Watch Intense New Trailer for Fox’s Hip-Hop Drama ‘Empire’

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The Single Most Important Risk To Stock Market Investors

max drawdown

It may sound obvious. But when you invest in stocks, you’re at risk of getting wiped out.

That really is the single most important risk to investors.

Even when you think you’re well-diversified, you could see the value of your investments quickly plunge or perhaps slowly bleed 90% of its value over years as the Greek stock market did during the eurozone crisis.

Citi’s Jonathan Stubbs addresses this in a recent research note about asset allocation. He included a chart highlighting some of the ugliest maximum drawdowns of in the global stock market.

“Figure 45 shows various markets and industries which have suffered severe losses in relatively short order in recent decades, e.g., the UK (1972-74), the Nasdaq (2000-03), Greece (2008-12) and Mining (2008-09),” he writes.

“Hence, buyer beware.”

Because many of these stocks are of companies that don’t go bankrupt, the losses are just paper losses that you don’t realize until you sell. If you have a long investment time horizon, you might think it wise to wait for the value to come back.

topixHowever, an investor must be willing to be extraordinarily patient if he hopes to recoup his losses.

“It can sometimes take many years for investors to make their money back after suffering big losses,” Stubbs writes. “For example, US equities only made it back to the peak 1929 total return levels in 1945, more than 15 years after the Great Crash. Kenji Abe, Citi’s Japanese strategist, highlights that Japanese equities are still a long way short of end-1989 peak levels.”

These are all things investors need to consider very carefully before they commit their life savings to the stock market.

SEE ALSO: This Crazy Chart Perfectly Illustrates Why You Should Never Expect ‘Average’ Returns

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‘Constantine': TV Review

The DC Comics character comes to life on the small screen, but the pilot doesn’t do him justice although the lead actor doesread more

New Disney Collabo is Basically Mickey Mouse on Acid

Disney has, rather unexpectedly, teamed up with the super-cool Copenhagen label Wood Wood, and the result is as wacky as you’d hope: designers Karl-Oskar Olsen and BSS Jensen distorted Mickey’s face to be the visual interpretation of the SKRRT sound.R…

Elon Musk Thinks Sci-Fi Nightmare Scenarios About Artificial Intelligence Could Really Happen

Elon Musk at MIT

Tesla CEO Elon Musk isn’t the biggest fan of artificial intelligence, an initiative he called “our biggest existential threat” in comments at the MIT Aeronautics and Astronautics department’s Centennial Symposium on Friday.

Musk, who called for some regulatory oversight of AI to ensure “we don’t do something very foolish,” warned of the dangers.

If I were to guess what our biggest existential threat is, it’s probably that. So we need to be very careful with the artificial intelligence,” he said. “With artificial intelligence we are summoning the demon.”

Artificial intelligence (AI) is an area of research with the goal of creating intelligent machines which can reason, problem-solve, and think like, or better than, human beings can. While many researchers wish to ensure AI has a positive impact, a nightmare scenario has played out often in science fiction books and movies — from 2001 to Terminator to Blade Runner — where intelligent computers or machines end up turning on their human creators.

“In all those stories where there’s the guy with the pentagram and the holy water, it’s like yeah he’s sure he can control the demon. Didn’t work out,” Musk said.

The symposium wasn’t the first time Musk raised concerns. In August, Musk tweeted: “We need to be super careful with AI. Potentially more dangerous than nukes.”

(h/t The Washington Post)

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IMF fights negative interest rates

The International Monetary Fund headquarters is seen June 5, 2011 in Washington, DC

Washington (AFP) – The International Monetary Fund on Friday announced a minimum interest rate on its unique SDR currency as it fights off the impact of sagging interest rates and deflation from major economies.

The IMF said that from Monday it would maintain a floor rate of 0.05 percent, or five basis points, on its special drawing rights or SDR currency, which represents a basket of the currencies of its largest members.

