<p>Harvard and Yale are the two most prestigious universities internationally, with Harvard #1.</p>
<p>I have lived in several countries. When you talk about top US schools, you name Harvard. That is the situation today.</p>
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<p>Sure, I agree, that if I had to pick one challenger, I would pick Stanford. </p>
<p>But that’s not really the relevant question. The question is not whether Stanford has a better chance of overtaking Harvard, compared to any other school out there. *The question is whether Stanford is actually going to overtake Harvard. * To that, I would say, probably not. At least, not in our lifetimes. After all, Harvard isn’t exactly going to go away quietly in the night. Harvard continues to develop programs and expand its reputation. </p>
<p>As a case in point, look at the political establishment. We just traded one Harvard man for another in the Oval Office. In contrast, Stanford hasn’t put a single person in the Oval Office in 80 years. The current Administration is inundated with Harvard alums: Holder, Summers, Bernanke, Duncan. In contrast, the Stanford representation at the highest levels of the Federal government are rather sparse: Susan Rice and that’s about it (note, Steven Chu was a Stanford professor, but not an alum).</p>
<p>And then of course there is the President’s coterie of personal Harvard pals:</p>
<p>[School</a> buds: 20 Harvard classmates advising Obama](<a href=“Yahoo News: Latest and Breaking News, Headlines, Live Updates, and More”>http://news.yahoo.com/s/politico/20081205/pl_politico/16224)</p>
<p>[The</a> Harvard Crimson :: News :: More Profs To Leave Harvard For Obama](<a href=“http://www.thecrimson.com/article.aspx?ref=526216]The”>http://www.thecrimson.com/article.aspx?ref=526216)</p>
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<p>And I would counter that with Harvard’s great tailwind: * government*. Let’s be perfectly honest, the only part of the US economy that is guaranteed to grow vigorously in the next few years, and almost certainly beyond that, is government. Which university is the most in bed with the current administration? Nor is that likely to change anytime soon. The leading contender for the Republican nomination in 2012 is probably Mitt Romney. Where did he get his degrees from? Oh yeah. {To be fair, Romney did attend Stanford, but he quickly transferred out.} I don’t think any Stanford graduate is a serious contender for the 2012 race. </p>
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<p>But that’s not the same question. You don’t buy a stock just because of the quality of the underlying firm. You buy a stock because of its low relative valuation. I would buy the stock of a terrible company as long as I thought the price of the stock was actually lower than whatever (small) value the company was truly worth. I would also avoid buying the stock of an excellent company if I felt that the strength of the company was already fully reflected in the value of the stock price. In other words, I might go on a shopping spree to buy the stocks of Citigroup, BoA, GM, AIG, Fannie, and Freddie, not because I think those companies are great - in fact, I think they’re terrible - but just because I think the equity prices have been beaten down so traumatically that they’re now effectively cheap ‘option plays’ that the bailouts will stabilize them.</p>
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<p>The authors freely acknowledge that Caltech is the most self-selected of any of the schools in the top part of the ranking, and the authors also freely acknowledge, both implicitly and explicitly (in Table 7) that the results for Caltech are strongly biased. That is why the Caltech results are not to be trusted - a fact that even the authors agree is a kink in their data.</p>
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<p>If you HAD to buy just one stock, I’d argue that you would steer clear of the Citi’s and AIG’s of the world (sure they offer great potential upside, but they also present massive downside risk as well – equity holders could easily go to zero on those shares).</p>
<p>If you had to buy just one stock and live with it, you’d buy a stock that not only had high potential upside, but with very low downside risk (e.g. Google). Harvard has low downside risk, but its upside is rather limited (e.g. Microsoft – its hard to go higher than no. 1, and a cynic would argue that the only place for it to go is down).</p>
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<p>This is, again, irrelevant to the actual point, which is that self-selection (be it stronger or weaker for Caltech vs MIT) does not explain the RP model’s mis-prediction of the tech schools’ cross admit results. The more self-selecting Caltech is compared to MIT, the harder it is to explain the known cross-admit ratio of 64 to 19 in favor of MIT. The study cohort for the Revealed Preferences paper was large enough to see some of that 64:19 in their data. The likely explanation, as I mentioned, is that Caltech was highly attractive to students not also admitted to MIT, and MIT was not quite as attractive to non-Caltech acceptees, but dual admits found MIT much more appealing.</p>
<p>And the same pattern could be true of HBS and Stanford, or HLS and Yale Law, for all that you know. Yield is vaguely correlated with dual-admit contests, but not all that well and not necessarily for closely matched rival schools at the top of the rankings.</p>
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<p>It doesn’t? Then you’re choosing to fundamentally disagree with the paper’s specific quote on p. 42.</p>
<p>*However, such schools are much less engineering-focused than Cal
Tech, so the decision to apply to them is less intensive in taste for engineering than is the
decision to apply to Cal Tech. Thus, Cal Tech is likely to play with a parameter (theta + alpha prime) where (alpha prime>alpha)
. This is a problem: Cal Tech is likely to win too often relative to how it would fare in
