28 Sep 2011
UDJ – Prof. Theodoros Evgeniou
Funny Statistics
Section E01 – Group 04
Chedid Haddad
Joumana Kreidi
Benjamin Lambert
SzeMing Lee
Swapan Taneja
Funny statistic in FMV
• Source: FMV Session 4 “NPV and Value Creation”, slide 13,
originally found here
Funny base-ball stat 1
Funny base-ball stat 1
• Source: http://espn.go.com/mlb/standings as of September 27, 2011
• There are 2 games left in the 162-game base-ball season and some teams are trying to make the playoffs. The
ESPN website provides standings and record of each team along with their probabilities to make the playoffs.
• In the American League East division, there is one spot left for the second placed team. Boston and Tampa Bay
are currently tied at second place with exactly the same record (89 wins/ 71 losses).
• Nevertheless, ESPN states that Boston has a 63.4% chance to make it to the playoffs while Tampa Bay has only a
34.6% chance with 2 games left for both teams.
• This difference is based on the fact that Boston’s last two games are against last place Baltimore. If you are in the
sports section of a Vegas casino, you might want to look twice at the ESPN playoffs odds though before betting
based on these probabilities.
• Indeed, for the last two games Tampa Bay is playing at home against first place New York Yankees who are
already qualified and have nothing to play for anymore. The New York Yankees intend to rest all their star players
for the playoffs and send their back-up team. It is also worth mentioning that all fair play considered, New York is
Boston’s arch-rival and would love to see Boston eliminated. The night before, these teams were already playing
each other, Baltimore beat Boston and Tampa beat New York,
• Apart from the figures, it is even more interesting that ESPN writers do not follow the statistic provided by their own
website:
• On a article dated as of the same day, Wallace Matthews writes: “Now, it's a coin flip whether the Yankees will
have to worry anymore about the Red Sox […] reanimating themselves to knock off the Yankees in the playoffs.
With two games left, there's just as good a chance that the Rays [,,,] could be waiting to meet them in the ALCS
(playoffs)” (http://espn.go.com/new-york/mlb/story/_/id/7025378/new-york-yankees-joe-girardi-decisions-makeahead-playoffs)
Funny base-ball stat 2
• Source: http://espn.go.com/new-york/mlb/story/_/id/7025378/new-york-yankees-joe-girardi-decisions-makeahead-playoffs
• The New York Yankees have made the playoffs and their manager, Joe Girardi, is trying to figure the starting
pitcher.
• According to the article, “before Monday night's game, Girardi said that matchups would determine the pitchers
he takes into the ALDS, and that both career numbers against the Yankees prospective first-round opponents -right now, it's either the Detroit Tigers or the Texas Rangers -- and recent performance would be the determining
factors. […]Garcia's career numbers against the Tigers are 18-8 with a 3.88 ERA, Burnett's 4-2 with a 6.33. By
that standard, you can deduce that Freddy Garcia is the frontrunner for the No. 3 starter's job, and A.J. Burnett
probably the odd man out.”
• It is funny to base such a decision on historical numbers when the next game is independent from all the previous
ones. In addition, the historical data is based on games played with different teams, different players and different
stadiums than the ones the next game will be comprised of.
Funny Statistics in Lebanon
Comments
Translation
Economy
Sales of car down 5.2% at end of August
According to figures from the Association of Automobile
Importers (AIA), 21,389 new cars were sold during the first
eight months of the year, representing a decrease of 5.2%
compared to the 22,545 cars sold during the same period last
year. Korean cars accounted for 42% of total sales, followed by
Japanese cars (30%), European (21.3%), American (6%) and
Chinese (0.7%).
Source:
Extract from L’Orient-Le Jour dated September 27, 2011

The journalist is basing the analysis of the
decrease in the sales of cars on an 8 months
period which is not truly relevant in this case

In fact, the journalist never mentioned
throughout the article the political situation in
Lebanon as well as in neighbouring countries
during this same time period in 2011 compared
to 2010:
–
Lebanon lacked a Prime Minister for
several months in early 2011
–
Surrounding countries witnessed a
number of rebellions and revolutions in
2011 which affected Lebanon on several
angles
A Long-Term Case for Stocks
By E.S. Browning
12 September 2011
(Copyright (c) 2011, Dow Jones & Company, Inc.)
