|
Money matters: Traditional or modern strategies? Which should you use? (Part 1)
Graham Macdonald
MBMG International Ltd.
Over the next few weeks, we’ll be looking at the
general area of investment methodologies. Often misunderstood by clients
(and in some cases advisors too), how you actually invest is often more
important than where. A global fund that has access to stocks, bonds,
commodities, property, and alternative assets has far wider scope than a
global fund that simply invests in equities. Similarly a fund that can
invest in equities long, short and option-protected too has far more scope
than a fund that invests ‘long only’. Yet investors often put a great
deal of thought into what percentage of their portfolios to allocate
globally or on country/region specific exposure but spend less time over
the actual methodology of the investment. Is this because geography is
more easily understood and explained than investment methodology?
The “active versus passive” management debate has
been well tried and documented over the last 30 years since indexing was
first introduced. In that time the investment landscape has changed
significantly and so has the demand for new and innovative ideas and
products. Historically, although investors have been frustrated with
traditional active managers unable to beat their benchmarks, they were
nevertheless hesitant to settle for the consistently marginally below par
performance with index funds.
A couple of years ago, MBMG International closely
followed the ‘Punch and Judy Challenge’ between Scottish Life’s risk
controlled funds and Virgin’s index funds. The results comprehensively
demonstrated that Richard Branson’s successful business intuition with
regards to music, airlines, cinemas, vodka, and cola didn’t translate
into the specialised field of investment management.
In the aftermath of the beating taken by index funds in
the last three years, we now hear investment experts extol the benefits of
a “Core-Satellite” approach. This had become an increasingly popular
approach among institutional investors for managing the mix of strategies
and managers and is now gaining increasing recognition among private
investors.
Essentially this is a strategy comprising of a
“core”, consisting of index managers, or of core stock picks, coupled
with a “satellite” comprising of active managers. Although this is a
huge step forwards from reliance purely on traditional ‘benchmarked’
methodologies, just using index and traditional-style active managers can
often lead to sub-optimal plan performance. If strictly adhered to, this
dual-style manager program structure can be inefficient in its delivery of
return once the risk that the investor willingly bears is taken into
consideration. In the midst of determining the optimal balance between
strategies, one approach that is rapidly gaining investor acceptance to
bridge the inefficiencies created by the “index-active gap” is
enhanced indexed strategies. Enhanced indexing or risk controlled active
strategies have experienced rapid growth in not only assets under
management but also investor acceptance.
It was recently estimated that enhanced index assets
increased by more than 30% amongst the largest US pension funds from
US$100bn to US$131bn. The top 10 funds alone saw enhanced indexing
investments grow 38% to US$73bn. In the latest survey, 21% of the 1,370
pension plans surveyed used enhanced indexing strategies, up from 16%,
representing the largest jump in any category. (To be continued).
The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of
any actions taken or not taken as a consequence of reading the above
article. For more information please contact Graham Macdonald on
graham@mbmg-international .com
Snap Shots: Make your visitors go Wow!
by Harry Flashman
This week I will go through a trick I learned many
years ago, but is one that many people have never seen, and the majority
will have no idea how it is done. The end result can be quite staggering,
and what’s more is almost unpredictable - other than the fact that
people will look at your photos and go “Wow!”
This week’s column refers very much to wall
“art”. When you hang something on the wall, you want an image with
‘oomph’ that has an immediate effect on people. This trick will give
you that image with oomph. The end result will be such that people will
say for years “How in heck did you take that? Was it a special kind of
filter?”
Well, the good news is that you do not need to know
anything about filters, let alone use one. The next piece of good news is
that you also do not need to know anything about f stops, shutter speeds,
zoom lenses, reciprocity failure or the like. Any camera will do - even a
cheap point and shooter!
The first step is to pop down to the photoshop and buy
some slide film. Don’t worry if you haven’t got a projector, never
used slide film before or any other of the excuses. If you normally use
100 ASA print film then get some 100 ASA slide film. Do not get the
Kodachrome that you have to send away for processing, just get ordinary
slide film that can be processed here.
