Archive
A lottery math problem
The MegaMillion Lotto Jackpot is now $237 Million. The odds of winning are about 1:175 Million. This means that if Rocky fills out 175 million lottery tickets, he is guaranteed to make a profit. (Assuming that he doesn’t have to share the prize.)
http://www.nylottery.org/ny/nyStore/cgi-bin/ProdSubEV_Cat_403_SubCat_337550_NavRoot_320.htm
http://www.megamillions.com/
But Rocky doesn’t want to stand at his local Seven-Eleven and fill out 175 Million tickets. (After he enters Trophy Wife’s birthdate, the dog’s birthdate, and his lucky number from inside of a Chinese Fortune Cookie, he won’t remember what numbers to pick.) So instead, he will ask the Seven-Eleven lottery clerk for 175 Million “Quick Pick” tickets.
A “Quick-Pick” is a computer-generated random number lottery entry. The computer picks the numbers, so Rocky doesn’t have to think that hard.
Alas, this won’t work either. Because even if Rocky buys 175 million Quick-Pick, there is some chance that he will receive duplicate Quick-Pick entries … and there is some chance that he won’t receive the winning combination.
The chance of getting a duplicate Quick-Pick should be the same as the chance of winning the lottery. But in Rocky’s case, achieving this result is an illustration of really bad luck.
So Rocky poses the following math question: What is the OPTIMAL number of Quick-Pick tickets to buy? (The optimal number should maximize the chance of getting the winning combination, and minimize the chance of getting a duplicate combination.)
As always, the reader with the best submission will receive a unique prize of dubious monetary value.
The Billion Price Project @ MIT : A real-time CPI
Inflation, says Rocky, are rising prices for the things that you WANT to buy. Deflation, says Rocky, are declining prices for the things that you DON’T WANT to buy.
Although it uses a more analytically rigorous definition, there are many problems with the government’s Consumer Price Index (CPI).
It’s exciting to announce that MIT has gone live with it’s “Billion Price Project” (BPP) — which monitors daily prices of 5 million items sold by 300 online retailers!
Here’s the link to the Billion Price Project: http://bpp.mit.edu/
[Disclosure: It costs the Labor Department $234 million each year to calculate the CPI, and it's only reported once each month. For more details, see: http://www.slate.com/id/2278623/ ]
$7.2 Billion — This does not compute!
Mrs. Picower voluntarily agreed to return $7.2 Billion to the Madoff Trustee Recovery Fund. As one of the largest beneficiaries of the fraud, she made the correct moral choice — but what was her real motivation?
Rocky figured this out!
He discovered that Mrs. Picower’s copy of Quicken Personal Finance Software crashed.
Quicken cannot handle dollar amounts larger than $99,999,999.99. Hence the $7,200,000,000.00 sitting in Mrs. Picower’s account was causing her computer to crash!
Rather than rebooting the computer, she decided to boot the cash to the other victims. For technical details, see: http://quicken.intuit.com/support/articles/using-quicken/reports-and-graphs/483.html (The technical term is “maximum supported value.”)
[Disclosure: It's difficult to imagine a checking account balance of $7.2 Billion. It's even more shocking to realize that at 1% interest rates, she's accruing interest at $200,000 per day! It's worth noting that TurboTax does not list a "maximum supported value" so Internal Revenue Service Agents can relax...]
Black clouds, black sheep, red ink
A friend writes: “About 18 months ago, I compiled a list of stocks for a buy-and-hold portfolio. As of today, it’s down 3.2% (excluding dividends). Going back further, my “sure-thing” portfolio is down 9.7% (excluding dividends).
Rocky notes that since December, 2008, the S&P500 has risen about 42%, and the “average” (non-market-cap-weighted) stock has gained about 75%. Interestingly, however, 57 stocks in the S&P500 have declined in price during this period!
Losing money during one of the biggest rallies in history is like walking around with a black cloud over one’s head. (A meteorological phenomonen with which Rocky is very familiar.)
In the spirit of the TV game show with-the-same-name, “The Biggest Loser” turns out to be Dean Foods Company (DF) which produces private label dairy products. Dean Foods has lost about 55% of its value during the past two years. The CEO of Dean Foods surely wishes that instead of “milking” his company dry, he had invested in the poultry business — and raised a few “golden” geese, which could have flown above the black clouds.
[Disclosure: Rocky has never invested in Dean Foods. He welcomes bad puns that involve milk companies that turn sour, but acknowledges the futility of crying over spilled milk. He also notes that investing in a "boring" S&P500 Index Fund can makes tons of hay when the sun shines.]
The cruelest cut: Yoshi Blade (as seen on TV)
The finger injury occurred while opening the plastic wrapper -- not while cutting.
