A Keynes' Beauty of the Beast Contest:
This is an experimental game to check
the validity of John Maynard Keynes assertion who said that
professional investment may be likened to those newspaper competitions
in which the competitors have to pick out the six prettiest faces from
a hundred photographs, the prize being awarded to the competitor whose
choice most nearly corresponds to the average preferences of the
competitors as a whole; so that each competitor has to pick, not those
faces which he himself finds prettiest, but those which he thinks
likeliest to catch the fancy of the other competitors, all of whom are
looking at the problem from the same point of view. It is not a case of
choosing those which, to the best of one's judgment, are really the
prettiest, nor even those which average opinion genuinely thinks the
prettiest. We have reached the third degree where we devote our
intelligences to anticipating what average opinion expects the average
opinion to be. And there are some, I believe, who practise the fourth,
fifth and higher degrees.
The name Beauty of the Beast comes from
the fact that all of the beauties are stocks of Banksters: they earn
most of
their money by, as Lloyd Craig Blankfein famously put it, doing God's
work.
Rules:
Each of the contestant must try and find out which is of our six
beauties this week (we will increase the number of beauties in
future editions) is the most likely to underperform its peers during
Friday's trading session on the NYSE. The
winner being the first competitor who will have made his entry and
whose choice will most nearly correspond to the average of the
competitors as a whole.
Each contestant must rank the six beauties from 1 to 6. They
can't be tied. All the ranks from 1 to 6 must be used in the form.
1 the most likely to tank 6 the least.
Results:
We will disclose on Thursday at 3:00 PM EST the winning choice of
the beauty of the beast contest to the owners and to the general public
on Friday at 9:11 AM EST. We will then be able to make a statistical
test and compare the ranking that emerged from the beauty of the beast
contest and the percentage change of the market value of the stocks
between the close on Thursday and the close on Friday. The result of
that statistical test will be given on Sunday at 9:11 AM EST.
That statistical result will be, if John Maynard Keynes was not
mistaken, very surprising to most.
Some might object that the game might distort market behaviour just
like the infamous Credit Default Swap.
Yet as a derivative of a beauty contest it is mostly unregulated and
a very useful tool for risk management.
Prize:
The winner will get a Professional Edition account for one year
whose wholesale value is $50.
Beauties:
This week beauties are, in alphabetical order:
BNP Paribas SA (ADR) (French banking
giant) OTC:BNPQY
Berkshire Hathaway Inc. (Stock holder of
Goldman Sachs) NYSE:BRK.A
HSBC Holdings plc (ADR) (Sino Britannic
banking behemoth) NYSE:HBC
Mitsubishi UFJ Financial Group, Inc.(ADR)
(Japanese
banking sumo) NYSE:MTU
UBS AG (USA) (Swiss dirty secret) NYSE:UBS
Visa Inc. (Global
jumbo overdraft) NYSE:V
1
1
1