OK, load the camera with the slide film (it’s just
the same to load as print film - for most cameras, put in the cassette,
pull the tail across and shut the back of the camera!)
The final result looks best with landscapes - include
some sky, or seascapes where you include a yacht or similar close up, or a
river scene, and finish the roll of film.
Now take the film back to the shop for processing and
here is an important part. You ask for E6 slide processing, but do not
mount the slides! Leave the slides either as a roll or cut into strips of
6 and put in sleeves like your usual print film negatives. Impress this on
the girl behind the counter. You do not want them mounted. Repeat the
instructions!
When you get the slide films back, just hold them up to
the light and select any one shot that you like the look of. You can
choose the slide in the shop even. You don’t have to be super-selective.
Now talk to the girl behind the counter saying, “I
want you to print number X as if this is a negative. I know it is a slide,
but I want you to print a picture, using this slide as the negative.” It
will probably take quite some repeating before the technician will
reluctantly take the job on, with much warnings about it will not look
right, etc. Ignore all warnings, just have faith. While you are at it,
tell them that you do not want the usual small size, but get an
enlargement done straight off. 10" x 8" is sufficient and costs
around 80 baht. The photoshops generally call this size 8R. Repeat your
instructions, tell them you know the colour will be wrong and leave them
to it.
You see, what happens with colour prints is that the processing machine
recognizes certain colours in the negative and converts that to green for
grass, blue for skies, etc., in a photochemical way. By giving the
auto-processor grass that is already green and skies already blue totally
confuses its auto brain (and the girl in the shop usually) and it will
produce a print with the wildest psychedelic colours you will ever see.
Expect orange trees and yellow skies - you can get anything! It is almost
impossible to predict, but the end result will certainly have that oomph I
promised you. Try it this weekend. You will not be disappointed.
Modern Medicine: Tree Hugging
by Dr. Iain Corness, Consultant
I am not a tree hugger. I am sure trees, like
us, have their bad days too, but they have to get their hugs somewhere else. I
was once knew a tree hugger who stopped the man with a bulldozer tearing down a
tree at the rear of her house. 12 months later the tree fell over on top of it,
demolishing the kitchen and half the dining area. Trees have obviously no sense
of moral gratitude. I am not a tree hugger.
What I am, is a conventionally trained British/Australian
style medical practitioner who has spent a lifetime practising EBM, otherwise
known as Evidence Based Medicine. I am proud of my training. Six years at an
Australian university that had a good name, and still does, despite
undergraduates like me attempting to besmirch it during the aforementioned six
years. I am also proud of my final exams taken in the Royal Colleges of
Physicians and Surgeons in London. I have the honour to have my name listed in
the ‘great book’ with luminaries such as Hunter, Jenner and Lister. I am
also indebted to my tutors during the 12 months of ‘pre-registration’, where
one applies one’s knowledge under the supervision of accredited specialists.
An arduous road, but one that is a safeguard for you, the general public.
Another safeguard is called ‘peer review’ which medical
doctors have to undergo. The ‘powers that be’ ensuring that we keep up to
date. Those ‘powers that be’ also ensure that we prescribe drugs that are
efficacious, that have been tested, and the evidence points to this. It is not
anecdotal evidence, but true scientific evidence shown by research in many
countries, with hundreds of thousands of patients. It is following that type of
evidence, that I can recommend with all good faith, that 100 mgm of aspirin a
day is good medicine. I also know that if I prescribe a ‘statin’ drug it
will lower your cholesterol levels. They have been tested.
I am also the first to admit that we can also get it wrong.
The Thalidomide story still has living examples of this. However, the medical
world-wide network is cohesive enough to ensure that this drug was withdrawn. It
is the checks and balances system that has kept western medicine afloat. This is
not to be equated with the cheques and balances system that keeps some other
systems afloat!
I am often asked my opinion on “alternative” medicine,
and all its diverse areas of ‘specialization’. As a non-tree hugger I try to
avoid direct confrontation over this. If devotees have found that they can
diagnose tumours by looking at patient’s auras through their third eye in the
middle of their foreheads, then I am genuinely pleased, in fact delighted,
provided that they have subjected the method to scientific scrutiny. Remember
the acronym EBM.