Currently the rate the Fund pays on the money its members lend to it is 3 basis points. That is also the basis for the global crisis lender’s loan rate to borrowers.

With short-term rates for key SDR components the euro and the yen now running below zero, and the dollar and pound rates barely above zero, that risked pulling the SDR rate down to a negative level as well, a senior fund official explained.

“Under the current rule there is nothing to stop the SDR rate from going negative,” he said.

“Financially, it would be a somewhat perverse situation because our creditor members would be paying for providing us resources.”

But it also acknowledges a worry the IMF, top central bankers, and bond market traders have been expressing of major economies sinking toward deflation.

“This is a reflection of the fact that central banks have set very low interest rates, or even negative,” the official said.

To meet the challenge of historically low rates as well, the official said, the IMF will round its rates to three decimal points instead of two as in the past.

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Julianne Moore Takes a Brave Stance Against Hickeys

In today’s Tweet Beat, Julianne Moore speaks out against a horrible epidemic that must be stopped, Billie Jean King hangs out with some cool friends and let’s all give Madonna some attention, please. Read more…

Drake Celebrates His Birthday With Video Games, a Very Bad Shmoney Dance

Drake Celebrates His Birthday With Video Games, a Very Bad Shmoney Dance

Aubrey “I was looking forward to a nice tuna sandwich on a bagel” Graham celebrated his 28th year on this Earth by borrowing one of Bill Cosby’s sweaters and throwing a party at an adult arcade in Times Square, which weirdly is exactly how I would expect a young Canadian multimillionaire to spend his money.

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The Failure Of A Major Mission In Afghanistan’s In Two Charts

Opium poppy cultivation sprawled to more than a half-million acres in Afghanistan last year, a record according to a report by the Inspector General responsible for overseeing Afghanistan’s reconstruction.

Two charts in the report convey the sheer depth of the US’s failure to end a globally illegal industry that directly funds the Taliban.

One of the report’s charts used UN data to show how market forces appear to hold sway over the country’s opium production levels.

That market paid amazingly little heed to over a decade of external efforts to crush it.

The US has spent $7.6 billion to date in Afghanistan to eradicate poppy crops and incentivize farmers into growing alternatives. But as the chart shows, the troughs in Afghanistan’s total poppy production follow low opium prices while opium yields exploded after a crop disease destroyed half of the country’s poppy fields in 2010.

When poppy yields declined, it was because of market forces and a literal act of God — not US efforts. And the overall level has risen substantially since 2002.

SIGAR Graph Afghanistan Opium Production and Events

A map created for the report gives an additional, national-level picture of where opium production has actually increased.

Taken as a whole, the Afghan poppy industry is worth $3 billion in opium and its derivative products (such as morphine and heroin). This is actually a $1 billion increase since 2012, according to the Inspector General’s report.

This map shows that the increase was a national phenomenon. It’s not as if a couple of regions enjoyed a bumper crop. Opium is a growth industry everywhere:

SIGAR Afghanistan Poppy Cultivation ChangeResponding to the report, an official at the American embassy in Kabul notes that “well over 80 percent of the world’s illicit opium” comes from Afghanistan. It’s “a windfall for the insurgency, which profits from the drug trade at almost every level.”

It also shows how one of the central US objectives in Afghanistan has failed. After 13 years and over $7 billion, the country’s economy, and its armed groups, are as dependent on the narcotics trade as ever.

Meanwhile, the Taliban are resurgent in Afghanistan’s north, just months before US combat operations are scheduled to conclude at the end of 2014.

SEE ALSO: Mexico’s drug war is entering a dark new phase

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Tech Founder Sends Female Reporter Gift Basket Loaded With Sexism

Tech’s armada of PR professionals can be their own worst enemy. But their protective shield occasionally hides the chauvinism of tech founders. Otherwise you get dudes like Blake Francis, founder of the question and answer app Need, who tried to buy f…

Here’s The Average SAT Score For Every College Major

student sat test studying

Students who plan on majoring in multi/interdisciplinary studies tend to do better on the SAT than those who major in engineering or math, according to the College Board’s 2014 SAT Report on College and Career Readiness. 

