This is an experimental game devised to check the validity of John Maynard Keynes assertion who said that professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; by Madame Or
(liberal)
Wednesday, May 5, 2010
β - The Age of Turbulence MDCCLXXVI
Beauty of the Beast Contest:
This is an experimental game to check the validity of John Maynard Keynes assertion who said that professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.
The name Beauty of the Beast comes from the fact that all of the beauties are stocks of Banksters: they earn most of their money by, as Lloyd Craig Blankfein famously put it, doing God's work.
Rules:
Each of the contestant must try and find out which is of our six beauties this week (we will increase the number of beauties in future editions) is the most likely to underperform its peers during Friday's trading session on the NYSE. The winner being the first competitor who will have made his entry and whose choice will most nearly correspond to the average of the competitors as a whole.
Each contestant must rank the six beauties from 1 to 6. There can't be tied. All the ranks from 1 to 6 must be used in the form.
1 the most likely to tank 6 the least.
Results:
We will disclose on Thursday at 3:00 PM EST the winning choice of the beauty of the beast contest to the owners and to the general public on Friday at 9:11 AM EST. We will then be able to make a statistical test and compare the ranking that emerged from the beauty of the beast contest and the percentage change of the market value of the stocks between the close on Thursday and the close on Friday. The result of that statistical test will be given on Sunday at 9:11 AM EST.
That statistical result will be, if John Maynard Keynes was not mistaken, very surprising to most.
Some might object that the game might distort market behaviour just like the infamous Credit Default Swap.
Yet as a derivative of a beauty contest it is mostly unregulated and a very useful tool for risk management.
Price:
The winner will get a Professional Edition account for one year whose wholesale value is $50.
Beauties:
This week beauties are, in alphabetical order:
BNP Paribas SA (ADR) (French banking giant) OTC:BNPQY
Berkshire Hathaway Inc. (Stock holder of Goldman Sachs) NYSE:BRK.A
The views expressed
in this article are those of Madame Or only and
do not represent the views of Nolan Chart, LLC or its affiliates.
Madame Or is solely responsible for the contents
of this article and is not an employee or otherwise affiliated
with Nolan Chart, LLC in his/her role as a columnist.