If various groups can cure cancer, epilepsy, halitosis or
lock-jaw by inserting dandelions into any fundamental orifice, then again I am
delighted. This is a medical break-through, but as such, must be subjected to
medical scrutiny. If the method stands true scientific examination (not to be
confused with anecdotal ‘evidence’) then it will be adopted by everyone,
complete with thanks to those clever people who picked the dandelions in the
first place. After all, penicillin was tripped over, not designed. But it has
had a very rigorous scientific scrutiny. Remember the acronym EBM.
When the ‘alternative’ group spends more time proving
their methods, instead of complaining about non-acceptance, EBM practitioners
will give them more credence.
 Heart to Heart with Hillary
Dear Hillary,
Given that a lawyer makes his (or her) living from the misery and suffering of
others, and a prostitute makes her (or his) living from the pleasure and
enjoyment of others; who do you think has the more honorable profession?
Gwyn
Dear Gwyn,
A very difficult one to answer. Why is it, for example, that a prostitute is
charged with ‘soliciting’ when plying his or her profession? If a lawyer
knowingly defends a guilty party are they then prostituting themselves? If
prostitution is the ‘oldest profession’, how come it still gets such a bad
rap? Surely after all this time, they would have managed to make it more
honorable? ‘First in - best dressed’ and all that sort of thing. A solicitor
deals in advice, while a prostitute solicits in vice. Really! One has a taxable
income, while the other has an income without taxes. It’s all too difficult
for Hillary, Gwyn my Petal. I’m just glad I’ve never been either!
G’day Hillary,
Wee Nit (the adorable) has set her heart on a new umbrella and so a journey to
the North is imminent. “Go look ill-tripe,” says Nit, endearingly,
“Ill-tripe neck too much.” No problem for me so long as she pedals the
samlor. I wonder if I will find an Australian language newspaper, complete with
an Aunty Sheila. Joop Joop.
Mistersingha
Dear Mistersingha,
I was tempted to drop your note in the round file that I keep beside my desk,
which the maid clears each evening. It is full of chocolate wrappings from
people who do honour their commitments, and the odd empty bottle of champers
(consumed after-hours of course). However, I felt that I should perhaps point
you in the correct direction, Petal. The long necked Karen hill tribe women are
nowhere near San Kamphaeng, where the brolly dollies ply their craft. Wee Nit
will have some pedaling with her samlor. Put a few days aside. The Australian
Auntie Sheila that you are thinking of was actually called Auntie Jack, and his
real name was Graeme Bond. Wrong again! Once more I think you have been
consuming too much of the eponymous beer, which is more than can be said for Ms.
Hillary’s lack of libations. Especially if I were waiting for you to cough up.
Dear Hillary,
This may not come as a surprise, as I keep hearing “my” tale of woe in many
places. Like so many “senior citizens” from America I have settled down in
Thailand with a Thai lady many years my junior. Our association has been
mutually beneficial, with me enjoying her company and the attentiveness for
which Thai women are so famous, while I have helped her family out, including
educating her three children from a previous marriage. We have been together two
years now, but the requests for assistance have been getting more and more every
month, and reputedly more and more urgent. It appears that every cousin, sister,
brother are putting demands on my lady, and she just hands over what ever they
ask for. I give her a monthly allowance, but that is gone in a few days as she
gives it away to the “needy” relatives. If I had a huge bank account I would
not mind so much, but I am living (and supporting people) on a US military
pension, which although adequate for the lifestyle I lead in Thailand, does not
stretch forever! I do know that the Thai people value the family ties much more
than we do, but surely there has to be a line drawn somewhere, Hillary. What do
you say? Should I put my foot down and say no more? You will understand my
position here.
