Social Proofs

By Mark Hulbert


ANNANDALE, Va. (MarketWatch) -- Are you more of a gambler or an investor?
One way to find out is to gauge your reactions to a newsletter such as the Granville Market Letter, edited by the famous (or should I say infamous?) Joe Granville. This letter is at the bottom of the Hulbert Financial Digest's rankings for performance over the past 25 years - having produced average losses of more than 20 percent per year on an annualized basis.



And yet, over the short term, you probably stand a greater chance of making a huge amount of money by following Granville's letter than you would by following most other letters that have finished higher up on the performance rankings.

How can this be, you may ask?

The reason: Notwithstanding his dismal long-term record, Granville wins in a really big way when he beats the market. His letter led the HFD's hit parade in two of the calendar years since 1980, for example, something only one other newsletter can say. Granville also holds the record for the greatest percentage gain in any calendar-year period since 1980 -- a 1,200 percent gain in 1989 for a portfolio of his options recommendations.

To be sure, chances are low that you will make a killing over the short-term following Granville's letter. But your chances are zero with other letters whose approach is slower and steadier.

This contrast will impress you if you are a gambler. Not so if you are an investor, however, since in that case you will be focusing on the long-term odds.

To use a baseball analogy: Granville strikes out a lot, but now and then hits a homer out of the ballpark. More conservative newsletters strike out far less often but never hit homers, focusing instead on getting on base. So if your goal is hitting a homer, even at the risk of striking out, Granville may be your man.

This same cost-benefit analysis exists for lotteries, of course: Odds are overwhelming that you will not recover what you spend on a lottery ticket, but gamblers nonetheless are drawn to the tiny odds of a huge gain.

While there is no doubt that playing a lottery is gambling, playing the stock market is more ambiguous. Because making money in the stock market is not completely a matter of luck, traders can rationalize that they are not gambling when they in fact are doing the functional equivalent.

They are kidding themselves.

If you have any doubt, consider a recent academic study showing that gambling behavior is quite prevalent in the stock market. The study, titled "Who Gambles in the Stock Market," was written by Alok Kumar, a finance professor at Notre Dame. (Click here to view a copy of the study.)

Kumar measures gambling behavior in the stock market by looking at the kind of stocks that are purchased. His rationale is that some stocks are not all that different from lottery tickets: High probability of loss coupled with very low probability of big gains.

The crux of Kumar's study is his finding that the same psychological and socioeconomic factors that lead many to engage in gambling in other parts of their life also lead them to invest heavily in these lottery-type stocks.

What should you do with this information? As the ancient philosophers counseled centuries ago, perhaps the most important first step is to know thyself. What are your goals in playing the market? Why are you doing what you are doing?

To be sure, there is nothing wrong with gambling. But it is dangerous to engage in gambling behavior with assets that you cannot afford to lose while nevertheless reassuring yourself that you are investing for the long-term.


Popularity contest: Pfizer is currently recommended by no fewer than 20 of 180 monitored newsletters.

Performance scoreboards, most/least popular stocks and funds, market exposure among timers

Profiles: Equity Fund Outlook, Fidelity Monitor, Growth Stock Outlook, Investor's World
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The Street.com
10 ways to tell if you should quit the market
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By Alan Farley 3/17/2005

The first quarter has been a mixed bag for trader profitability. Strong momentum fizzled out as the new year began, but that didn't stop folks from chasing the upside anyway. This behavior triggered major drawdowns for those who were unwilling to adapt to the market's somber message.

There have been good momentum plays this quarter, but they've been harder to find. For example, you're counting your profits if you focused on energy or basic materials, but tallying your losses if you sat on tech positions. In any case, you discovered that cement and iron mines weren't favorite plays in hot-money chat rooms.

Oil and gas stocks triggered lots of quiet profits before Exxon Mobil (XOM, news, msgs) and Valero Energy (VLO, news, msgs) awakened the public, attracting the same attention as Voice-over-Internet protocol (VoIP) and stem-cell research. That's the way it goes in a trading culture that's still praying for a return to the '90s.

Skilled scalpers and daytraders have also had a good quarter. In fact, the intraday markets have provided the majority of tradeable trends during the last three months. Drill down through the sea of whipsaws and you'll find a small world of sustained bull and bear markets.

Destructive combination of factors
It's also clear that many traders have lost a ton of money since this year began. A lack of solid discipline and a choppy market can be a very destructive combination. This is especially true when the margin for error is smaller than at any period since the bubble burst. Banks and insurers
check your credit.
So should you.



Unfortunately, most players don't have a well-defined plan and just chase the latest news or sentiment. Strong bull markets don't punish this behavior with the same intensity you'll find in choppy conditions. In other words, you need to trade very well these days or pay the price.

This year's losers may be wondering if now is the right time to quit trading. Let's try to answer that serious question with a little self-examination.

Playing the markets is a difficult way to earn a living, but it has its advantages. Staying at home and earning a living in your pajamas is the American dream. But this pursuit is not for everyone. As many traders have discovered, no one is printing money.

Your pocketbook is the first place to look if you're thinking about giving up. Did you come into the game with enough capital to outlast the shortcomings of your trading education? If not, perhaps it's a good time to walk away until your financial situation improves.

Trading takes its toll
Trading is hard work that increases stress and emotional behavior. This is normal up to a point, but it can do physical damage if you let the stress get out of control. If your body is telling you to quit, listen to it and cash in your chips immediately.

Everyone has a different tolerance for pain, so dwindling capital may not push you out the door. Some folks lose a fortune trying to make a buck, but they continue to trade anyway. Other aspirants give up after burning just a few dollars in the market flame.

So should you leave the markets to the pros and find a safer hobby? Here are 10 more ways to tell if it's time to hit the showers.

