Posted by: jhamon | June 17, 2009

Big Winners From Recessions? You Sure?

There is a meme that great companies are borne of recessions.  Maybe not, according to a post from VentureWire on www.wsj.com

A few choice morsels:

A report last week from the Ewing Marion Kauffman Foundation found that more than half of the companies on the 2009 Fortune 500 list were launched during a recession or bear market. As the study concludes, “…despite the pain of the current recession, there is reason for hope – good things do grow out of recessions.”

By the looks of this admittedly unscientific comparison, the previous recession hasn’t exactly produced a bundle of superstars.

Still, the disparity makes it hard to believe that two years will make enough of a difference to support the mantra that the big winners come out of the recession and not the overheated periods.

So just because “people say that…” doesn’t make it so.  There is no subsitute for science.  Everything is (market) speculation.  That’s why we stick to the numbers.  And if you can’t design an experiment to test it, forget your idea, because you can’t generate the numbers.

If it’s good enough for Jim Simons, it’s good enough for me:

Jim Simons

Quantitative Rockstar Jim Simons

“We hire physicists, mathematicians, astronomers and computer scientists and they typically know nothing about finance,” Simons said in a keynote address at the International Association of Financial Engineers annual conference. “We haven’t hired out of Wall Street at all.”

The firm’s scientists tap decades of diverse data in Renaissance’s vast computer banks to assess statistical probabilities for the direction of securities prices in any given market. Experts attribute a breadth of data and the firm’s ability to manipulate it for its consistent success in beating the markets.

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