Tater’s Takes – Top Gear Distorts

August 13th, 2011 by Potato

The big news this week seemed to be the US debt downgrade and the stock market. I’ll likely get around to posting about the market sometime later.

I never liked Top Gear, but then again, I’ve only seen it when pointed to it by something outrageously unrealistic, like when they tried to pick the only test where a BMW could beat a Prius in fuel efficiency (all-out throttle on a closed track at speeds you could never drive on a police-patrolled road and hope to keep your license). So it’s not surprising to see them called out again for distorting a “test” to make their point that they don’t like technology or saving gas — in this case draining the battery of an electric car before setting out on a trip to cripple the car. They seem to have a genuine, irrational hatred for any new technology or even the very notion of saving fuel instead of going fast. Zoom-zoom is definitely a bias present in many automotive journalists, but Top Gear is brain-damaged in their fervour about it. “Jeremy Clarkson is either an idiot or a genius. He’s either an idiot who actually believes all the badly researched lying offensive shit that he says. Or he’s a genius, who’s worked out exactly the most accurate way to annoy me.”

An interesting juxtaposition in the Globe this weekend: a “Me and My Money” column on a GIC-only investor who claims to have achieved returns of “within a few dollars” of the S&P500 from 1980 to 2002 using just GICs, and another article says that we can’t avoid investing in the stock markets with our nest egg since cash doesn’t provide the needed returns. For the GIC investor, I suppose it’s possible that he did match the market performance with just his GICs: though the S&P500 increased 900% (not including dividends) over that time, for a CAGR of ~11% (probably more like 13% once dividends are included), interest rates were high over much of that period. Plus, 2002 was the bottom of the tech wreck, so he looks to have cherry-picked. Though I do have to wonder if he’s including the effects of taxes (did he have enough RRSP room for an all-GIC portfolio?), or perhaps he forgot about dividends.

The uproar over Google’s real name policy for G+ continues to rage, even picking up a moniker of its own: the “nymwars”. The EFF weighs in, as doesMicrosoft Research, calling “real” name policies “an abuse of power”.

Michael James talks some more about the futility of active investing, with the help of Larry Swedroe’s “The Quest for Alpha”. I keep meaning to get my thoughts out into a blog post on why I think active investing is possible (though still not a great idea for most people), but it’s getting harder and harder to get motivated to write that as my “alpha” has been firmly negative in 2011 (and getting worse).

One Response to “Tater’s Takes – Top Gear Distorts”

  1. Michael James Says:

    I think it’s possible that a clever GIC investor who manages to get the best available rates can keep pace over the long term with an investor who buys balanced funds with 2.5% MERs. However, if someone is clueless enough to pay massive MERs, it seems unreasonable to expect him or her to know how to get the best GIC rates.