1. Everyone needs rules. The ones you write down should include a loss limit at which you'll step to the sidelines for a permanent vacation.

2. Examine all of your losing trades as soon as possible. Then quit the game immediately if you can't learn anything new.

3. Talk to your spouse, kids and family pets. If they show physical distress because of your market activities, cancel your subscription to The Wall Street Journal.

4. Do you see trading as a form of entertainment? The truth is that trading is no fun at all most of the time. If you want fun, quit trading and join a rock band.

5. How badly you want to trade? If you see yourself doing this for the rest of your life, stay in the markets and take your pain. If you realize it's a good hobby gone bad, take up knitting or racquetball instead.

6. Trade to the point where you're following all of your rules but still losing money. Then decide whether it's your rules or your trading that needs to go.

7. Just quit and forget about the markets right now. If that makes you crazy, start trading again, because you were on the right path in the first place.

8. Examine your pain tolerance when it comes to money. How much can you really afford to lose? Head for the exits well before you lose that amount.

9. Brutal honesty and self-examination will tell you when it's time to go. The first question to ask is whether you really have the talent to trade successfully.

10. Do you have a history of success when taking financial risks? Or is your checkbook a string of misfortunes, misdeeds and misfires? If so, you're going to crash and burn if you stay in the markets.


Alan Farley is a professional trader and author of "The Master Swing Trader." Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. At the time of publication, Farley did not have any positions in any of the stocks mentioned in this article, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback and invites you to send it to [email protected]. Click here to read our conflicts and disclosure policy.
 
Introduction United Kingdom Top of Page
Background: Great Britain, the dominant industrial and maritime power of the 19th century, played a leading role in developing parliamentary democracy and in advancing literature and science. At its zenith, the British Empire stretched over one-fourth of the earth's surface. The first half of the 20th century saw the UK's strength seriously depleted in two World Wars. The second half witnessed the dismantling of the Empire and the UK rebuilding itself into a modern and prosperous European nation. As one of five permanent members of the UN Security Council, a founding member of NATO, and of the Commonwealth, the UK pursues a global approach to foreign policy; it currently is weighing the degree of its integration with continental Europe. A member of the EU, it chose to remain outside the European Monetary Union for the time being. Constitutional reform is also a significant issue in the UK. The Scottish Parliament, the National Assembly for Wales, and the Northern Ireland Assembly were established in 1999, but the latter is suspended due to bickering over the peace process.

Geography United Kingdom Top of Page
Location: Western Europe, islands including the northern one-sixth of the island of Ireland between the North Atlantic Ocean and the North Sea, northwest of France
Geographic coordinates: 54 00 N, 2 00 W
Map references: Europe
Area: total: 244,820 sq km water: 3,230 sq km note: includes Rockall and Shetland Islands land: 241,590 sq km
Area - comparative: slightly smaller than Oregon
Land boundaries: total: 360 km border countries: Ireland 360 km
Coastline: 12,429 km
Maritime claims - as described in UNCLOS 1982 (see Notes and Definitions): territorial sea: 12 NM exclusive fishing zone: 200 NM continental shelf: as defined in continental shelf orders or in accordance with agreed upon boundaries
Climate: temperate; moderated by prevailing southwest winds over the North Atlantic Current; more than one-half of the days are overcast
Terrain: mostly rugged hills and low mountains; level to rolling plains in east and southeast
Elevation extremes: lowest point: The Fens -4 m highest point: Ben Nevis 1,343 m
Natural resources: coal, petroleum, natural gas, iron ore, lead, zinc, gold, tin, limestone, salt, clay, chalk, gypsum, potash, silica sand, slate, arable land
Land use: arable land: 26.41% permanent crops: 0.18% other: 73.41% (1998 est.)
Irrigated land: 1,080 sq km (1998 est.)
Natural hazards: winter windstorms; floods
Environment - current issues: continues to reduce greenhouse gas emissions (has met Kyoto Protocol target of a 12.5% reduction from 1990 levels and intends to meet the legally binding target and move towards a domestic goal of a 20% cut in emissions by 2010); by 2005 the government aims to reduce the amount of industrial and commercial waste disposed of in landfill sites to 85% of 1998 levels and to recycle or compost at least 25% of household waste, increasing to 33% by 2015; between 1998-99 and 1999-2000, household recycling increased from 8.8% to 10.3%

Environment - international agreements: party to: Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Sulfur 94, Air Pollution-Volatile Organic Compounds, Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Marine Life Conservation, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling signed, but not ratified: Air Pollution-Persistent Organic Pollutants
Geography - note: lies near vital North Atlantic sea lanes; only 35 km from France and now linked by tunnel under the English Channel; because of heavily indented coastline, no location is more than 125 km from tidal waters