George
Dear George,
Hello Petal, that’s not THE George Dubbya, is it? Of course not, Dubbya’s
pension would be able to keep the entire region of Isaan in schoolbooks;
however, I do understand your predicament and I applaud your taking the
education of your lady’s children as being your responsibility. You are also
correct when you say that Thai families do look after the members in it, but the
main direction is upwards, towards the parents. Most Thais will send money
“home” every month to help support those left “at home”. Now George, in
all associations there has to be a degree of give and take - and that’s not
you give and they take. Having been with your lady for two years you should be
able to sit down and discuss the problem with her. Explain that things are
different in America, and she has to see your side too, after all you have been
seeing life from her side of the fence all this time. Only by talking will you
get over this hurdle, and it can be a high jump for someone who is obviously
thought of as a family “cash cow” or “ATM”, my Petal. My suggestion
would be to arrange regular payment each month to the parents and everything
else be subject to discussion between the pair of you before any money leaves
your account. When it become a little more difficult to milk the cow, the
buffalo will come to look after itself!
Personal Directions: Well, what are you waiting for?
by Christina Dodd
I was finishing up a one-day program on
Assertiveness for Managers last week and we had come to the part where each
individual in the group completes a Personal Action Plan proposing what sort
of follow-up action they will take on a particular area that needs
attention. As I glanced around the room there were heads buried deep in
thought, some were directing their gaze into space, others were frantically
writing as if their lives depended on it. Having completed the task, it was
time to invite members of the group to share their thoughts and plans.
One young man jumped out of his seat and announced that
from this day on he needed to really examine his behavior and firstly, as a
manager, boost his confidence which he had identified as being the main
reason for his poor performance. The penny had dropped that he could achieve
so much more if only he had more confidence to act and act now! He asked me
if there were any suitable books he could start to read on this subject and
I said to him that I had actually noticed one in the bookstore downstairs by
a famous motivational speaker Anthony Robbins. The book was called Awaken
the Giant Within. Well, at that moment he took out his wallet, rustling
through it counting up the cash he had available. Then he asked to be
excused so he could go and buy the book. And off he went!
I’m not going to elaborate on Anthony Robbins here, but
on the behavior of this young man in the program who at last could summon up
the courage to take action to solve his problem. It is one thing to identify
and to recognize that you have a problem and it is another to start to do
something about it. So many of us are walking around the streets of our
lives knowing full-well the things we must change in order to improve –
but we don’t do anything to embark on that project.
This guy felt the only way he could break out and begin
the process of change was TO JUST DO IT!
And that is exactly what he did. He took the first step
and we all know that there are many steps that must follow driven by oneself
and concentrated application. But to take the first step for many of us is
the most extraordinary feeling to experience. It is a breakthrough. It is
different to our normal behavior. It is like we finally found the gold at
the end of the rainbow. It is exhilarating – that first step!
One other girl also attending the same program became
inspired by her colleague’s actions and courage. She stood up and made a
pledge – her words – to seriously look at the way she handles her time
both at work and at home. In writing her Personal Action Plan she said she
finally realized how much valuable time she wastes every day. She has always
been this way and has always known that she should do something about it.
But it wasn’t until she actually sat and wrote down the things she wants
to change, that she decided to really do it. And the actions of her
colleague prompted her to speak up and share her thoughts and plans.
Just do it and do it now!
Get the ball rolling. Get that motor running. Do whatever
it is that you have to do to make the start. If there is no beginning to
anything there can never be a middle or an end. Makes sense to me. And how
will you ever achieve anything if you never begin to achieve it?
This goes for all of you out there. It goes for me, it
goes for every one. When something in ourselves needs changing – and we
know it and believe it to be so – it obviously becomes important to us. If
it is important to us, then why don’t we act on it? You have the answers
and I have the answers to that question but taking that first step to act is
not about knowing the answers. You just have to do it.
Most of the time it is necessary to think things through
before acting. It is the way most of us behave. It also depends on the
situation and it also depends on the person. There are a lot of factors
involved here and when it comes to taking action. But is it possible that
sometimes we simply think too much and in the process “lose the moment”?
If the moment is there right in front of you then why not just go for it! Is
this what you are like or are you still thinking about when you are going to
do something ten years down the track!
