One Stock's Unbalanced Sway over the Dow Jones Industrial Average. (Not every stock in the average is average)

On Friday, April 25, 2014, the Dow Jones Industrial Average fell 140 points.  In this era of large market swings, that's no longer considered to be a huge move, but it's enough to draw notice.

The interesting thing about that big decline is that nearly half of the movement on that day can be attributed to a drop in just one of the thirty stocks which comprise the average, VISA (V). In fact, on that day, eight of the stocks in the average, more than one quarter of them, actually increased in price, and the aggregate price changes of the other 29 companies would have caused the Dow to drop by only 73 points. VISA made the difference between just a run-of-the-mill down day and the perception of a bad day.

How can that be? How can one stock have such a huge impact on the average, the benchmark that most news outlets use as their benchmark for the entire market?

The answer lies in the way that the average is calculated. The Dow Jones Industrial Average is a simple average. It is not weighted for prices or market capitalization like the NASDAQ average is. The simple calculation methodology means that equal percentage moves in various stocks have disparate impact on the average, based on the price of the stock, which we'll see in a moment.

First, let's look at how the average is calculated. Back in 1896, when Charles Dow created the average which still bears his name, he simply added up the prices of thirty large industrial stocks of the era and then divided by thirty. It is exactly the way we all learned to calculate averages in elementary school (statisticians call this an "arithmetic mean."), and it had the same flaws when Dow first published it as it does today, that more expensive stocks impact movement in the average more than cheaper securities do, but, again, we'll get to that in a moment.

While Dow started out dividing by thirty, as time passed, that divisor had to change. In order to maintain consistency of the number for comparability over time the divisor had to be adjusted to allow for things like stock splits and changing of component stocks in the average. For example, say that one of the companies in Dow's original list underwent a four-for-one stock split, reducing its share price from $120 to $30. This would cause the sum of the prices of the thirty stocks to be $90 less than it was pre-split. If Dow had continued to divide the sum of the prices of his stocks by 30 was maintained, then his average would have fallen by three points even though no wealth been lost by any investor. In order to make sure that values from Dow's average were comparable from one day to the next, he had adjust the divisor, in this example, from 30 down to 28.8 in order to make sure that his average was consistent.

In a similar manner, changes in the company composition of the average also caused the divisor to change. Replace a low-priced company with a more expensive company, and the divisor must be increased; replace an expensive stock with a cheaper one, and the divisor decreases. Over the past 100 years, the predominant trend of the changes has been to decrease the divisor, mostly due to stock splits, to the point that the divisor eventually (in 1986) fell to near one, and then declined below it. The current divisor, as of April 25, 2014, is 0.155715905, which means that every one dollar change in any of the Dow Stocks cause the average to move by 6.42 points (1 / 0.155715905).

And that's how we get the imbalance. Take a look at the thirty stocks which currently comprise the DJIA, along with their closing prices on April 25 and the day's change for each, represented in terms of dollars and a percentage:

		Close	Change	Pct
AXP	American Express Co	87.03	-0.38	-0.4366%
BA	Boeing Co	128.66	-1.20	-0.9327%
CAT	Caterpillar Inc	104.69	-0.59	-0.5636%
CSCO	Cisco Systems Inc	23.00	-0.33	-1.4348%
CVX	Chevron Corp	123.99	-0.31	-0.2500%
DD	E I du Pont de Nemours and Co	66.66	-0.45	-0.6751%
DIS	Walt Disney Co	78.23	-1.36	-1.7385%
GE	General Electric Co	26.60	0.14	0.5263%
GS	Goldman Sachs Group Inc	158.24	-2.61	-1.6494%
HD	Home Depot Inc	79.38	-0.39	-0.4913%
IBM	International Business Machines Co...	189.63	-0.59	-0.3111%
INTC	Intel Corp	26.26	-0.49	-1.8660%
JNJ	Johnson & Johnson	99.79	-0.17	-0.1704%
JPM	JPMorgan Chase and Co	55.70	-0.49	-0.8797%
KO	The Coca-Cola Co	41.01	0.31	0.7559%
MCD	McDonald's Corp	100.73	0.89	0.8836%
MMM	3M Co	136.56	-0.09	-0.0659%
MRK	Merck & Co Inc	57.24	-0.29	-0.5066%
MSFT	Microsoft Corp	39.91	0.05	0.1253%
NKE	Nike Inc	72.70	-0.69	-0.9491%
PFE	Pfizer Inc	30.75	0.04	0.1301%
PG	Procter & Gamble Co	81.41	0.26	0.3194%
T	AT&T Inc	34.49	-0.01	-0.0290%
TRV	Travelers Companies Inc	88.31	-0.28	-0.3171%
UNH	UnitedHealth Group Inc	75.66	-0.93	-1.2292%
UTX	United Technologies Corp	117.21	-1.77	-1.5101%
V	Visa Inc	198.93	-10.47	-5.2632%
VZ	Verizon Communications Inc	45.94	-0.34	-0.7401%
WMT	Wal-Mart Stores Inc	78.62	0.31	0.3943%
XOM	Exxon Mobil Corp	100.41	0.40	0.3984%
		2547.74	-21.83	-0.8568%

Note that VISA is the most expensive stock in the list, nearly $200 per share (three years ago, I owned VISA, and sold it for $88 per share when I got spooked, but that's another story).  VISA shares declined over $10, which was over 5% of VISA's value.  That $10.47 change, when divided by the current Dow divisor, means that this stock had an impact on the average of -67.24 points.

Now, say for example that Cisco Systems (CSCO) had suffered a decline of the same magnitude as VISA's plummet.  Cisco's stock would have fallen $1.23, from its opening price of 23.33 down to $22.10.  But, the same divisor calculation means that the Dow Jones average would have fallen only 7.89 points.  Cisco's shareholders would have endured a financial loss of 5.26% in the value of value of their position, identical to the pain suffered by VISA's shareholders on Friday, but Cisco's pain would have barely dented the Dow Jones average.

Today was a very blessed day.

First, we were fortunate to experience the review of nearly 900 new sailors after completion of their hellish basic training. It was truly inspiring to see a room full of young people, every one of whom appears to be much more focused and determined than I was at that age. The ceremony itself was beyond moving, packed with patriotism, the traditions of our 225 year old Navy, and disciplined sailors who were just kids when they began back in July, but who are now ready to serve and defend us.

As the review ended, there was a mad scramble inside that cavernous drill hall as families and sailors rushed toward each other. I found Patrick very quickly and wrapped my arms around him to deliver the biggest hug I've ever given him. Then we found MaryKay, who temporarily had been lost in the crush, and she held her baby boy like she would never let go.

Tomorrow, Patrick flies to Pensacola to continue his journey, but today we were rewarded with eight hours of time to spend with our son. It was the first time to enjoy his company since he was inducted and likely will be the only opportunity until next spring. It was so impressive to see how much he has grown and the incredible maturity he displays. Truly, God has blessed us with a very special young man!

We attended a baseball game in a stadium we've always wanted to visit, swapping stories and catching up on all that has transpired over the past two months. Patrick wore his Navy whites, and all afternoon, everywhere we went, at Wrigley Field, along the street, even while riding the Ell, strangers and passersby came up and said "Thank you for your service." It happened at least a hundred times over the course of those eight hours.

As the afternoon waned, we delivered him back to the base, and he showed us around some of the places on that installation that he has called home for the past nine weeks. Afterward came the toughest part of the whole trip as Patrick's liberty came to an end, and we were forced to exchange goodbyes once again. I gave Patrick another bear hug, and then MaryKay wrapped her arms around him while holding back her tears. Afterward, he walked away to find his mates and return to his barracks, and we got in the car and left the base.