tournaments based on (theta). If other words, if a certain school is so obviously specialized that
students who are lukewarm about its specialty don’t bother to apply, our estimate of its (theta) is biased upwards. *</p>
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<p>Again, no, the likely explanation is exactly what the authors discuss in Section 7: the model does not handle highly ‘taste-specific’ schools (in their words) in a fair manner. Specifically, the preference estimations will be too strong.</p>
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<p>Please specify exactly which statement in their paper (you claim) contradicts exactly which statement of mine. </p>
<p>Good luck! If you had understood the pseudomathematical verbiage in the passage quoted, you would see that they express agreement with one of my statements and say nothing about about any other point that I made. If anything, their whole paper is implicitly (or somewhat explicitly) a denunciation of your posted fallacy that higher yield (HBS) evidences victory in cross-yield (over Stanford).</p>
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<p>Uh, wrong. Absolutely and completely wrong. The whole paper is actually an explicit endorsement of what I have just said, which is that those schools that display strong taste-specific preferences, which the authors agree that Caltech is one, will be overemphasized within the model. </p>
<p>If you don’t like the pseudomathematical verbiage in the quoted passage, hey I can’t help you. Take it up with the authors: it’s their quote not mine. But please understand it before you object to it. Again, here is the relevant synopsis.</p>
<p>*This is a problem: Cal Tech is likely to win too often relative to how it would fare in
tournaments based on (theta). If other words, if a certain school is so obviously specialized that
students who are lukewarm about its specialty don’t bother to apply, our estimate of its (theta) is biased upwards. *</p>
<p>Siserune, I strongly recommend that you read and understand the paper before you object to it. If you think you do understand it, then perhaps you can tell us why the above statement supposedly conforms with your analysis.</p>
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<p>Actually, what you seem to be getting it has to do with risk preferences. After all, you agree with me that Citi and AIG have great upside, as well as great downside. It is that potential for great upside that is why anybody is bothering to invest in any of them at all, and therefore why their stocks aren’t worth zero. </p>
<p>However, if the logic is that a stock is preferable because it is less risky, then that logic is not consistent with your preference for Google over Microsoft. After all, Google has a higher beta than Microsoft does, which therefore means that Google fluctuates more with the market. Hence, Google is clearly the riskier choice. That notion is similarly supported by Google’s business model. Google basically has one revenue stream - search advertising - and while it is a fantastically successful one, it is still only one. Microsoft, on the other hand, has multiple sources of revenue. Furthermore, Google as a technology is more subject to substitution than is Microsoft. Using another search engine is a simple matter of just typing another URL into your browser, and if enough users do that, then advertisers will surely follow, thereby eviscerating Google’s revenue stream. There are no consumer sunk costs: nobody really ‘needs’ Google. Frankly speaking, competitors such as Yahoo Search or MSN Live Search work so well that numerous marketing reports have demonstrated that their search results are practically indistinguishable from Google’s. {For example, one study rigged a website to look like Google, but whose search results were actually provided by the Yahoo Search engine, and nobody noticed the difference, which demonstrates that customers could easily switch with little trouble.} </p>
<p>It is correspondingly a far more weighty affair to switch away from Windows and (especially) MSOffice, for not only does that mean installing a long new software load (or having to buy a whole new system), but also risks incompatibility with some of your other devices and/or software. For example, I know one guy who is a complete tech geek nut, loves the Mac and Linux, and absolutely despises Microsoft. But he keeps his best PC running Windows anyway. Why? Because his favorite game is Fallout3, which is not available on Linux or MacOS. In contrast, there is no such thing as a website only being ‘available’ through Google.</p>
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<p>I and the paper disagree with your posted fallacy that yield battles predict the results of cross-yield battles. The authors, in fact, make a point of criticizing ranking based on “matriculation rate” (yield) and present data to emphasize how it differs from their ranking system. </p>
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<p>i.e., the Revealed Preferences paper is an “explicit endorsement” of my comment in post #40, about how Caltech, MIT, Wellesley and other specialty schools have elevated rankings due to self-selection of their applicants.</p>
<p>What the Revealed Preferences paper doesn’t agree or disagree with, is whether merely having a higher degree of self-selection for Caltech than MIT, is a complete explanation of Caltech’s higher position in the rankings, given the additional information that MIT trounces Caltech in cross-admit battles (plus some other extracts published from the RP data set). That’s the issue that came up in documenting your fallacy about HBS versus Stanford in yields and cross-yields.</p>
<p>You explicitly claim that Caltech’s greater “taste-specificity” explains the ranking, and it could if Caltech were routinely beating MIT in matriculation tournaments. But the published data from the RP authors and from MIT admissions appear to indicate that the opposite happened. </p>