The two young people in the group told me later that they
felt very “excited” about what they had said to the class and the fact
that they had actually done it. Never before had they acted so boldly and
although it was out of character – it was the best thing that happened to
them. I told them it was one of the best things that had happened to me too.
Watching them assert themselves and step into “new territory” was very
rewarding and I will give them every encouragement I possibly can.
Is there something that you know you need to do but
haven’t done anything about it yet? I have plenty of them and I’m sure
you do too. You know they are important – right? Well, why don’t you and
I take the plunge and write all those things down on separate pieces of
paper then place them in a bowl. No we are not going to eat them – we are
going to draw one slip of paper out as if it is a lucky dip! Then just as
the young man in my class jumped up out of his seat, let’s jump out of
ours too and announce that we are going to ACT RIGHT NOW on the task we have
won. Are you with me on this? If you are then let’s go!
What are we – what are YOU waiting for?
Good luck with it and have a fantastic week!
If you would like to write to me or contact me further
about any of our personal or business skills programs, then please email me
at Christina.dodd @asiatrainingassociates.com
I’d be very happy to hear from you.
Social Commentary by Khai Khem:
American’s weighty problem can be fixed - maybe
Pediatricians are generally good at
making nice with children, but those at the American Academy of Pediatrics
might send a lot of terrified kids running for the exits. The organization
put out a statement urging schools to banish sugary soft drinks, in an
effort to keep students from enjoying themselves.
No, that’s not true. It’s really an effort to keep
them from getting fat, or at least fatter. The AAP thinks this action is
vital because, it says, one of every six American children is overweight.
It also claims that those who drink sweetened soft drinks are generally
more prone to obesity. Gee, did anyone ever hear of water over there?
But it’s hard to believe the change would make much
difference. After all, it wouldn’t cause kids to like low-fat milk more
or ‘Mountain Dew’ less. Those who can’t get their sugar at school
may just drink more of the forbidden stuff at home since their parents are
just as fat. Or they may bring their own. Or they may just indulge in
other fattening treats. Schools don’t allow sex on campus, but that
doesn’t prevent teen pregnancy.
The approach proposed by the AAP hasn’t worked in
Sweden, where the government goes to great lengths to keep kids lean.
Swedish kids are systematically protected from the temptations of vending
machines in schools and TV commercials aimed at getting them to buy things
like fast food. They also enjoy access to all sorts of subsidized sports
meant to keep them active. Yet “the number of kids who are overweight
has tripled in the past 15 years—roughly the same rate as in other
European countries,” reports The Wall Street Journal.
The problem kids have, in America as well as Europe, is
the same problem adults have: food keeps getting cheaper, more abundant
and more tempting, and the amount of physical activity required of them
keeps diminishing.
Greed, gluttony and sloth are vices that most people
are prone to are nonetheless unwholesome and immoral habits that for most
of human history, people didn’t have to worry about: food was too scarce
and the demands of survival were too great. But today, most people have to
make a conscious effort not to eat too much and exercise too little. So
the extra calories we ingest stay with us.
The marvelously productive economy in the USA has made
it easier for them all to consume more of everything. As W. Michael Cox
and Richard Alm noted in their 1999 book, “Myths of Rich & Poor,”
the average person had to work an hour and 11 minutes in 1970 to pay for a
large pepperoni pizza, compared to 50 minutes today. A given serving of
Coca-Cola requires less than half as much work now as it did then. At the
same time, whatever work that average person does is less likely to burn a
lot of calories.
Of course the answer is simple: Americans should eat
less and move more. But “simple” doesn’t mean “easy.” We’ve
all known for a long time what we need to do, and it hasn’t altered
behavior enough to matter. Some human beings just like to stuff themselves
with tasty foods. But people are also programmed to conserve energy.
However, today some societies have the luxury to eat and lounge as much as
they want—which is a lot.
Is it futile to think we could all acquire the strength
to overcome these relentless instincts? In recent years, it’s true; the
use of tobacco and alcohol has declined, suggesting we’re capable of
doing what’s best for us. But that achievement only dramatizes the
challenge posed by obesity. We can all live without beer and cigarettes.