Multi/interdisciplinary courses typically combine two or more academic disciplines, such as economics and history, in the study of a particular subject. 

College Board took students’ SAT scores and compiled them into a table showing how different prospective majors did on critical reading, writing, math, and overall. 

The results are not too different from the College Board’s 2013 report. Here we’ve ranked majors in order of highest combined, critical reading, math, and writing scores, respectively.

While the SAT is not a perfect test, some notable trends emerge. Students planning to major in multi/interdisciplinary studies have the highest combined reading and writing scores, which makes sense as this major encompasses a wide array of talents.

Students with an interest in the physical sciences (chemistry, physics, etc.) had the second highest combined scores, which also makes sense as the physical sciences tends to be a highly demanding field that draws in some of the most disciplined students.

Here is a ranking by combined scores: combined

Now, a ranking of majors by critical reading score. Notably, physical sciences scored higher than humanities.


Next, a ranking of majors by math scores. Unsurprisingly, prospective math majors won this one.


Finally, a ranking of majors by writing score. Multi/interdisciplinary majors ranked the highest on this, too.


SEE ALSO: We Took Harvard’s Incredibly Popular Computer Science Course And Can See Why Students Love It

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Microsoft’s PR Boss Had A Funny Response To Google’s Big News (MSFT, GOOG)

Sundar Pichai

Google dropped some big news to employees Friday.

Sundar Pichai, the executive in charge of Android and Chrome, got a promotion that makes him the boss of all of Google’s core products: search, Google+, apps, advertising, Android, Chrome, and so on.

The news of Pichai’s promotion leaked late in the afternoon when Re/code’s Kara Swisher and Liz Gannes obtained an internal memo to Google employees announcing his new role.

One Google rival, Microsoft’s PR boss Frank Shaw, reacted to the news with a subtle jab on Twitter:

I think Friday afternoons are a good time to make news.

— Frank X. Shaw (@fxshaw) October 24, 2014

To be fair, Google will probably make a formal, public announcement about Pichai’s new job soon. And Microsoft doesn’t exactly have the best track record with releasing news when people are around to pay attention. It announced the Nokia acquisition late in the evening at the end of the long Labor Day weekend last year, likely frustrating some reporters who just wanted to go to bed.

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This Crazy Chart Perfectly Illustrates Why You Should Never Expect ‘Average’ Returns

We hear frequently from folks like Wharton professor Jeremy Siegel about the long history of the stock market outperforming other financial asset classes.

Investment advisors often put it simply, saying that annual returns average around 10% and about 3% less than that on an inflation-adjusted, or real, basis.

“Real US equity returns have annualized 6.8% since the 1870s, ahead of the 2.7% return from US government bonds,” Citi Research’s Jonathan Stubbs writes.

In reality, we rarely see a year when returns are average.

In a new report examining asset allocation, Stubbs presents this bar chart showing the average annual returns for stocks and Treasury bonds by decade. As you can see, most average annual returns swing far from average levels during these 10-year periods. This makes it very challenging to a be an investor strategizing for the long-term.

“Equities have had three decades of negative real returns vs. five decades for bonds,” Stubbs noted. “Real equity returns have beaten real bond returns in 12 out of the last 15 decades.”

real returns

SEE ALSO: FORGET GOLD: Here Are 11 Odd Items People Use To Store Their Wealth

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Magnificent ’80s Oprah Counsels a Woman Who Had Sex With a Ghost

Whatever intern runs the YouTube account of the OWN network has been hitting out of the park this week, as the channel now features several vintage clips of Oprah interviewing people who claim to have encountered ghosts. All of the clips are their own flavor of spectacular, but this clip from Halloween 1988 with an elderly woman who claims she fucked — ahem, “had an intense sexual experience” with — a ghost is really A+ content.

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