<p>That is the question I have been talking about, not the more superficial point about taste-specificity or the pseudomathematics that appears to have entranced you on page 42 of the article. </p>
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<p>Apparently I understood it better than either you or the authors, along with a number of other matters about the paper that were covered in earlier threads (such as whether the study implicitly models the preferences revealed by which schools receive applications).</p>
<p>As for the passage you quoted, a careful referee would probably force them to alter it substantially or delete it.</p>
<p>sakky, with the risk of hijacking this thread into a mind numbing exercise in stock selection, the Citi / AIG example does not equal Google in the current investment environment.</p>
<p>Citi / AIG may eventually become nationalized over the near / medium term (if you don’t consider them quasi-nationalized at this point anyway). If you are a shareholder, your risk that equity value goes to zero is far, far higher than with a company that has zero debt, no government ownership (hence loss of control), and very high growth potential. Let’s forget about the fact that the financial sector still has a long ways to go before it is out of the woods (e.g. expect more bad news, more writedowns and more bankruptcies).</p>
<p>Further, GOOG is expanding into many different directions as we speak (communications / multimedia - google mobile, google voice (formerly GrandCentral), software – google docs, and if any firm has the power and capability to successfully challenge MSFT, its GOOG). Not to mention that the battle for intellectual capital (the brains behind the next generation of winners) is being won by GOOG. Harvard graduates’ no. 1 most desired employer over the last couple of years is? Surprise, surprise. Google. In sum, my original statement stands:</p>
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<li>Citi / AIG offer great near term upside with an equally high degree of downside risk.</li>
<li>GOOG offers great upside and low downside vs. MSFT / Citi</li>
<li>MSFT offers lower upside and lower downside risk vs. GOOG / Citi</li>
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<p>i.e. if I HAD to pick a stock and stick with it over the long haul, I’d take GOOG.</p>
<p>what is the valuation of GOOG these days?</p>
<p>do u think any educated investors don’t already know what you’ve mentioned here?</p>
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<p>Market valuation is based on something called the current share price (or more specifically, market capitalization – this is often referred to as a firm’s “public value”). Try looking it up. GOOG’s last closing share price was $375.50 as of Thursday’s closing session.</p>
<p>AIG’s closing share price, by contrast, was $1.16. More to the point, AIG has lost 97% of its market value over the course of the last 52 weeks.</p>
<p>p.s. if you have any more 5th grade level questions, please try googling “stock investing for idiots”. if you have something slightly more valuable to add to the discussion please do.</p>
<p>You’re resorting to elementary-school level insults because you recognize the weakness in your argument and are trying to divert attention from it.</p>
<p>How much has GOOG lost in the last 52 weeks? </p>
<p>I can buy hundreds of AIG shares with the price it takes to buy one GOOG share.</p>
<p>What exactly is the “upside” of GOOG. Isn’t it already the highest-priced stock in the world or something like that?</p>
<p>Everyone is onboard GOOG. According to Warren Buffet, “Be fearful when others are greedy and to be greedy only when others are fearful.” Or are you a better economist than Warren Buffet?</p>
<p>Forget about GOOG/AIG, isn’t it a better time to invest in the stock market NOW, than at the peak of the market 18 months ago? Which scenario has better “upside”?</p>
<p>Let me go play with my lego now.</p>
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<p>BTW. Have you invested in any stocks?</p>
<p>As well, if I had bought that book, I probably would’ve lost half my portfolio.</p>
<p>So I refrain from adopting your advice.</p>
<p>Over the last 52 weeks, GOOG shares have lost 16.28% vs. the NASDAQ index which has lost double that value (-35%) over the last 52 weeks.</p>
<p>Besides, you are totally ignoring the fact that AIG has been teetering on the brink of bankruptcy over the last few months and is effectively trading like a penny stock since the beginning of this year.</p>
<p>GOOG by contrast is a market leader with solid fundamentals: balance sheet? ZERO debt, tons of cash, strong free cash flow and making money. By every metric its a solid company – and far superior to a basketcase like AIG. So you go ahead and cash in all of your savings and dive headlong into AIG. I wish you luck.</p>
<p>btw, I made a considerable amount of money in the market last year.</p>
<p>Can you share with us how you made “considerable” money last year?</p>
<p>What stocks did you invest in?</p>
<p>If you invested in GOOG, you’d have less money than me, cause 18 months ago I took all my money out and put it under my mattress. All the money is still there.</p>
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<p>So you can’t overpay for a good stock?</p>
<p>If you had invested in GOOG on May 2, 2008, you would have lost 36.4% of your investment by today. And I think last year they had similar “fundamentals” as they do now.</p>
<p>Anyways - I’m done with this bickering. Avoid resorting to elementary-school insults just because people challenge your ideas.</p>
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<p>No.</p>
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<p>There is no free lunch. I charge my clients a decent amount for that privilege. Why not try doing your own homework?</p>
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<p>Who is bickering? Good bye.</p>
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<p>Yeah? Well I made 1000% return on my investments. And this is while they were under my mattress.</p>
<p>Beat that.</p>