None of us can live without food and rest. And temperance can be harder
than abstinence.
So we may have to put our hopes in other possibilities.
One is to concoct new low-calorie foods that taste sinfully rich –
composed of artificial sugar and fat. If people can’t stop themselves
from loading up on french-fries or ice cream and prepackaged food that may
be easy to heat and eat, but is full of preservatives (sugar and salt),
the only way to fight obesity may be to give them french-fries or ice
cream that won’t make them fat.
Or maybe the pharmaceutical industry could invent a
pill that will allow us to eat whatever we want without harming our
bodies. Americans love popping pills. How much easier to swallow a tablet
than abandon gluttonous habits! Or go to the clinic and have the blubber
sucked out, sliced away (or just buy bigger and bigger clothes until only
a garment the size of a camping tent will fit)!
These remedies may sound like a ridiculous response to
a malady that can be solved through self-discipline. But for many people,
advising them to eat less and exercise more is about as effective as
advising them to grow taller. Scientific and technological advances caused
the problem, and scientific and technological advances may have to fix it.
Food is big business in the USA, where even very poor people are often
obese. In a nation where household debt is becoming a political football,
I know Americans who are already 50-100 pounds overweight and would rather
max out their credit cards in supermarkets and restaurants than pay their
taxes or send their kids to college.
The past few years I’ve started to see what used to
be a rare sight – fat Thais. Not many, to be sure, since peer pressure
and a healthy, natural diet keeps most of us outside the brackets of
obese. That doesn’t mean it can’t creep up on us. Don’t be too quick
to laugh at those fat farangs who waddle down the street. We have plenty
of access to the same kinds of food they are eating. Most Thais don’t
understand Western food, except that some of it may taste delicious. And
so it is.
A Thai friend of mine just came back from a 2 year stint in the USA and
now he’s bulging out of his clothes and is collapsing the chairs in his
mother’s home. Mom’s mad, and the fianc้ just gave back the
ring. The wedding day has been moved up until the lady deems my friend fit
to show in public. That got his attention. He’s getting thinner –
fast. Maybe not fast enough. I hear she’s already kicking in “plan
B” and flirting with the thinner, more handsome older brother. I’m
just a spectator watching the race. Far be it from me to pick on fat guys.
PC Blues - News and Views: Google is for sale
by Monitor
Google, the world’s principal search engine, has
announced its Initial Public Offering (IPO). It is asking for
US$2,718,281,828 - which the advanced mathematicians will recognise as
‘e’, the basis for logarithms.
A survey in USA shows Google ranking first at 50%, with
Yahoo a close second, and the rest in single figures.
For those who have not used it, the website address is
www.google.com, and the interface is spartan; no clutter from adverts. You
can search for images as well as for text, and the advanced options are
helpful. You can download a little helper program which sits on your
(Internet Explorer) toolbar, ready for searches. The helper even blocks
pop-ups, if you want.
Try searching for ‘google IPO’ in your favourite
search engine, and see what you get.
Not content with asking for a silly sum of money, Google
is being unconventional in the manner of its sale, and is conducting a
Dutch Auction. Wall Street is not amused.
But first, an
explanation of an IPO:
Google is a private company, with private shareholders.
Its staff are shareholders. Its principal directors and executive officers
have salaries which are modest by American standards - the chief executive
pulls in about $300,000.
An IPO is where all these shareholders get rich quick,
by selling their shares to the public. There are under 2000 staff, and the
offer is for over 2,000 million dollars. An equal distribution would make
each member of staff a dollar millionaire: doubtless, the distribution will
be uneven!
Now, what is a Dutch Auction?
In an ordinary auction, people bid increasing amounts
until there are no more bids, and the last, and greatest, bid wins. This is
all very well when there is only one item (or one of its kind) for sale.
When there are two billion items, it is a bit irrational.