I'm not always emotional, but this day has been one of the most uplifting days of my entire life! I was giddy with anticipation (dare I say "teary?") as I watched the units march into the drill hall this morning. I was overcome with joy when I finally got to hold him. I was beyond proud as I marvelled at what a great young man he is. I'll admit that it was tough to say goodbye tonight, but having him for an afternoon and having to say goodbye was preferable to not seeing him at all. My little boy is a man.


It was a very blessed day.

(Written on Friday, September 20, 2013)

Comparing the Routes of the Deseret News Classic

I've been running the 10K on Pioneer Day for over a decade.  Since I'm not a fan of the marathon course, my only option has been to run the 10k.

..Okay, before I get started, maybe I should backtrack.

This year, the races on Pioneer Day got a new name, the Deseret News Classic.  Last year, in 2012, they were called the Deseret News Marathon Race Series.  A few years before that, they just called it the Deseret News Marathon, even though they offered a 10K and a 5k untimed run.

For simplicity sake, I've always just called it the Pioneer Day run.

What is Pioneer Day?

Pioneer Day is a legal holiday in Utah.  Banks are closed and state government is closed, but it's not just a bank/government-only holiday; lots of people (including me) get the day off.  There are fireworks shows at night and parades in many cities around the state.  The largest parade is the Days of '47 Parade in Salt Lake City, and it happens to be the third largest parade in the country (it also plays a role in the race, as we'll discover in a few paragraphs).

Pioneer Day is celebrated on July 24 every year, and it commemorates the arrival of the Mormon pioneers in the Salt Lake Valley on July 24, 1847.

The Half Marathon route is the only one of the courses which passes directly in front of the This is the Place Monument, which commemorates the arrival of the Mormon Pioneers on July 24, 1847.  It's a good reminder of why we celebrate Pioneer Day in the first place.

The 10K Route

For years, the only two timed races offered on July 24 were the marathon and a 10K.  I must admit that I really love this 10K course.  The route starts at Research Park, up by the University of Utah.  It runs down to Foothill Blvd. and then westward past Rice-Eccles Stadium to 13th East.  After that, it proceeds up to South Temple.  The next section, almost two miles, is a on a downhill slope on South Temple, a pleasant tree-lined avenue lined with stately homes (including Utah's governor's mansion).

The final two miles of the 10K route are the best:  it traces straight down the parade route, on 2nd East and then 9th South to Liberty Park.  The street is lines with thousands of people, many of whom have camped out overnight, who cheer on the runners as they wend their way to the finish.  It makes for a very enjoyable run, and I've made it part of my July 24 tradition since 2002.

The view of the 10K route at the top of the parade route.  The view here is southbound on 2nd East from South Temple.  Crowds line both sides of the street for the entire distance, two miles from this point to the finish line at Liberty Park, on 9th South at 6th East. 

The Marathon Route

For anyone who desired to run longer than a 10K, the only alternative, before this year, has been the marathon.  My wife has run this marathon, but I never have.  There are two things that I don't like about this marathon course.

First, is the long climb near the beginning of the course uphill to Little Mountain Summit, at the top of Emigration Canyon.  Second, it's the fact that marathon runners, other than the elite runners who can complete the race in under three hours, do not get to run down the parade route. Nope, because the parade begins at 9:00, ordinary marathoners, like me, are forced to run one block to the east, on 3rd East.  It spoils the magic of running on Pioneer Day!

So, I have always stuck with the 10K.

Finally, a Half!

This year, 2013, for the first time, the Deseret News added a new race to the program:  a half marathon. When I looked at the course, it had all of the plusses of the 10K route and none of the drawbacks of the marathon.  To wit:  the half marathon began about a mile shy of Little Mountain Summit -- on the Salt Lake side -- so there was no uphill.  The first six miles were downhill running in the canyon until emerging at the Hogle Zoo.  The last six miles traced the 10K route, parade route and all.