As stocks plunged last week, investors focused on the risk of recession and another market collapse.
Richard Sylla sees something very different over the longer term -- the much longer term.
Prof. Sylla is a financial historian at New York University's Stern School of Business, studying market behavior all the way back to 1790. By analyzing patterns detected years ago
with two colleagues, he accurately predicted in 2000 the decade of overall declines that haunted investors.
Now, Prof. Sylla has made a new forecast at the request of The Wall Street Journal. Better days lie ahead, he says. If past market patterns hold true, as they did in the last decade,
stocks should bottom out during the next few years and begin a recovery.
"People ought to take a longer view and think in terms of years and even decades," Prof. Sylla says. "Most people are quite pessimistic right now. I am saying: The market may go
down from here. It may go up. But if you look at the long sweep of history, this seems like a good time to buy because the average return is down near the bottom" and is likely to go
up.
Last week, the Dow Jones Industrial Average fell 2.2% to 10992.13. If the market sticks to its long-term pattern, Prof. Sylla says, the Dow Jones Industrial Average could climb to
20250 by the end of 2020, up 84% from today. The Standard & Poor's 500-stock index might hit 2300, up 99% from Friday's close of 1154.23.
Prof. Sylla says he isn't trying to predict short-term behavior. He doesn't know whether stocks will be higher or lower at year end, and he isn't losing sleep over Greece, the
sputtering U.S. economy or other problems now haunting stocks.
A Long-Term Case for Stocks
His long-run focus parallels that of financial planners, many of whom urge clients who aren't about to retire to tune out the stock market's volatile swings.
"Not that you want to be unaware of what is happening day-to-day, but to have to worry about reacting to what is going on when you are not going to be using this money for 20
years is kind of silly," says Reed Rinderknecht, a financial planner at Foster Group in West Des Moines, Iowa. More than 90% of the firm's clients "understand that and are able to
go back to work and not worry about what is going on," he says.
Using 10-year averages of annual market returns, including dividends and adjusted for inflation, Prof. Sylla and his colleagues found that U.S. stocks have risen and fallen in
surprisingly consistent waves for more than 200 years. The pattern has become even steadier since World War II.
When 10-year-average annual returns dip below 5% -- and especially when they turn negative, as they did in 2008 and 2009 -- markets tend to bottom out and begin a recovery,
the figures show. Years later, returns top out as investors get overconfident, with average returns above 15%. The market patterns might be related to swings of economic
performance and investor confidence.
In 2000, when returns were at the high end of his range, Prof. Sylla found that a decade of zero average annual returns would fit the past trend. He was right, and stocks suffered.
Now a recovery with 6.5% average annual returns, equal to the historical inflation-adjusted average, would fit, he says. He isn't saying stocks will rise that much each year, just that
this could be the average.
Prof. Sylla does see a 25% chance that the next decade could fall well short of that. Japan suffered meager stock returns for more than 20 years after its real-estate and stock
bubbles burst in 1990. Still, "my guess is that even if we had a couple more years of bouncing around, 2013 to 2022 would be much better," he says.
Investors with long time horizons should focus on where stocks could be in 10, 20 or even 30 years, Prof. Sylla says. That doesn't mean they should buy stocks to the exclusion of
all else, just that they shouldn't give up on them.
"There is a lot of excessive short-term thinking about the stock market: 'What did [Federal Reserve Chairman Ben] Bernanke say today?'" he says. "In the 1980s, it looked terrible
with those low returns, but I always tell my students that wasn't such a bad time to buy stocks."
Prof. Sylla based his work on the S&P 500, for which data have been estimated back to 1871, as well as calculations he did with his two colleagues for the period from 1790 to
1860, and the work of Bryan Taylor of Global Financial Data for the intervening period.
The reason business and stock cycles were shorter and more volatile before World War II is probably that stocks were focused then on the growing industrial economy, he says.
Since then, they have tracked the growing service economy, which tends to be less volatile. In addition, stock returns during the 19th century came mainly from dividends. Now,
price gains provide most of the fuel.
Of course, stocks could lurch higher and lower in the short run. And things could get worse before they get better. Prof. Sylla says the current period resembles a downturn period
in the late 19th century.
"We may not be able to get enlightened government policies until things get worse than they are now, which isn't a happy thought," he says. But in the longer run, "I think the
country is going to recover and go on to prosperity again as it always has."