Monthly Archives: October 2009

The Kindle in Australia

Kindle-smallEarlier this week, Amazon began shipping the international version of the “Kindle” electronic book reader for US$279. The first generation of the Kindle was released almost two years ago in the US, so it has been a long time coming. But, with the announcement this week of the competing Barnes & Noble “Nook“, it looks as though the era of the e-book reader is well and truly upon us.

The Kindle has a monochrome “electronic paper” screen rather than the pervasive LCD screens found on laptops, iPhones and BlackBerries. Also known as e-paper or e-ink, the electronic paper screen comes a lot closer to replicating the appearance of traditional printed paper. There is no back-light and in fact displaying a page draws no power, it is only changing the display that will draw on the battery. As a result, the battery life of electronic paper devices is much longer than other devices. Amazon claims that, with the wireless connection turned off, you can read on the Kindle for up to two weeks before draining the battery. This also means that the Kindle can display an image on the screen when it is powered off, which is somewhat disconcerting at first. Although the contrast is not quite as high as print (the background is not quite white and the text is a little grey), reading on the Kindle is very comfortable. Better still, the quality does not degrade in strong sunlight as is often the case for LCD screens (although they are getting better all the time). So reading the Kindle outside is just as easy as it is in bed (although you will still need a bedside light).

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Petrol Price Update

Another five months on since my last petrol price update and oil prices have continued to rise, but so has the value of the Australian dollar. So while crude oil prices in US dollars are up around 75% since their lows in February, they are only up 29% in Australian dollar terms.

WTI Prices - USD and AUDWest Texas Intermediate Oil Prices

The Australian dollar has been rising steadily for the last six months, pushed along by the Reserve Bank of Australia which has started raising their target cash rate. Higher interest rates in Australia make it more attractive for offshore investors to buy Australian securities and they have to buy Australian dollars to do so. Australian investors holding foreign assets may do the same.

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I have a love/hate relationship with psychometric testing

A while ago, I had a bit of a rant in the post I Hate Personality Tests. Responding in this guest post, Maria Skarveli (who knows far more about psychology than I do) ponders personality testing phobia.

As a psychology student belonging to the faculty of health and behavioural sciences which also harbours biology, medical science and physiology, I was constantly hassled by my friends that were studying law, commerce and engineering and forever asking me “Can you read my mind?” or worse “Are you trying to analyse me?” as if I was Professor Xavier and I could distinguish mutants from humans. Of course I had to keep a straight face and stop myself from saying, “You’re an idiot, there you have it analysis complete” I just rolled my eyes and went with the flow. But deep down I was insulted. It was bad enough psychology had been branded as a “soft science”, which is apparently less intellectually stimulating than the “hard sciences” such as biology, physics and chemistry. But now the general view from all faculties was that psychology is akin to the paranormal, dare I say astrology!

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A better view of the asylum-seeker league tables

The last post looked at how many applications for asylum Australia and other countries have received this year on a per capita basis. The top three countries in the resulting league table are Malta, Cyprus and Norway and their figures are so much higher than other countries that they skew the data, making it hard to differentiate the lower rankings. To remedy this, I have reproduced the chart using a logarithmic scale.

Refugees per Capita (log scale)

Asylum-seekers per capita 2009

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Is Australia taking its fair share of asylum-seekers?

In Crikey this week, Bernard Keane made the point that Australia accepts a disproportionately small number of asylum-seekers given our population size. So, where exactly do we rank in the world in terms of generosity towards displaced persons? The United Nations Refugee Agency provides a wide range of statistics about refugees and asylum-seekers. The latest monthly data gives the number of asylum-seeker applications by country for 2009 up to and including August. The chart below shows a ranking of the 44 countries who reported accepting asylum-seekers over this period. Australia finds itself well down the list in 20th place. Mind you, the United States ranks a few spots behind us and, despite having a better reputation when it comes to taking refugees, New Zealand is even further behind. Malta is by far the most welcoming country for refugees.

Asylum-seekers per capita

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Does Switzerland have the world’s best universities?

Today @jgzebra drew my attention to the Times Higher Education league table of the top 200 univerities in the world. A quick glance at the list shows two US universities in the top three and six in the top 10. And indeed the United States dominates the results, claiming 54 spots out of the 200. The United Kingdom comes in next, taking 29 spots.

University Count (Mac)

Country Count in Top 200 Universities List

Of course, this tally does not take into account the differing sizes of each country: with a population of over 300 million people, you would expect a good showing from the United States. So the obvious question is, what would the national ranking look like if population were taken into account? Rather than doing this based on the number of appearances each country makes in the list, I aggregated the overall “score” awarded to each univerity (which combines scores based on surveys of peers, employers, staff and students, citations and international staff and students) and then ranked each country by aggregate score per million population*.

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Cash on the Sidelines?