People United Kingdom Top of Page
Population: 60,270,708 (July 2004 est.)
Age structure: 0-14 years: 18% (male 5,560,489; female 5,293,871) 15-64 years: 66.3% (male 20,193,876; female 19,736,516) 65 years and over: 15.7% (male 4,027,721; female 5,458,235) (2004 est.)
Median age: total: 38.7 years male: 37.6 years female: 39.8 years (2004 est.)
Population growth rate: 0.29% (2004 est.)
Birth rate: 10.88 births/1,000 population (2004 est.)
Death rate: 10.19 deaths/1,000 population (2004 est.)
Net migration rate: 2.19 migrant(s)/1,000 population (2004 est.)
Sex ratio: at birth: 1.05 male(s)/female under 15 years: 1.05 male(s)/female 15-64 years: 1.02 male(s)/female 65 years and over: 0.74 male(s)/female total population: 0.98 male(s)/female (2004 est.)
Infant mortality rate: total: 5.22 deaths/1,000 live births female: 4.58 deaths/1,000 live births (2004 est.) male: 5.83 deaths/1,000 live births
Life expectancy at birth: total population: 78.27 years male: 75.84 years female: 80.83 years (2004 est.)
Total fertility rate: 1.66 children born/woman (2004 est.)
HIV/AIDS - adult prevalence rate: 0.1% (2001 est.)
HIV/AIDS - people living with HIV/AIDS: 34,000 (2001 est.)
HIV/AIDS - deaths: 460 (2001 est.)
Nationality: noun: Briton(s), British (collective plural) adjective: British
Ethnic groups: English 81.5%, Scottish 9.6%, Irish 2.4%, Welsh 1.9%, Ulster 1.8%, West Indian, Indian, Pakistani, and other 2.8%
Religions: Anglican and Roman Catholic 40 million, Muslim 1.5 million, Presbyterian 800,000, Methodist 760,000, Sikh 500,000, Hindu 500,000, Jewish 350,000
Languages: English, Welsh (about 26% of the population of Wales), Scottish form of Gaelic (about 60,000 in Scotland)
Literacy: definition: age 15 and over has completed five or more years of schooling total population: 99% (2000 est.) male: NA% female: NA%
Government United Kingdom Top of Page
Country name: conventional long form: United Kingdom of Great Britain and Northern Ireland conventional short form: United Kingdom abbreviation: UK
Government type: constitutional monarchy
Capital: London

Administrative divisions: England - 47 boroughs, 36 counties*, 29 London boroughs**, 12 cities and boroughs***, 10 districts****, 12 cities*****, 3 royal boroughs******; Barking and Dagenham**, Barnet**, Barnsley, Bath and North East Somerset****, Bedfordshire*, Bexley**, Birmingham***, Blackburn with Darwen, Blackpool, Bolton, Bournemouth, Bracknell Forest, Bradford***, Brent**, Brighton and Hove, City of Bristol*****, Bromley**, Buckinghamshire*, Bury, Calderdale, Cambridgeshire*, Camden**, Cheshire*, Cornwall*, Coventry***, Croydon**, Cumbria*, Darlington, Derby*****, Derbyshire*, Devon*, Doncaster, Dorset*, Dudley, Durham*, Ealing**, East Riding of Yorkshire****, East Sussex*, Enfield**, Essex*, Gateshead, Gloucestershire*, Greenwich**, Hackney**, Halton, Hammersmith and Fulham**, Hampshire*, Haringey**, Harrow**, Hartlepool, Havering**, Herefordshire*, Hertfordshire*, Hillingdon**, Hounslow**, Isle of Wight*, Islington**, Kensington and Chelsea******, Kent*, City of Kingston upon Hull*****, Kingston upon Thames******, Kirklees, Knowsley, Lambeth**, Lancashire*, Leeds***, Leicester*****, Leicestershire*, Lewisham**, Lincolnshire*, Liverpool***, City of London*****, Luton, Manchester***, Medway, Merton**, Middlesbrough, Milton Keynes, Newcastle upon Tyne***, Newham**, Norfolk*, Northamptonshire*, North East Lincolnshire****, North Lincolnshire****, North Somerset****, North Tyneside, Northumberland*, North Yorkshire*, Nottingham*****, Nottinghamshire*, Oldham, Oxfordshire*, Peterborough*****, Plymouth*****, Poole, Portsmouth*****, Reading, Redbridge**, Redcar and Cleveland, Richmond upon Thames**, Rochdale, Rotherham, Rutland****, Salford***, Shropshire*, Sandwell, Sefton, Sheffield***, Slough, Solihull, Somerset*, Southampton*****, Southend-on-Sea, South Gloucestershire****, South Tyneside, Southwark**, Staffordshire*, St. Helens, Stockport, Stockton-on-Tees, Stoke-on-Trent*****, Suffolk*, Sunderland***, Surrey*, Sutton**, Swindon, Tameside, Telford and Wrekin****, Thurrock, Torbay, Tower Hamlets**, Trafford, Wakefield***, Walsall, Waltham Forest**, Wandsworth**, Warrington, Warwickshire*, West Berkshire****, Westminster***, West Sussex*, Wigan, Wiltshire*, Windsor and Maidenhead******, Wirral, Wokingham****, Wolverhampton, Worcestershire*, York*****; Northern Ireland - 24 districts, 2 cities*, 6 counties**; Antrim, County Antrim**, Ards, Armagh, County Armagh**, Ballymena, Ballymoney, Banbridge, Belfast*, Carrickfergus, Castlereagh, Coleraine, Cookstown, Craigavon, Down, County Down**, Dungannon, Fermanagh, County Fermanagh**, Larne, Limavady, Lisburn, County Londonderry**, Derry*, Magherafelt, Moyle, Newry and Mourne, Newtownabbey, North Down, Omagh, Strabane, County Tyrone**; Scotland - 32 council areas; Aberdeen City, Aberdeenshire, Angus, Argyll and Bute, The Scottish Borders, Clackmannanshire, Dumfries and Galloway, Dundee City, East Ayrshire, East Dunbartonshire, East Lothian, East Renfrewshire, City of Edinburgh, Falkirk, Fife, Glasgow City, Highland, Inverclyde, Midlothian, Moray, North Ayrshire, North Lanarkshire, Orkney Islands, Perth and Kinross, Renfrewshire, Shetland Islands, South Ayrshire, South Lanarkshire, Stirling, West Dunbartonshire, Eilean Siar (Western Isles), West Lothian; Wales - 11 county boroughs, 9 counties*, 2 cities and counties**; Isle of Anglesey*, Blaenau Gwent, Bridgend, Caerphilly, Cardiff**, Ceredigion*, Carmarthenshire*, Conwy, Denbighshire*, Flintshire*, Gwynedd, Merthyr Tydfil, Monmouthshire*, Neath Port Talbot, Newport, Pembrokeshire*, Powys*, Rhondda Cynon Taff, Swansea**, Torfaen, The Vale of Glamorgan*, Wrexham
Dependent areas: Anguilla, Bermuda, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Guernsey, Jersey, Isle of Man, Montserrat, Pitcairn Islands, Saint Helena, South Georgia and the South Sandwich Islands, Turks and Caicos Islands

