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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (55117)	4/7/1999 10:57:00 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 132070

bgr, i'll give you evidence that mpt doesn't work. in 1997 16 mb dram prices had collapsed from $10 to $6.50 and the herd ran the stock up from $40 to $60 as mu's earnings were obviously collapsing. the problem w/ mpt may not be the theory itself. it may be an assumption that it makes. it assumes people can interpret the data correctly. if you give me 2+2=4 and the herd says 6 'cause it feels good, does that make for modern math theory? to the person that sees the obvious answer as being 4, any theory that says the herd is right at 6 sounds dumb. absurdly so. that is where i am at w/ mpt. it is absurd b/c analysis and interpretation of the street is extremely weak. my forward predictions on mu, as mike's and all the bears, have been so obviously correct b/c we interpreted data correctly. just b/c the herd didn't have this ability doesn't mean they were right in valuing mu at absurd levels relative to reality. mpt says they were defacto right. mpt is wrong. throw it out and start over or improve it so that it works.

To: BGR who wrote (55117)	4/8/1999 9:34:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

BGR, >>Now suppose that you invest in the MSFT bond and Michael in the FBN bond. Also, let's suppose that at the end of the year, FBN actually doen't default. So, your returns are less than Michael's. But does that mean that Michael is a better investor? Certainly not, as he just assumed more risk and could have lost his capital outright. In fact, if the original risk adjustment and interest rate settings are accurate, both of you have exactly the same acumen as an investor.<< I don't want to get too involved in this discussion because I know very little about MPT. But I may be able to bridge the gap between Mike and yourself somewhat. Perhaps Mike (and I can't really speak for him) feels that a good investor is someone that generates high positive returns "period". An investor of that sort chooses from all the available investment options and asset classes and finds the best value available at the time. He assumes that the risks and rewards among various asset classes change all the time. Someone who presumes that a certain asset class is less or more risky at any particular snapshot in time may be very far off base even if correct in the very general sense. So someone who produces let's say -5% against a benchmark that produced -10% seems superior by MPT, but looks real bad to many other people because they believe that a superior investor should have recognized the lack of value in that area. (more often than not) Similarly, allocations according to asset class formulas of any sort are an attempt to relieve oneself of the chore of making tough investment decisions and allowing time to forgive the sins. Perhaps it's just a matter of the thought process. Wayne