equal chance of picking all the stocks (1/3 chance to pick each one) you will have a 2/3 chance of picking A or B and a 1/3 chance of picking C. This means that if you swapped when given the option you would win 2/3 of the time (if you initially chose A or B) and lose 1/3 of the time (if you chose C). Therefore the answer is that you should always swap when given the option as it is statistically more likely that you have chosen A or B as your initial stock and it would result in swapping to C (the winner).

Probability Problem

Have a crack at this great probability problem.

You have the choice of three stocks to buy: A, B or C. You must buy one and only one of the stocks. Colin the all knowing (and always correct) chartist tells you that two of the stocks are dogs and one is a ten bagger. You have no information available to figure out which one is the ten bagger and which are the dogs. You go ahead and randomly pick one of the stocks to buy.

Colin then reveals that one of the stocks you did not select is a dog and tells you its name (A, B or C). Colin then gives you an opportunity to change your mind. That is, to stay with your original selection or switch to the remaining stocks. Should you switch or stay?

I'll post up the answer tomorrow!

Tony Robbins TED Talk

This TED talk by Tony Robbins runs for about 20 minutes and is definitely worth watching. Tony is a great speaker, educator and is very entertaining. I'd go as far as saying that nearly everyone could benefit majorly by working through one of his workshops.



Also I'm going to try keep the post length down from now on so that they are not too daunting to read (and include more pictures!). I do enjoy rambling though so we'll see how it goes...

US debt limit really doesn't limit debt

Everyone probably knows by now that the US has finally reached a debt agreement to avoid default. Rather then blogging an article about the details of the deal (you can find those everywhere) I thought I would link this one:

http://www.seattlepi.com/news/article/US-debt-limit-really-doesn-t-limit-debt-1681790.php

Because there are so many paragraphs I would like to highlight in this article (I would end up copying and pasting nearly the entire article into this post), I've decided to just assume people read it and pull out a couple of points that I find interesting.

1. The debt limit has been raised 78 times since 1960.
2. In 2006, when Obama was a senator, he voted against a debt level increase and said that raising the debt limit was 'a sign of leadership failure'. Obviously he's eating his words now. He has since called his vote in 2006 a mistake and said 'That was just an example of a new senator making what is a political vote as opposed to doing what was important for the country".
3. The spending cuts that were announced can't be forced upon future congress. There is precedent for congress voting against previously established cuts and doing as they wish.

My opinion on the whole situation is that the U.S. does need to put in place large long term budget cuts as well as have tax reform. The cruel reality of borrowing (as anyone with a credit card has experienced) is that you do have to pay the money back and you do have to cut back on your lifestyle/benefits. I just had the hard lesson thrust upon me by choosing to repay a credit card and that forced me to cut back on nearly all my discretionary spending. The point is that just because you are a government it does not make you exempt from having to tighten your belt in times of financial strain. This is something that the Greeks have learnt the hard way. Obviously some people will get angry and protest as they feel that they were not the ones who got them into this mess and that they are being treated unfairly. While this has some merit (though I do believe people should always be aware and critical of how the government is spending their country's money) it does not change the fact that the belt must be tightened. It instead highlights issues within our current system of government.