Independence: England has existed as a unified entity since the 10th century; the union between England and Wales, begun in 1284 with the Statute of Rhuddlan, was not formalized until 1536 with an Act of Union; in another Act of Union in 1707, England and Scotland agreed to permanently join as Great Britain; the legislative union of Great Britain and Ireland was implemented in 1801, with the adoption of the name the United Kingdom of Great Britain and Ireland; the Anglo-Irish treaty of 1921 formalized a partition of Ireland; six northern Irish counties remained part of the United Kingdom as Northern Ireland and the current name of the country, the United Kingdom of Great Britain and Northern Ireland, was adopted in 1927
National holiday: the UK does not celebrate one particular national holiday
Constitution: unwritten; partly statutes, partly common law and practice
Legal system: common law tradition with early Roman and modern continental influences; has judicial review of Acts of Parliament under the Human Rights Act of 1998; accepts compulsory ICJ jurisdiction, with reservations
Suffrage: 18 years of age; universal
Executive branch: chief of state: Queen ELIZABETH II (since 6 February 1952); Heir Apparent Prince CHARLES (son of the queen, born 14 November 1948) head of government: Prime Minister Anthony (Tony) BLAIR (since 2 May 1997) cabinet: Cabinet of Ministers appointed by the prime minister elections: none; the monarchy is hereditary; following legislative elections, the leader of the majority party or the leader of the majority coalition is usually the prime minister
Legislative branch: bicameral Parliament comprised of House of Lords (consists of approximately 500 life peers, 92 hereditary peers and 26 clergy) and House of Commons (659 seats; members are elected by popular vote to serve five-year terms unless the House is dissolved earlier) elections: House of Lords - no elections (note - in 1999, as provided by the House of Lords Act, elections were held in the House of Lords to determine the 92 hereditary peers who would remain there; pending further reforms, elections are held only as vacancies in the hereditary peerage arise); House of Commons - last held 7 June 2001 (next to be held by NA May 2006) election results: House of Commons - percent of vote by party - Labor 42.1%, Conservative and Unionist 32.7%, Liberal Democrats 18.8%, other 6.4%; seats by party - Labor 412, Conservative and Unionist 166, Liberal Democrat 52, other 29; note - seating as of 5 January 2004: Labor 408, Conservative 163, Liberal Democrats 54, other 34 note: in 1998 elections were held for a Northern Ireland Assembly (because of unresolved disputes among existing parties, the transfer of power from London to Northern Ireland came only at the end of 1999 and has been suspended four times the latest occurring in October 2002; since October 2002 the Northern Ireland Parliament has been suspended); in 1999 there were elections for a new Scottish Parliament and a new Welsh Assembly
Judicial branch: House of Lords (highest court of appeal; several Lords of Appeal in Ordinary are appointed by the monarch for life); Supreme Courts of England, Wales, and Northern Ireland (comprising the Courts of Appeal, the High Courts of Justice, and the Crown Courts); Scotland's Court of Session and Court of the Justiciary
Political parties and leaders: Conservative and Unionist Party [Michael HOWARD]; Democratic Unionist Party (Northern Ireland) [Rev. Ian PAISLEY]; Labor Party [Anthony (Tony) BLAIR]; Liberal Democrats [Charles KENNEDY]; Party of Wales (Plaid Cymru) [Dafydd IWAN]; Scottish National Party or SNP [John SWINNEY]; Sinn Fein (Northern Ireland) [Gerry ADAMS]; Social Democratic and Labor Party or SDLP (Northern Ireland) [Mark DURKAN]; Ulster Unionist Party (Northern Ireland) [David TRIMBLE]
Political pressure groups and leaders: Campaign for Nuclear Disarmament; Confederation of British Industry; National Farmers' Union; Trades Union Congress
International organization participation: AfDB, AsDB, Australia Group, BIS, C, CDB, CE, CERN, EAPC, EBRD, EIB, ESA, EU, FAO, G- 5, G- 7, G- 8, G-10, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICFTU, ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, ISO, ITU, MONUC, NAM (guest), NATO, NEA, NSG, OAS (observer), OECD, OPCW, OSCE, Paris Club, PCA, UN, UN Security Council, UNAMSIL, UNCTAD, UNESCO, UNFICYP, UNHCR, UNIDO, UNITAR, UNMEE, UNMIK, UNMIL, UNMOVIC, UNOMIG, UNRWA, UPU, WCO, WEU, WHO, WIPO, WMO, WTrO, ZC

Diplomatic representation in the US: chief of mission: Ambassador David G. MANNING chancery: 3100 Massachusetts Avenue NW, Washington, DC 20008 FAX: [1] (202) 588-7870 consulate(s): Dallas, Denver, Miami, and Seattle consulate(s) general: Atlanta, Boston, Chicago, Houston, Los Angeles, New York, and San Francisco telephone: [1] (202) 588-6500
Diplomatic representation from the US: chief of mission: Ambassador William S. FARISH embassy: 24/31 Grosvenor Square, London, W1A1AE mailing address: PSC 801, Box 40, FPO AE 09498-4040 telephone: [44] (0) 20 7499-9000 FAX: [44] (0) 20 7629-9124 consulate(s) general: Belfast, Edinburgh

