Polly Want a Dividend?

Many of you might have already heard this story. Keith Olbermann included it one night in his program and several news outlets have carried it. AFP reported that a Korean researcher has compared the performance of a parrot by the name of Ddalgi, which translates as “strawberry,” with the performance of ten investors in choosing stocks to invest in. The human investors had free reign to pick any stocks they wanted while Ddalgi would use her beak to randomly pick blue balls that each represented a major corporation. Each investor started out with 60 million imaginary Won (which is the equivalent of $48,380).

The results were that Ddalgi beat all but two of the investors hands down. One human had a return of 64.4% and another human investor had a return of 21.4%. Ddalgi, because of simple random chance, came in third with a return of 13.7% from her investments. The other investors performed so poorly that the humans overall averaged a loss of 4.6%.

One might be inclined to assume that the reason that most of the humans performed so poorly compared to the parrot was that the researchers had the bad luck of picking some really bad investors to participate. But this was not the first study to show an illogic to the financial system.

Numerous studies have shown that the weather affects the volatility of the stock market. One such study was done by the Kurtz Chair in Finance at Ohio State University's Fisher College of Business, David Hirshleifer, along with Tyler Shumway, assistant professor of finance at the University of Michigan. In this study they compared the daily returns of the leading stock exchange in 26 countries over a 15-year period starting from 1982 until 1997 with the average cloud cover for those cities using data from the US government.

What they found was that when the weather was sunnier in those cities the stock market returns were higher. When the weather was cloudy the returns were lower. When they combined all of the cities data together the result was even a greater collation between weather and returns than it was when each city was taken individually.

So what can we learn from the parrot Ddalgi and the various weather studies? The lesson is that the claim that private investment is logical and that it’s necessary for efficient production is a myth. Private investment is nothing but a mechanism by which capitalists retain control over the means of production and redistributes wealth from the workers to themselves.

It’s time to replace private investment with social investment.