The half marathon course also eliminates the additional leg that the marathon route has, turning south at Hogle Zoo and hugging the bench before joining Foothill Blvd near the mouth of Parleys Canyon, and then turning back toward downtown Salt Lake City. That jog in the route has the psychological impact of heading in the opposite direction from the finish line in those crucial, depressing mid-teen miles.  Again, the route of the half spares runners from this.

After looking at the route, I knew immediately that I would sign up for the half!

Utah's Governor's Mansion is one of the sights along South Temple.  All three races pass in front of here, at 6th East.

Maps

This page contains maps of all the races
http://deseretnewsclassic.com/about/course-maps/

Did the Half Marathon Hurt the Pioneer Day Run?

2013 marked the first time that the Deseret News Classic offered a half marathon.  In prior years, the only choices for a timed run were a 10K or a full marathon.  The addition of a half to the program filled a big gap in distance options.

The thing that I wondered was this:  what was the impact on the other races caused by the addition of the new race?

Number of Finishers

Year	Full Marathon	Half	10K		Total
2009	493		2264		2757
2010	564		2343		2907
2011	500		1839		2339
2012	544		1944		2488
2013	428	903	1151		2482

The total number of finishers in the three races this year was 2,482. While, that number is a far cry from the nearly 3,000 finishers back in 2010, it's almost identical to the number from last year, 2,488, and almost 150 more than the number of finishers from 2011.

I don't know what caused the big drop-off after 2010, but it looks like it all came out of the 10K race. The addition of the Half this year seems to have taken another big bite out of the 10K, but remember that they charge $20 extra for the half marathon, so this was an enhancement to revenue.

Of course, the new race brings a new demand for busses to the start line that wasn't needed for the 10k because 10K runners park at the starting line in Research Park. Also, I'm sure the longer course necessitates higher expenses such as additional police presence to block intersections. (although, there was less than a mile of the Half Marathon course that was already a part of either the full marathon course or 10K course or both.)

My source for the number of finishers are the race results found on this page: http://deseretnewsclassic.com/about/results-2/

Hiking in the Albion Basin (aka Alta Ski Area)

I love Alta!  It's my favorite resort for skiing.  Maybe I'm a snob and I like Alta because they don't allow snowboarders. Maybe it's because Alta (like Brighton) is still very affordable.  Or, maybe is just because it is such a pretty spot.

Even though it's July, yesterday, my wife and I trekked up to the top of Little Cottonwood Canyon for a trip to Alta, but this time, instead of bringing ski boots we donned hiking boots.  Even in the summertime, Alta is a very pretty spot!  We hiked from the the Albion Basin Campground, which is located right near the top of the Sunnyside Lift up to Cecret Lake, which is midway up the Sugarloaf Lift, off to the left, as you're ascending. The hike is about a mile each way, and the trail gains only about 500 feet in elevation, which makes it a popular hike for families with young children.

To give some perspective, I've taken an Alta trail map and drawn a couple lines to indicate the locations of the road to the the Albion Basin campground and the Cecret Lake Trail.  (I know it's bigger than my layout, but I thought it was important to leave it large so that you can read it.)

The Albion Basin campground is located very near the top of the Sunnyside Lift.  When you come off the lift, you are headed directly toward the campground.  Although it's possible to ski off to the left, most people ski down and then turn to the right.  There is an out of bounds fence located at the bottom where skiers make the turn onto the Dispy Doodle run to head toward Alf's Mountainside Chalet and the Cecret and Sugarloaf Lifts.  The campground is just beyond this fence.

To get here, drive past the main base of the Alta Ski Area.  The road climbs around the eastern side of the resort, touching the Patsy Marley run on the switchbacks on the way up.  The road traces the Crooked Mile run near the top of the Albion Lift, curving under the Sunnyside Lift near the Catherine Pass parking lot (one of two parking lots on this road).  

The road continues another half mile, looping around the Sunnyside Lift before arriving at the Albion Basin campground. There is a parking lot at the campground that is available for day use hikers (you don't have to pay the camping fee to park there).  There are pit toilets at the parking lot, and from there, you can see the base of the Supreme Lift.