Flag description: blue field with the red cross of Saint George (patron saint of England) edged in white superimposed on the diagonal red cross of Saint Patrick (patron saint of Ireland), which is superimposed on the diagonal white cross of Saint Andrew (patron saint of Scotland); properly known as the Union Flag, but commonly called the Union Jack; the design and colors (especially the Blue Ensign) have been the basis for a number of other flags including other Commonwealth countries and their constituent states or provinces, as well as British overseas territories

Economy United Kingdom Top of Page
Economy - overview: The UK, a leading trading power and financial center, is one of the quartet of trillion dollar economies of Western Europe. Over the past two decades the government has greatly reduced public ownership and contained the growth of social welfare programs. Agriculture is intensive, highly mechanized, and efficient by European standards, producing about 60% of food needs with only 1% of the labor force. The UK has large coal, natural gas, and oil reserves; primary energy production accounts for 10% of GDP, one of the highest shares of any industrial nation. Services, particularly banking, insurance, and business services, account by far for the largest proportion of GDP while industry continues to decline in importance. GDP growth slipped in 2001-03 as the global downturn, the high value of the pound, and the bursting of the "new economy" bubble hurt manufacturing and exports. Still, the economy is one of the strongest in Europe; inflation, interest rates, and unemployment remain low. The relatively good economic performance has complicated the BLAIR government's efforts to make a case for Britain to join the European Economic and Monetary Union (EMU). Critics point out, however, that the economy is doing well outside of EMU, and they point to public opinion polls that continue to show a majority of Britons opposed to the euro. Meantime, the government has been speeding up the improvement of education, transport, and health services, at a cost in higher taxes. The war in March-April 2003 between a US-led coalition and Iraq, together with the subsequent problems of restoring the economy and the polity, involve a heavy commitment of British military forces.
GDP: purchasing power parity - $1.664 trillion (2003 est.)
GDP - real growth rate: 2.1% (2003 est.)
GDP - per capita: purchasing power parity - $27,700 (2003 est.)
GDP - composition by sector: agriculture: 1.4% industry: 24.9% services: 73.7% (2000)
Population below poverty line: 17% (2002 est.)
Household income or consumption by percentage share: lowest 10%: 2.3% highest 10%: 27.7% (1995)
Distribution of family income - Gini index: 36.8 (1995)
Inflation rate (consumer prices): 3% (2003 est.)
Labor force: 29.7 million (2001)
Labor force - by occupation: agriculture 1%, industry 25%, services 74% (1999)
Unemployment rate: 5.1% (2003 est.)
Budget: revenues: $565 billion expenditures: $540 billion, including capital expenditures of $NA (FY01)

Industries: machine tools, electric power equipment, automation equipment, railroad equipment, shipbuilding, aircraft, motor vehicles and parts, electronics and communications equipment, metals, chemicals, coal, petroleum, paper and paper products, food processing, textiles, clothing, and other consumer goods
Industrial production growth rate: -0.6% (2003 est.)
Electricity - production: 360.9 billion kWh (2001)
Electricity - production by source: fossil fuel: 73.8% hydro: 0.9% other: 1.6% (2001) nuclear: 23.7%
Electricity - consumption: 346.1 billion kWh (2001)
Electricity - exports: 264 million kWh (2001)
Electricity - imports: 10.66 billion kWh (2001)
Oil - production: 2.541 million bbl/day (2001 est.)
Oil - consumption: 1.71 million bbl/day (2001 est.)
Oil - exports: 2.205 million bbl/day (2001)
Oil - imports: 1.418 million bbl/day (2001)
Oil - proved reserves: 4.741 billion bbl (1 January 2002)
Natural gas - production: 105.9 billion cu m (2001 est.)
Natural gas - consumption: 92.85 billion cu m (2001 est.)
Natural gas - exports: 15.75 billion cu m (2001 est.)
Natural gas - imports: 2.7 billion cu m (2001 est.)
Natural gas - proved reserves: 714.9 billion cu m (1 January 2002)
Agriculture - products: cereals, oilseed, potatoes, vegetables; cattle, sheep, poultry; fish
Exports: $304.5 billion f.o.b. (2003 est.)
Exports - commodities: manufactured goods, fuels, chemicals; food, beverages, tobacco
Exports - partners: US 15.5%, Germany 11.2%, France 9.4%, Ireland 8%, Netherlands 7.1%, Belgium 5.2%, Italy 4.4%, Spain 4.3% (2002)
Imports: $363.6 billion f.o.b. (2003 est.)
Imports - commodities: manufactured goods, machinery, fuels; foodstuffs
Imports - partners: Germany 12.9%, US 11.9%, France 7.8%, Netherlands 6.3%, Belgium 5%, Italy 4.4% (2002)
Debt - external: $NA (2002 est.)
Economic aid - donor: ODA, $4.5 billion (2000)
Currency: British pound (GBP)
Currency code: GBP
Exchange rates: British pounds per US dollar - 0.61 (2003), 0.67 (2002), 0.69 (2001), 0.66 (2000), 0.62 (1999)
Fiscal year: 1 April - 31 March

Communications United Kingdom Top of Page
Telephones - main lines in use: 34.898 million (2002)
Telephones - mobile cellular: 49.677 million (2002)
Telephone system: general assessment: technologically advanced domestic and international system domestic: equal mix of buried cables, microwave radio relay, and fiber-optic systems international: country code - 44; 40 coaxial submarine cables; satellite earth stations - 10 Intelsat (7 Atlantic Ocean and 3 Indian Ocean), 1 Inmarsat (Atlantic Ocean region), and 1 Eutelsat; at least 8 large international switching centers
Radio broadcast stations: AM 219, FM 431, shortwave 3 (1998)
Television broadcast stations: 228 (plus 3,523 repeaters) (1995)
Internet country code: .uk
Internet hosts: 2,865,930 (2002)
Internet users: 25 million (2002)

