Randall Bolten Blog

February 16, 2015
Six years ago David Friehling, Bernie Madoff’s auditor, pleaded guilty to aiding and abetting the fraud, but he still hasn’t been sentenced. It’s a drama eerily reminiscent of the old “Weekend Update” bit on “Saturday Night Live,” where newsman Chevy Chase announces that “Generalissimo Francisco Franco is still dead.”

February 11, 2015
A recent (2/9/15) Reuters article suggests that the accelerating trend of large U.S. companies reincorporating abroad, sometimes called “tax inversions,” is NOT motivated by the statutory U.S. federal tax rate, at 35% one of the highest corporate rates in the world. An interesting perspective, but the numbers they cite don’t support it. Yet again, this is an instance that illustrates how important it is that we be careful about the words that we wrap around the numbers.

February 03, 2015
One of the most “boneheaded” incentive scheme design choices is excessive binary-ness. This is a problem in the Affordable Care Act, but it’s also a problem that frequently rears its head in compensation plans. In this post, we look at an example and discuss how to fix it.

January 29, 2015
The efforts by both the Obama administration and the Republican-controlled Congress to tinker with the employer mandate won’t work. The problem is that the efforts are merely symptoms of what is not only a fundamental flaw in the ACA, but a flaw in many incentive compensation plans: excessively binary schemes.

January 10, 2015
I frequently write about the importance of using words properly in order to make numbers understandable. An article about recent trends in health insurance premiums – a critically important subject, and in a prestigious publication – has several statements that are unsupported by the facts. The problem isn’t that the author misunderstands the information, it’s that he’s mischaracterizing it. This is where proper use of words comes in.

January 05, 2015
In one of my last 2014 posts, I lambasted a particularly silly Yahoo! Finance blog titled “This Signal Has a Perfect Record of Forecasting Year-End Gains,” in which the author used a convoluted calculation based on the Market Volatility Index (VIX) to predict the S&P 500’s performance for the remainder of the year. We rarely have the opportunity to skewer such pontificating so promptly, but this “signal” no longer has a perfect record.

December 30, 2014
Let’s try an unusual, but sometimes effective technique: recasting the data. Rather than looking at individual presidents and individual elections, let’s look at – for want of a better term – “dynasties,” that is, continuous periods where a single party controlled the presidency, and see how that party fared in the U.S. House during that dynasty:

December 23, 2014
Pres. Obama’s has just threatened a “proportionate response” to North Korea’s cyber-attack on Sony Pictures’ computer systems. I’m at a loss to understand what he really meant by that, or why he chose the words he did. In quantation, getting the words right is critically important – the numbers mean nothing without them. So today’s word is “proportionate,” a word with obvious quantation implications.

December 17, 2014
Since my last post was so negative, and so critical of the stuff given to us to read, it’s a pleasure to encounter a good example of quantation, even on an unpleasant subject. I’m referring to a Washington Post-ABC News poll of public opinion related to the recent Senate report on torture and the CIA. Here’s what I liked about the survey design:

December 15, 2014
I try to be positive. I really do. But yesterday I came across a post that is so ridiculous that I can’t stay silent. The writer observes that in every year since the Chicago Board Options Exchange’s Market Volatility Index (^VIX) was created in 1986, if the VIX traded at more than 34% above its one-month low at least once during the month of December, the S&P 500 showed a gain from that point until the end of the year. (Got that? There will be a quiz on this later.) The writer claims to have found a predictor “whose results have been so overwhelmingly consistent that it is hard to ignore.”

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