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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (597)	8/7/1998 10:42:00 AM
From: Ed Brynes	Read Replies (1) \| Respond to of 1722

A simple experiment. I looked at the closing prices of the first 35 securities in the WSJ NASDAQ listing for today. I found an unusually large number (about 13) starting with 1. But if these prices were translated into German marks (about 2 to the dollar), most of the initial 1's would be changed into 2's, and then Benford's law would fail. I don't see how the probabilities can be "scale invariant" as Dr. Hill says. The more likely explanation in my view is that when people start numbering anything, they naturally begin with 1. To begin with a 0 would seem funny because to quote a value with an initial 0 seems senseless. At any rate, before we get too confident about the DJI reaching 10,000, let's consider that according to Benford's law, it would be just as likely to drop to 1,000.