Transportation United Kingdom Top of Page
Railways: total: 16,893 km standard gauge: 16,536 km 1.435-m gauge (4,928 km electrified) broad gauge: 357 km 1.600-m gauge (in Northern Ireland) (2002)
Highways: total: 371,913 km paved: 371,913 km (including 3,358 km of expressways) unpaved: 0 km (1999)
Waterways: 3,200 km
Pipelines: condensate 370 km; gas 21,263 km; liquid petroleum gas 59 km; oil 6,420 km; oil/gas/water 63 km; refined products 4,474 km; water 650 km (2003)
Ports and harbors: Aberdeen, Belfast, Bristol, Cardiff, Dover, Falmouth, Felixstowe, Glasgow, Grangemouth, Hull, Leith, Liverpool, London, Manchester, Peterhead, Plymouth, Portsmouth, Ramsgate, Scapa Flow, Southampton, Sullom Voe, Teesport, Tyne
Merchant marine: total: 384 ships (1,000 GRT or over) 9,181,284 GRT/9,566,275 DWT by type: bulk 20, cargo 50, chemical tanker 28, combination ore/oil 1, container 130, liquefied gas 23, livestock carrier 1, multi-functional large load carrier 1, passenger 20, petroleum tanker 45, refrigerated cargo 18, roll on/roll off 34, short-sea/passenger 11, specialized tanker 1, vehicle carrier 1 foreign-owned: Australia 2, Croatia 4, Cyprus 1, Denmark 42, Finland 1, Germany 52, Greece 36, Hong Kong 16, Italy 3, Japan 1, Monaco 13, Nigeria 1, Norway 32, South Africa 2, Sweden 13, Taiwan 7, United registered in other countries: 522 (2003 est.)
Airports: 471 (2003 est.)
Airports - with paved runways: total: 334 over 3,047 m: 8 2,438 to 3,047 m: 33 914 to 1,523 m: 86 under 914 m: 57 (2003 est.) 1,524 to 2,437 m: 150
Airports - with unpaved runways: total: 137 2438 to 3047 m: 1 1,524 to 2,437 m: 1 under 914 m: 112 (2003 est.) 914 to 1,523 m: 23
Heliports: 11 (2003 est.)

Military United Kingdom Top of Page
Military branches: Army, Royal Navy (including Royal Marines), Royal Air Force
Military manpower - military age: 16 years of age (2004 est.)
Military manpower - availability: males age 15-49: 14,943,016 (2004 est.)
Military manpower - fit for military service: males age 15-49: 12,393,785 (2004 est.)
Military expenditures - dollar figure: $42,836.5 million (2003)
Military expenditures - percent of GDP: 2.4% (2003)

Transnational Issues United Kingdom Top of Page
Disputes - international: since Gibraltar residents voted overwhelmingly by referendum in 2003 against a "total shared sovereignty" arrangement, talks between the UK and Spain over the fate of the 300-year old UK colony have stalled; Spain disapproves of UK plans to grant Gibraltar greater autonomy; Mauritius and Seychelles claim the Chagos Archipelago (British Indian Ocean Territory), and its former inhabitants since their eviction in 1965; most reside chiefly in Mauritius, and in 2001 were granted UK citizenship and the right to repatriation; UK continues to reject sovereignty talks requested by Argentina, which still claims the Falkland Islands (Islas Malvinas) and South Georgia and the South Sandwich Islands; Rockall continental shelf dispute involving Denmark and Iceland remains dormant; territorial claim in Antarctica (British Antarctic Territory) overlaps Argentine claim and partially overlaps Chilean claim; disputes with Iceland, Denmark, and Ireland over the Faroe Islands continental shelf boundary outside 200 NM
Illicit drugs: producer of limited amounts of synthetic drugs and synthetic precursor chemicals; major consumer of Southwest Asian heroin, Latin American cocaine, and synthetic drugs; money-laundering center

This page was last updated on 11 May, 2004








SOURCE: Central Intelligence Agency - Directorate of Intelligence
 
Morningstar.com
Are Funds Barreling Out of Tech and Into Energy?
Thursday March 17, 6:00 am ET
By Kunal Kapoor, CFA


In the late 1990s, when oil prices were hitting historical lows, energy stocks were simply considered too prosaic for all but the most diehard value fans. And even many of the most respected value managers took a pass on these shares because of concerns that managements at these companies were poor allocators of capital. As such, the diversified domestic category with the largest allocation to energy stocks was large-cap value, with the typical fund keeping just over 9% of its assets in the group


Lucky for them!

Energy stocks have since soared, boosted by rising prices for oil and natural gas. And while concerns remain about how companies will redeploy all those profits, conventional wisdom holds that more and more managers have gotten interested in energy stocks. In particular, there's speculation that growth managers, who all but ignored these stocks in the late 1990s, are in love with the sector.

A Closer Look
But is that really what's happening? For the answer, we examined the energy weightings of funds in the nine diversified domestic categories, looking at their year-end allocations beginning in 1998 and lasting through 2004. To make it more interesting, we also examined the hardware and software allocations of funds in these categories to see if money had been flowing out of technology, potentially because managers were instead shifting that money to energy. The results were interesting, if a little surprising.

Among large-cap funds, value-oriented offerings didn't see much of a shift in their overall allocation to energy. In fact, at the end of 2004, the typical large-value fund had seen its overall weighting to energy rise by just 1 percentage point in the past six years. This likely implies that as stock prices have risen, the category's managers have been doing some selling. And while large-growth funds have seen their energy weightings double, it's still only a bit more than 4% of assets, so it isn't nearly as significant a trend as many make it out to be.

