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An econometrician does not have the necessary experience to create a practical "barometer" for an industry. Second, this is just a quick reference and nothing

An econometrician does not have the necessary experience to create a practical "barometer" for an industry. Second, this is just a quick reference and nothing more. It's a simpler version of what the S&P stands for. It was done in collaboration with an analyst[0] and two execs[1][2] (insight maybe?). [0] https://www.linkedin.com/in/jonbirchler https://www.linkedin.com/in/jonbirchler [1]http://www.bloomberg.com/research/stocks/people/person.asp?personId=61025125&privcapId=875458 http://www.bloomberg.com/research/stocks/people/person.asp?p... [2]http://www.bloomberg.com/research/stocks/people/person.asp?personId=380632481&capId=379520491&previousCapId=379520491&previousTitle=Tune%20Labs http://www.bloomberg.com/research/stocks/people/person.asp?p...

JumpCrisscross 10y ago
> An econometrician does not have the necessary experience to create a practical "barometer" for an industry Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. > It's a simpler version of what the S&P stands for The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. [1] https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf https://us.spindices.com/documents/methodologies/methodology...
- leroy_masochist 10y ago
  You're being unreasonable and harsh. The infographic and its methodology are straightforward; as the footnote at the bottom of the infographic notes, > The index is a gauge of startup activity that equally considers capital raised, deal count, first financings, and exit count. Each of the input factors is normalized for its historical volatility and then the normalized factors are combined in equal proportions to form a normalized index for constructing this barometer. That's a very straightforward and defensible methodology. Really the only bone I would have to pick is that (AFAICT) the data is rebased to April 2007, which is a bit arbitrary -- but not sure how else I would have established base values if it were me doing it.
- stagbeetle 10y ago
  > Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. They're very prevalent, I have no qualms about that. But, economics is a young field and we're starting to see the old methods come apart. Specifically, GDP. It has been touted as the end-all-be-all to measure a country's wealth (quality of life), however this notion is incorrect[0]. > The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. I am speaking purely of a practical sense. That is, what use do market practitioners (investors, speculators, etc.) assign to it. The group of S&P indices (not just the popular 500) is used as a quick tool to gauge segment "health," i.e current level compared to all levels and means before it. This is the same reason this barometer is supposed to serve. >The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? It's supposed to be shorthand for the "startups" segment. However, since most startups (and in particular the technology startups that dominate this segment) are difficult to assign accurate valuation (due to: risk, intangible assets (see: goodwill), opaqueness of financials, private ownership, etc.), there is very little work with. >Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. I believe it's a step into the right direction, but it definitely will need updating moving forward as we learn more about the nature of startups. [0]http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even http://www.economist.com/news/briefing/21697845-gross-domest... (as only one quick example)

JumpCrisscross 10y ago

> An econometrician does not have the necessary experience to create a practical "barometer" for an industry Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. > It's a simpler version of what the S&P stands for The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. [1] https://us.spindices.com/documents/methodologies/methodology-sp-us-indices.pdf https://us.spindices.com/documents/methodologies/methodology...

leroy_masochist 10y ago
You're being unreasonable and harsh. The infographic and its methodology are straightforward; as the footnote at the bottom of the infographic notes, > The index is a gauge of startup activity that equally considers capital raised, deal count, first financings, and exit count. Each of the input factors is normalized for its historical volatility and then the normalized factors are combined in equal proportions to form a normalized index for constructing this barometer. That's a very straightforward and defensible methodology. Really the only bone I would have to pick is that (AFAICT) the data is rebased to April 2007, which is a bit arbitrary -- but not sure how else I would have established base values if it were me doing it.
stagbeetle 10y ago
> Gross domestic product, producer price indices, consumer price indices, employment statistics, housing starts, manufacturing and trade inventory levels and flows and stock indices are not practical? I think you underestimate the role and prevalence of econometric methods. They're very prevalent, I have no qualms about that. But, economics is a young field and we're starting to see the old methods come apart. Specifically, GDP. It has been touted as the end-all-be-all to measure a country's wealth (quality of life), however this notion is incorrect[0]. > The S&P 500 has a clearly-stated goal and methodology [1]. It's used as a shorthand for U.S. large cap equities because it's well designed for that purpose. I am speaking purely of a practical sense. That is, what use do market practitioners (investors, speculators, etc.) assign to it. The group of S&P indices (not just the popular 500) is used as a quick tool to gauge segment "health," i.e current level compared to all levels and means before it. This is the same reason this barometer is supposed to serve. >The Bloomberg "barometer" doesn't do any of these. Is it supposed to forecast valuations? Ease of fundraising? IPO conditions? It's supposed to be shorthand for the "startups" segment. However, since most startups (and in particular the technology startups that dominate this segment) are difficult to assign accurate valuation (due to: risk, intangible assets (see: goodwill), opaqueness of financials, private ownership, etc.), there is very little work with. >Nailing down what an index is designed to do, practically, is important because that directs which data one uses and how one weights them. Calling this a "quick reference" is a farce--it's an obfuscated infographic that fails to make a point. I believe it's a step into the right direction, but it definitely will need updating moving forward as we learn more about the nature of startups. [0]http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even http://www.economist.com/news/briefing/21697845-gross-domest... (as only one quick example)