Again, normally in IPOs, a great brokerage or bank will
assess the market and decide on an asking price; they may decide, for
example, that the value of one share is $2.40, and that becomes the asking
price in the offer. Indeed, they guarantee to buy any shares which are not
taken up by the public at that price. However, they charge a great fee for
this work.
In a Dutch auction, an initial asking price is
announced, and then gradually lowered until someone accepts. For example,
they may first ask $100, and then gradually lower it until, at $2.40,
someone accepts.
Google proposes to lower the price until enough people
have accepted all the shares. But, some may have accepted at 10$, and
others at $9, until at, say, 2$, all the shares are taken up. Now the magic
of this is that everyone pays the final price of 2$, no matter that they
may have bid more.
Google thinks this is fairer to all concerned, including
themselves. They think they will get a higher return on their offer this
way, and there will be no scandal of insider dealing, and the brokerage
fees will be lower. Wall Street will lose these fees, and no wonder Wall
Street is not pleased!
Why is Google so special?
Google ranks pages according to a measure of authority.
Suppose you wanted to know about Simon Bolivar. You might ask people, and
they would tell you to look in Encyclopaedia Britannica. The Encyclopaedia
Britannica is an authority: everybody says so. Suppose you wanted to know
the origin of a word - the Greater Oxford Dictionary is an authority:
everybody says so. And suppose you wanted to know the weather tomorrow? No
one is an authority on this, and you might look at weather reports in the
papers, or on TV, or you might even consult an astrologer.
Google gathers this sort of information for web pages.
For any given web page on a particular subject, it searches to find how
many other related web pages refer to it. The more references, the more
authority. This technology has been patented by Stamford University, and
Google holds the licence. It is called Page Rank.
So, if you search on Google, the top page will be the
one which other pages reference most often: Google takes you to the most
likely source, first.
This has unusual side effects. The following awkward
state of affairs recently made national news. If you searched for ‘jew’
on google, top of the list was a website most critical of the jews!
Software is blind to prejudice. Organisations who do not like this demanded
that Google ‘fix’ this. [Try for yourself, and read Google’s caveat
at the top of the page, titled “Offensive Search Results” at
www.google.com/explanation]
The solution, of course, is simple. All one has to do is
buy several domain names (or several thousand, if necessary), and create
websites with sufficient cross-references to change the ranking. I’m sure
that, in this case, Google would be only too happy to provide information
as to the necessary numbers.
However, as this could be done on any subject, and
thereby spoof the rankings, I imagine that Google would not wish to make
this a general practise.
Did you note that bit about Google not owning the patent
on Page Rank? Google’s licence will run out sometime, and there is no
guarantee of its renewal. Perhaps it will use some part of its two billion
dollars to buy the patent, making Stamford richer. In any case, the likes
of Micro$oft and Yahoo want to knock Google off its No 1 spot. Microsoft
has not had much luck with search engines, but it has a lot of money. Yahoo
is close enough that, with a little effort, it could become No 1.
However, there is a significant difference between Yahoo
and Google. Google is a Search Engine, while Yahoo used to be a Directory.
Yahoo is now two things, Yahoo! Search and Yahoo!Directory. And, I
understand, Yahoo is actually using a search engine for its main search
results, not its directory.
A directory is subject to manual review, and it is easy
to influence page ratings by the application of money. A pure search engine
is more difficult to suborn. Whatever the merits of one mechanism over
another, there is no doubt that Google will have to develop new technology
in order to remain No 1, and others will have to do likewise in order to
catch up.
The web needs new search technology anyway. Google has
found 4.2 billion pages, and the number keeps increasing. The search for
‘jew’ mentioned above finds 1.8 million definition references. Unless
you are blessed with intuition, it is difficult to find what you want in
this welter of information, or even to find if the information exists on
the web.
If what you are seeking is a specialism, you might try a
specialist search engine (did you know they existed?) Google has 502.000
pages on the subject, of which the first is collection of guides to
specialized search engines. Happy hunting.
Should you buy into this? I’m not a tipster, and
can’t say one way or the other. If I could afford it, I might buy a piece
of history, and you might too.
|