What's more significant is that large-growth funds have seen their allocation to tech hardware stocks fall from more than a quarter of assets to approximately 15% of assets. Some of that is due to depreciation, but it also confirms that large-growth funds have cooled a bit on the group. This lack of enthusiasm is also mirrored on the value side, where tech stocks remain scant, a sign that valuations in the sector still aren't low enough for this category's managers.

The trends are more pronounced in the mid-cap area, where value, blend, and growth funds alike have meaningfully ramped up their energy exposure in the past few years. Mid-growth funds, for instance, had less than 2% of assets in energy stocks at the end of 1998 and now have more than tripled that exposure. Meanwhile, value funds have seen their exposure rise from approximately 5.6% of assets to more than 8%. On the tech front, mid-growth and mid-blend funds have meaningfully reduced their exposure to the group, while mid-value funds are not really doing anything dramatic. The trends are very similar in the small-cap arena, although it is worthwhile to note that even after cutting back their tech exposure dramatically, small-cap growth funds continue to devote a fifth of their assets, on average, to the sector.

So, what's the takeaway from all this? First, at least for now, the trend to higher energy weightings, while apparent, isn't nearly as pronounced as many believe. While it's clear that mid- and small-growth funds retain more of a speculative, performance-chasing flair than the other diversified categories, growth funds in general seem to have toned down their acts. Secondly, for those who remain fascinated with tech, these numbers are a reminder that investors' persistent attention to the sector is increasingly disproportionate to the weightings it is now accorded in portfolios. My guess is that's a good thing, as it's a sign that growth managers in particular are acting more rationally than they were a few years ago.

And even if you believe that energy stocks remain cheap, the fact that value funds continue to own them in about the same proportion that they did in the late 1990s means that their energy weightings are one of the contributing factors to rising portfolio valuations among many of these funds. The practical implication, of course, particularly when it's viewed in the context of the recently strong performance of these funds, is that value-fund investors should at least ratchet down their return expectations a notch or two. Chances are that the recently wide disparity in returns between the two groups isn't likely to persist to the extent that it has since the late 1990s.

And From The Department Of Irrelevance...
Turns out that we weren't the only ones writing about Buffett last week. In fact, I saw several worthwhile pieces about the Oracle's latest annual letter. However, I did come across one article that put me off. The article, "Trade Like Warren Buffett," actually references a book that's also been released on the topic. The gist of the argument is that Buffett has made money by more than just buying and holding stocks and that investors should also learn by looking at what he's done in merger arbitrage, distressed debt, and so on. That may be true as far as it goes, but I do think that putting the focus on them takes away from his central buy-and-hold message, which has more relevance for investors. As such, while this kind of thing makes for interesting reading, I think that's about where its usefulness ends.
 
There's a reason the same cons reappear year after year: They use time-tested ways of pushing just the right buttons to make us give up our cash or personal information.

By Jennifer Mulrean

Every year, the Federal Trade Commission's Consumer Sentinel issues a report on the top scams of the year, based on the number of complaints filed to watchdog organizations like the FTC and the National Consumer's League. What's startling about these lists isn't the volume of complaints -- more than 635,000 filed in 2004 -- or the dollar value of reported losses -- $547 million last year.

What's perplexing is how little the list changes each year.

Among online frauds, Internet auctions have topped the Consumer Sentinel list every year, followed by online shopping/catalog sales, Internet-access scams, foreign money offers and variations of the same old same old. A fraud may move around on the list – the Nigerian scam was No. 5 among Internet scams in 2003 and No. 4 last year. But the status quo seems to prevail year after year.

Sure, new technology makes new scams possible, but in general, con artists aren't that creative. They don't have to be. The same tricks work over and over again. Why?

Anatomy of a scam
Doug Shadel, the AARP's Washington state director, and Anthony Pratkanis, a social psychology professor at the University of California, Santa Cruz, have been studying cons' pitches through more than 600 telephone conversations taped by the FBI. (Consumers who were being targeted had their calls forwarded to investigators, who then posed as the victims.) Don't let retirement
sneak up on you.
Create a perfect plan.



The two, who are writing a consumer guidebook due in June, transcribed 325 of those tapes and identified 15 common strategies used by the con artists. Learn to recognize these "social influence" tactics and you can better your odds for stopping a fraud in its tracks.

There are usually four steps to pulling off a scam, says Pratkanis:
The cons lure you with something tempting.

They gain your trust.

They sweeten the pot to make you really consider biting.

They close the deal.
To do so, they employ any number of strategies at each step. "The pitches are social-influence cocktails, just jam-packed with one tactic after another," says Pratkanis.The top frauds of the year
The Consumer Sentinel's list of top frauds represents more than 635,000 complaints filed to watchdogs like the FTC and the National Consumer's League. The Sentinel doesn't track complaints by person, or even determine if each complaint represents someone who actually lost money to the scam. So it's hard to know if the same people are repeatedly falling for the schemes, or if they're being proactive about alerting the authorities.

Still, the lists have been fairly stable for years now. Identity theft has reigned at No. 1 for the last five years, and Internet auctions have dominated Internet-related frauds since the Sentinel began breaking those out from its general report a few years ago.

One interesting note: The broad complaint categories may mask newer schemes, such as phishing, that take advantage of technology to steal personal information, says Betsy Broder, the FTC's assistant director for planning and information. "As a subset in each category, we're seeing some attempt of data theft," she says.

This means consumers may be reporting one type of fraud -- say, a business opportunity that didn't pan out as promised-- when they're actually a victim of another.

"Sometimes victims never connect the new accounts opened in their name with the initial fraud," such as an ad they answered for a job, Broder says.

