Additional Math Pages & Resources

Wednesday, November 2, 2011

What if for the third and final time

This week we've been investigating What If? questions, and how math comes into the picture.
  • What if I bought this house?
  • What if I took this job?
  • What if we invested in this company's stock?
Answering What If? questions can be considered gambling - "an enterprise undertaken or attempted with a risk of loss and a chance of profit or success." Even using math to carefully analyze the odds, we are still prospecting (looking for gold) in a wilderness!
In this rough economy, many of us have learned that investing resembles gambling more than it does saving.

One way to reduce mistakes in our What If? choices is to collect and consider information BEFORE choosing a course of action. We provide opportunities for elementary school kids to do this via our Excel Math curriculum. However, for adults it can be a complex challenge!

A site called "The Informed Investor's Forum" claims:

"our forums allow investors to hear directly from company executives, and to ask questions before they invest. Companies benefit by presenting their story to highly engaged, serious investors who, on average, research their investments diligently, make larger investments and hold their investments for 5 years or more." 

Is that your profile? Or do you get a tip from a friend and buy a stock?

One of my quirks is that I actually like to read the fine print in agreements. The following blue text is taken from a public company's website, abbreviated by 50% (!) and edited for clarity. Similar fine print is thrown at all US investors by all public companies, thanks to our Securities Exchange Commission.

The SEC encourages us to disclose forward-looking (future) information so investors can better understand our company's future prospects and make informed investment decisions. "Forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995 do not relate strictly to historical (past) or current (present) facts.

Forward-looking statements use words such as "anticipates," "estimates," "expects," "projects," "intends," "plans," "believes" in connection with discussions of future performance.

Our forward-looking statements are based on our management's current expectations and assumptions regarding the Company's forecasts of its future business, events, circumstances and results.

As with any projection or forecast, they are inherently susceptible to uncertainty

Our actual results may vary from those expressed or implied in our forward-looking statements. Actual results may differ materially from the forward-looking statements due to:
  • recent and future changes in technology, services, standards and formats
  • changes in consumer behavior, spending, and when, where and how things are consumed
  • changes in our plans, initiatives and strategies, and consumer acceptance of them
  • competitive pressures, including audience fragmentation and changes in technology
  • our ability to deal with economic slowdowns or other economic or market difficulties
  • shifting advertising expenditures, pressure from public interest groups, and other societal, political, technological and regulatory developments
  • piracy and our ability to protect ourselves and our intellectual property rights
  • lower than expected valuations associated with our cash flows and revenues
  • decreased liquidity in the capital markets and limits on our ability to gain funding
  • the effects of significant acquisitions, dispositions and other similar transactions
  • failure to meet earnings expectations
  • adequacy of our risk management
  • potential losses from terrorist acts, hostilities, natural disasters and pandemic viruses
  • effects of union or labor (talent) disputes
  • changes in accounting policies, tax rules and other federal laws and regulations
  • other risks and uncertainties detailed in Risk Factors (6 pgs in our Annual Report):
    • risks arising from the outcome of various litigation matters
    • loss of key management personnel or popular on-air and creative talent
    • risks relating to doing business internationally
    • personal influence exercised by our Chairman due to his ownership of preferred stock
Any forward-looking statements made by the Company speak only as of the date on which they are made. We expressly disclaim any obligation to update or alter these forward-looking statements, whether as a result of new information, subsequent events or otherwise.

All this means that you should take any Forward-Looking Information cum grano salis. You did study Latin, didn't you?

Just as you would expect your dinner to be mostly food, with just a little salt, so you should expect Forward-Looking Information to be primarily speculation, seasoned with just a few facts. Not the other way around.

So any math you do using this information has to be considered speculative rather than accurate!