Last week, the Australian Financial Review was doing its best to spruik the ongoing prospects for the Australian share market in their front page article “Cashed-up funds have $70bn to invest”. The article is only available online to subscribers, but this quotation sums it up:

analysts cite the volume of cash stockpiled as a reason for stocks to keep rising

Mostly consisting of quotations from people in the equity business (who all arguably stand to benefit from talking up the market), the authors do include some data to support the proposition as well:

The latest data released by the Australian Bureau of Statistics shows that fund managers have increased their cash holdings to about 18 per cent of the $880 billion they manage, or about $160 billion. If managers were to return their cash holdings to more normal levels, there would be about $70 billion available for investment, with the local sharemarket receiving up to $30 billion.

water-wallThe image of a wall of cash on the sidelines waiting to spill over into equity markets is compelling, but does it make sense? The power of this commonly used image arises from the idea that cash is somehow transforming into shares, when of course for every buyer there is a seller who gets the cash, so share trading never changes the total amount of cash in the system (note that aggregate money supply can change through central bank operations and banking deposit creation, but that is a whole other story beyond the sharemarket and is not part of the standard “cash on the sidelines” argument). Of course, this does not stop share prices from going up or down.

So, if the cash in the system does not change, what is going on?

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Subscribing to the Stubborn Mule

rss-180Recently, a few people have asked me whether they can get automatic updates when new posts are published here on the Stubborn Mule. The short answer is “yes!” And of course it’s all free.

Those who are familiar with RSS feeds will already know all about this and need read no further (but should also feel free to subscribe). For everyone else, I’ll give a longer answer, explaining how it all works and describing some of the options available for subscribing to the blog.

You may have seen icons like the one here on various web-sites before. It is the RSS logo and indicates that content is available via subscription. RSS stands for “Really Simple Syndication” and over the last 10 years it has become a standard mechanism for distributing content online (for example, podcast subscriptions are built on RSS). True to its name, the way it works is quite simple. A specially formatted file* is created with a list of blog posts, podcasts, news headlines or whatever the subscription content is, along with a link to where the content is located. Whenever new content is added to the website, this file, called an RSS feed, is updated to reflect the new content. The feed can then be read by an “RSS reader” which will periodically check to see if new content is available and then download it, ready for you to read, watch or listen to.

The trick then is to find the best RSS reader and there are a lot of them, as is evident from this list of readers. Readers may themselves be on the web, like Google Reader (my RSS reader of choice), or can be stand alone applications like NetNewsWire. Some email applications can also be used as RSS readers. With an RSS reader, you can manage subscriptions to a wide range of feeds and always keep track of the latest content. Some readers, including Google Reader, also allow you to share you favourite content with friends.

If this all seems too complicated and you are not interested in a large number of subscriptions, you can also have updates to the Stubborn delivered to you directly via email. To do this, simply enter your email address in the box below and click on “subscribe”.

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I have the RSS feed for the Stubborn Mule managed by a service called “Feedburner”, which is now owned by Google. As well as providing extra features like the email subscription, this allows me to track how many people subscribe to the blog…so subscribe now, I am watching!

* Like so many web standards, the RSS format uses XML.

Junk Charts: Secondary Axes

Data visualisation is a fascination of mine and, as a result, the posts on this blog have featured a wide array of charts. My aim is always to use graphics to help explore data and provide greater insight into whatever phenomena might be lurking in the data. While I have tried to make use of “good” charts, I have never talked about “bad” charts. There is no end to the things that can be said about bad charts. Indeed, one of my favourite blogs, Junk Charts, is dedicated to the subject. Nevertheless, I have decided that I will begin to assemble some bad charting habits to avoid.

Inspired by a chart on the Australian Stock Exchange (ASX) web site, brought to my attention by Danny Yee, I will start by considering the perils of the “secondary axis”. This is a topic that has been covered on Junk Charts, but it seems to be poorly understood by many people in finance. Bank economists seem to be particularly fond of secondary axes.

Since the ASX chart is dynamically generated, I have reproduced a static snapshot showing the key features of the chart. The chart shows (in blue) the history of the S&P/ASX 200 share price index over the last six months. The axis on the left hand side is the “primary axis” and shows the values of this share price index. Overlaid in red is the share price of Alchemia Limited (ACL), a biotech company. The price of Alchemia is shown on the axis on the right hand side, the “secondary axis”.

ACL - ASX version

Alchemia Share Price on a secondary axis (on the right)

At face value, it would appear that the price of Alchemia shares has tracked the performance of the overall share market very closely. However, this is an illusion created by the use of a secondary axis. When considering performance of shares, what is important is not the share price itself, but the returns these prices generate. The upper and lower limits of each axis bear no relation to one another, but are simply determined by the range of values each price series takes and so give no insight into the returns of Alchemia compared to those of the S&P/ASX 200.

A better approach is to create a return index by considering what would happen to $100 invested in either Alchemia or the market as a whole (ignoring dividends and any costs such as brokerage fees and stamp duty). Both these indices can then be plotted on the same axis and this gives a very different picture.

ACL - relative

Alchemia Share Price on a common axis

It now becomes clear that Alchemia shares performed dramatically better than the market as a whole. In fact, over this six month period, while the sharemarket index  returned a very healthy 32%, the return on the Alchemia share price was an enormous 304%. This return was helped, no doubt, by Alchemia’s progress in drug trials with the US FDA.

The most that can be said for the ASX chart with the secondary axis is that it reveals some correlation in the ups and downs of the Alchemia share price and the broader market. However, the chart completely missed the big story in the data.

It is worth noting that producing the secondary axis in the first chart above using the R package is rather fiddly, while creating secondary axes in Microsoft Excel is very straightforward. This points to what I expect to be a theme in future bad chart posts: if it is easy to do in Excel, it is probably bad.