Consumer Sentinel's top 10 consumer complaints in 2004:
Identity theft (39%)

Internet auctions (16%)

Shop-at-home/catalog sales (8%)

Internet services and computer complaints (6%)

Foreign money offers (6%)

Prizes/sweepstakes and lotteries (5%)

Advance-fee loans and credit protection (3%)

Business opportunities and work-at-home plans (2%)

Telephone services (2%)

Other (miscellaneous) 12%
Consumer Sentinel's top Internet-related scams for 2004:
Internet auctions (48%)

Shop-at-home/catalog sales (17%)

Internet-access services (10%)

Foreign money offers (6%)

Internet info and adult services (3%)

Computers: Equipment and software (2%)

Business opportunities and work-at-home plans (2%)
(The remainder of Net-related complaint categories each comprised 1% or less.)


To lure you in initially, the scammers will generally use "phantom fixation" -- the promise of something tantalizing that never materializes. The Nigerian scam is a great example of this. In exchange for the use of your bank account to move funds out of another country, you're told you'll receive millions of dollars. People become so distracted by the notion of instant wealth that they're willing to throw their usual caution to the wind. The scam is closed when people fork over money for "incidental fees" to move the money to their account or divulge private bank account information that can be used to move money out of the account.

"(Victims) are not thinking logically because they're so obsessed with getting the money," says Shadel.

For step 2, gaining your trust, scammers will often use what Shadel and Pratkanis call the "command of authority" and the premise that your help is direly needed. Again, the Nigerian scam utilizes both of these: The scam is in the form of a personal plea for help, often from a supposed former high-ranking official from a foreign government. The official-sounding titles and ranks sprinkled throughout are meant to wrap a cloak of legitimacy around the plea.

And the plea for help is more than an appeal to your conscience, Shadel says. It's meant to mistakenly give you the feeling that you're in control of the situation and can walk away at any time. Other tactics used to gain your trust include friendly persuasion, which is just what it sounds like, and the "expert snare," where the con artist tries to make you feel like an expert who should be able to recognize a great opportunity when you see one.

Sweetening the scam
Making a scam appear too good to pass up is critical. There are five tactics generally used here:
Creating the landscape: A scammer will try to limit your use of outside information to investigate the scam. Some victims are told they're being given a secret opportunity that would be jeopardized if others found out. With Internet scams, there is often ample opportunity to investigate them before taking the bait. But as Barbara Mikkelson, who runs the hoax- and myth-busting site Snopes.com, points out, it's sometimes easier said than done. With the foreign money offers, so many of the names and stories change that unless you know you're looking for information on the "Nigerian scam," it can be difficult to track down the real story. (She says this old scheme still generates more mail to her site than any other financially related scam.)


Comparison: One example is when an old price is scratched out and a new one is listed so that you can clearly see the "deal" you're getting.


Social proof: A scammer will try to make it sound as if lots of people have already benefited from this scheme, so that you might think, "If everyone is doing it, it must be good."


Self-generated persuasion: Arguably a softer sell than some of the other tactics, the perpetrator plants an idea but lets you use your own imagination to fill in the gaps. Pratkanis notes one scammer who said he wanted the victim to picture everything he might do with a large sum of money -- and would contact him in a week to hear the ideas. A week was plenty of time for the potential of all that money to really take hold of the victim's imagination.


Scarcity: "When something is made scarce, it triggers three processes," Pratkanis says. "1) In our head, we think, if it's rare it must be valuable; 2) it creates panic – 'if I don't get it now I may never get it'; and 3) it makes you special (for owning it)." Shadel cites the example of gold coins that aren't worth what they're sold for as one scam that takes advantage of this tactic.

Closing the deal
By the time a scammer is ready to close the deal, he may try to take advantage of the norm of reciprocity. This is the notion that if I've done something for you, you should do something for me, Shadel says. The con artist may have given you something of perceived value or done something for you in order to create a feeling of obligation. Pratkanis relates a tale where a scammer found out his potential victim was also being played by another con artist. He reported the other guy to the police and took credit for the good deed with the victim only to later defraud her himself.

Other strategies for closing the deal include:
A door-in-the-face: This is when a scammer proposes something farfetched, such as sending them a large sum of money, which causes you to turn them down. The scammer will then approach with a much smaller request you're more likely to grant.


Reverse psychology: Instead of pressuring you, Shadel says, the con might say something like "it's completely up to you what you want to do" or "I wouldn't blame you at all if you wanted to just say no. A lot of people have trouble with making a lot of money." These appeals work because they don't appear to limit your freedom, and they tap into the tendency to do the opposite of what is asked.


Commitment and consistency: With this strategy, a con will ask for a seemingly easy "commitment" up front. It may feel like no more than agreeing with a statement like "You want to make money, don't you?" But when you later try to bail on the deal at hand, the con will bring up your earlier commitment to make you feel you're caught being inconsistent.
If you're still not biting, the scammer may resort to fear and intimidation. Used all too frequently, according to Shadel, this can take the form of personal insults and sky-is-falling threats.

Why they work
All of these tactics are meant to put the consumer in a specific role, says Pratkanis. And because the con is orchestrating the role you're in, he has tremendous control over the outcome.

These strategies also tend to be successful because we're used to seeing many legitimate businesses use them. "Sales people have known about these tactics for a long time," says Shadel. When McDonald's advertises the number of burgers served, it's using social proof. Click on a cable home-shopping TV channel and you'll see many tactics at work simultaneously, notably scarcity, social proof and comparison. The difference with scammers, though, is that they'll often take things to an ugly level, using fear and outright deception to get you to cave.

And finally, most people are looking for easy ways to make decisions, Shadel says. "The (social-influence tactics) exploit our very human tendency to want to take decision-making shortcuts by blindly complying to habits, patterns and cultural norms. The con is counting on such compliance."
 
There are usually four steps to pulling off a scam,
The cons lure you with something tempting.

They gain your trust.

They sweeten the pot to make you really consider biting.

this is awful
 
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