Flush with profits from a recent trade (and a 20% discount coupon), Rocky headed to his local CVS/Pharmacy to treat himself to an indulgence.
He passed on the bubble bath. (skin allergies)
He passed on the organic chocolate bars. (weight gain)
He passed on the automatic blood pressure monitor. (don’t ask, don’t tell)
He settled on Yoshi Blade – “the one knife whose sharpness is guaranteed.”
Rocky enjoys late-night informercials, hence he knew Yoshi Blade is a ceramic knife that’s guaranteed to stay sharp; won’t rust or pit; can replace a drawer full of metal knives; is made of natural eco-friendly materials; and its design is ideal for precision cutting and thin slicing.
After paying $18, he headed home and severely gashed his finger while opening the sharp plastic wrapper. Alas, Rocky discovered that the plastic wrapper would prove to be a better knife than Yoshi Blade (as seen on TV).
“When all else fails, read the instructions,” thought Rocky.
Fearful of a paper cut, Rocky carefully unfolded Yoshi Blade Care and Maintenance Guide, (a booklet containing more detail than his Dell Computer User Guide.)
From the Guide: (verbatim)
- DO NOT use Yoshi Blade or the side of the blade to chop food.
- DO NOT use Yoshi Blade to cut frozen food.
- DO NOT use Yoshi Blade to cut hard cheeses.
- DO NOT use Yoshi Blade for carving poultry or meat with bones.
- DO NOT cut on ceramic plates, marble, stone, glass or tile.
- DO NOT bend, twist, pry or apply force on the tip or side of the blade.
- DO NOT use Yoshi Blade to smash garlic or other foods with the side of the blade.
- DO NOT place Yoshi Blade in or near open flame or heat source, as ceramic blade will get hot.
- Yoshi Blade is NOT dishwasher safe. Hand wash only in warm water with mild soap and never let Yoshi Blade soak in water for any period of time.
Rocky thought he understood the instructions. Yoshi Blade cannot be used for cutting, carving, chopping, twisting, stirring or any other activity normally reserved for knives.
(It suddenly became clear how Yoshi Blade can replace a drawer full of metal knives: put Yoshi Blade in a drawer, and order Chinese Take-Out.)
[Disclosure: Rocky lives dangerously. He put Yoshi Blade in his dishwasher. ]
Masteroftheuniverse is back!
Rocky’s friend, Jeff Watson had his blog hacked. (A malicious person guessed his password and deleted the blog plus years of posts.)
Rocky sought the assistance of the skilled “Happiness Engineers” at WORDPRESS.COM, and after a six week abeyance, Jeff is back online — sharing his wit and wisdom with the world.
His experience reminds Rocky that periodically changing passwords is a good idea. (It’s also a good idea to occasionally change the batteries in one’s smoke detector.)
Here are some good tricks to creating and remembering “strong” passwords:http://www.wikihow.com/Create-a-Password-You-Can-Remember
[Disclosure: Rocky's smoke detectors beep when their batteries are low. Most blogs do not beep, making them dangerous at night.]
Don’t spend that penny all at once!
Real returns turn positive by one basis point.
When Rocky was a little kid, his miserly Uncle Scrooge would hand him a shiny penny, and intone, “Don’t spend it all at once!”
The mathematically-proficient, (but economically ignorant) child would reply, “But Uncle, how do I get change back from a penny?”
After a trip to negative 0.62%, the 5-year Inflation-Index Bond (“TIP”), closed yesterday at a whopping, positive, (drum roll please): 00.01% yield! That’s ONE BASIS POINT positive yield. Break out the champagne! Savers can now retire early! Not.
When Rocky lends money to the US Treasury, he likes to receive more money than he lends (after inflation). He’s excited that Uncle Sam will be handing him a shiny new penny!
[Disclosure: Rocky is less bearish on Treasuries. But he's not bullish on Treasuries. He also notes that his bond market strategy discussed in this post is working nicely at the moment. http://onehonestman.wordpress.com/2010/11/22/less-exposure-same-return/ ]
Garbage In => Garbage Out
Back when Rocky studied Rocket Science, a popular saying was “Garbage In = Garbage Out.” This meant that if you put silly data into a computer, the lights would flash, the drives would spin, the bells would ring, and out of the printer came: garbage.
The GIGO model came to mind when Rocky read the following e-mail from Dow Jones:
[Disclosure: Basing one's investment decisions on a real-time feed from Dow Jones New Service is reminiscent of a blind man who looks in a mirror and shaves using a straight-edge razor. As for "code words," Rocky has only one word that really matters: "Plastics."]
Really cool website
Rocky stumbled upon a new website that allows everyone to make fun cartoons for free.
Here’s Rocky talking (in real life):
