Monday, 9 June 2014


I have been a fan of Steven Levitt and Stephen Dubner ever since I came across their first book: Freakonomics. They use economists's focus on data to review a huge variety of subjects. The titles of their essays tell it all. They range from How is the Ku Klux Klan Like a Group of Estate Agents? to Why do Drug Dealers Sill Live with their Moms?

I have yet to dip into their latest offering  Think Like a FreakBut I am an avid listener to their podcast. From that I have learnt that the new book contains a chapter on the three (or four) hardest words to utter in the English language: I don't know.  It appears that failure to admit ignorance is close to being hard wired. Children, when tested, will make a stab at the right answer, even when asked a nonsensical question. Adults find it very hard to say that they don't have an answer, especially when faced with peer pressure. Even more so when they assume the role of an expert (example a senior member of the marketing department of a company when queried by the MD about the effectiveness of various advertising methods).

Admitting to ignorance is the first step towards making a proper reasoned decision. There follows the need to seek out data which will help draw the correct conclusion and make the right decision.

But what about the time when data is non-existent or ambiguous. The two Steves (or is it Stephes) have an answer. Their web site provides a coin flipping service. The argument is that if a decision is a close call, and you must decide you might as well flip a coin. On their site you have the choice of a straight flip or
a best of three. A good exercise is to see if you can express a preference before the coin flip - you are being prompted to see if you are truely undecided. The same exercise should be repeated after the flip: are you satisfied or do you really wish it had gone the other way?

I tried it on the vexed question of whether I should be sucked into this ever rising market. I cheated for I already knew my answer. I have decided to be in there. At present nothing is upsetting the apple cart so I have decided to go in, admittedly, with trepidation. I am also ready to withdraw at a moment's notice.

My preference is for shares that will make money over days or a couple of weeks, at most. And that means that UK shares are more or less out.

My US picks are as AAV AXAS  PXLW PAM and ENSV. They come from the El Cheapo's Unisearch in Vector Vest. This has been throwing up winners recently. It looks for shares below $10 that offer excellent value for money, are low risk and the price has been moving upward on a relatively smooth trajectory.

In the UK I have bought a substantial holding in JII. This is an investment trust that specialises in the Indian market. It has done well since the election of a new right wing prime minister who promises to emulate the Chinese model for economic development. I may not agree with all Mr Modi's political stances but he has stated aims of improving relations with Pakistan and fighting corruption. Lets hope he succeeds.

1 comment:

Dave said...

I, too, have had good luck with and ETF called SCIF, that has small Indian companies.
Let's hope it continues!