One more note about parking.  Parking is limited, and on busy days, the Alta township sets up an information booth in front of the ski area.  They stop traffic on the road and tell people that the parking lots are full and recommend  that people ride the free shuttle shuttle.  There is no parking permitted along the road outside of the two parking lots.  I just told the information people that I intended to drive up the road to the campground and then turn around and come back down, so that they would let me continue; once I arrived at the parking lot, I had no trouble finding a spot.  Of course, the irony is that if the township hadn't been funneling so many people onto the shuttle, then I likely would not have found a place to park!

It's a short hike.  It took my wife and me only twenty to reach Cecret Lake.

Continuing up the trail, you pass under the Cecret Lift, near the top.

Gorgeous wildflowers fill a meadow with solid wall of Devil's Castle towering in the distance

Nearing the top, skiers at Alta know this area as the Razorback run

Larkspur on the short of Cecret Lake

The reward at the top of the trail:  Cecret Lake

Looking down from near the top of the Cecret Lake Trail toward the Sunnyside Lift.  The Albion Basin Campground is just out of the view of this photo to the right.

Memorial Hill

Yesterday, I stumbled across a site in Utah that I've never heard of before.  I've lived here for eighteen years and have driven to just about every place in the state, but yesterday, while I was up taking pictures in the Heber Valley, I spotted a mountain in Midway with a bunch of flags on top of it.

"What is that?" I wondered aloud.  I turned the car around and headed toward it.  Within a couple minutes, I had arrived at this entryway.

I was intrigued, so I entered.  I didn't see signs mentioning an entry fee, only this sign, which only piqued my curiosity:

The drive up mountain is a dirt road which caracoles three full times before reaching the top.  On the summit, I was greeted by a line of five flag poles, each flying the standard of one of the branches of our nation's military.

From right to left: The flags of the US Navy, The US Army, The US Marine Corps, The US Coast Guard, and The US Air Force.  The view is toward the north.

At the center of the hill, is another flag pole with an American flag and the Utah flag, standing guard over a central monument which contains plaques highlighting the names of residents of Wasatch County who have served.

At the south end of the monument is this memorial, which I believe was called "The Last Watch."



















Aside from the monument, the views from atop the hill are phenomenal, with expansive, picturesque vistas over Midway toward Deer Creek Reservoir, and across fields to Heber City.

Looking east toward Heber City

Looking south over Midway with Deer Creek Reservoir in the background

On the afternoon I was up here, a Saturday in July, I had the entire mountaintop to myself.

Since, I had never heard of this place, once I got home, I did a little research, to try and find out who was responsible for this special place.  It turns out the the site is now owned by Wasatch County, but it was originally privately funded.  This website has some good details:

http://memorialhillrestoration.com

If you are in Midway, this place is worth a quick stop.  It's located only 1/2 mile off Highway 113, which is the main road  from Heber into Midway.

View Larger Map

When Does a Parent Stop Worrying About the Kids?

Maybe I was naïve, but once upon a time I thought that when my kids turned 18 and graduated from high school that my worries as a parent would be over.  After all, I remember when I was was 18, I went wherever I wanted and stayed out as late as I wanted.

My parents must have had nerves of steel, because now I know that a parent never stops worrying.  The only thing that changes when a child turns 18 is that the parent loses the ability to say "No."  The child can pretty much do whatever, and the parent simply has to hope that the prior 18 years of parenting have taken root.

Patrick heading off to San Diego this morning

Today, our son and seven of his friends piled into two cars and headed off for ten days in San Diego.  Eight freshly minted high school graduates, driving 750 miles away, with no chaperons and no parents, for ten days.  

Of course, when I was 18, I was mature, as all 18-year-olds think they are.  Now, being almost 50, I know better.  Patrick, too, won't know how much he didn't know at age 18 until he's in his forties, too.  That's just the way it is.