In the morning, things coalesce.

I was going to attend the Trenton Computer Festival today mostly to harass Donn Fishbein from Neuroquant to ask him for any stock or analyst that could be considered a “leading indicator”.  But I changed my mind.

I looked into the volatility index (VIX) and the mathematics underlying that only to realize it is a lagging indicator.  Actually, since it’s constructed from the sum of option puts and calls, it would be closer to the truth to consider it a “Wisdom of Crowds” indicator.

Last night on Bloomberg Television during a program called Buffett and Beyond: The Future of Value Investing, four stock professionals (teachers or traders) were talking about Warren Buffett’s latest purchase of Burlington Northern Santa Fe Corp. They wrapped up the evening wondering how to tell if a company is faking their accounting to look better for investors.  The panel suggested looking carefully at balance sheets and talking about the numbers with management.

Needless to say, this is impossible for the average Joe (or Ceneviva).

Considering the ephemeral nature of money, the lack of skin in the game with the largest firms, the incentive structure of the investment banks and the lack of leading indicators, value investing could be considered difficult if not impossible.

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