explain xkcd - User contributions [en]

2270: Picking Bad Stocks

2023-10-01T03:10:33Z

Besenj: Removed superfluous apostrophe.

{{comic
| number = 2270
| date = February 19, 2020
| title = Picking Bad Stocks
| image = picking_bad_stocks.png
| titletext = On the news a few days later: "Buzz is building around the so-called 'camping Roomba' after a big investment. Preorders have spiked, and..."
}}

==Explanation==

In simplest terms, the stock market is a system by which private investors (including individual) can invest in companies by purchasing shares of stock, which can pay dividends, based on the company's net profits, and which rise in value if a company is doing well or is expected to do well in the future. Like many laymen, [[Cueball]] apparently understands the concept of the stock market, but is mystified by the complex strategies and vehicles for investment. He asks [[Ponytail]] if he can just "open up a website, and a pick a company you like." In fact, in modern times, it's quite easy for individuals to set up online brokerage accounts with relatively small investments, and buy any available stocks they like.

Ponytail then adds that there's a lot of evidence suggesting that no investment strategy consistently outperforms the market. This is significant, because there's an entire industry of "fund management", in which (often highly paid) financial experts determine how clients' money should be invested. The notion is that such managers, being particularly educated and informed on both general economic conditions and the state of specific companies, should be able to select companies that are more likely to do well and avoid those which will do poorly. However, history shows that stock markets in most advance economies tend to rise over time, which means that most stocks are more likely to go up in value, rather than down. Simply choosing more stocks that go up in value than down is relatively trivial, in order to be valuable, a fund needs to "beat the market", meaning that it appreciates in value more than the entire body of stocks do.

As Ponytail points out, however, there is little evidence that these funds provide much value in the long term. Many studies, such as the long-running "[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=670404 Investment Dartboard Contest]" run by ''{{w|The Wall Street Journal}}'', have found that an index of stocks that represent the total market is likely to produce returns just as favorable as an expert. This means a large enough set of randomly-selected stocks (often colloquially stated as "picked by a monkey") is likely to do the same, as it's likely to represent the entire market. The reasons for this are much debated. A lot of the value of stocks is based on perception and speculation about the future, and so exhibits a great deal of unpredictable and quasi-random behavior. And any objective information about a company's health tends to shift the prices very quickly, so the typical investor can't really take advantage of those. While a fund might have periods of significantly market-beating performance, those are generally balanced out by periods of bad luck.

Ponytail then points out an interesting corollary. If movements of the stock market are effectively random, then it's just as hard to consistently ''lose'' money by investing as it is to consistently gain money. The reason is that consistently losing money would require a person to be able to consistently identify stocks that are likely to decline in value. The ability to do that would be very valuable, because the more bad stocks you can remove from your portfolio, the higher percentage of good stocks you'll have left.

Cueball's immediate response is that he's sure can pick money-losing stocks. The final panel suggests that he's teamed up with [[Megan]] and [[White Hat]] to do exactly that, selecting stocks based on absurd reasons, while the others watch from a distance, and cull his suggested stocks from their portfolio, rather than investing in them.

In real life, this strategy would be unlikely to work, for the exact reasons Ponytail laid out: the trends of individual stocks are too complex and random to predict, so good or bad decision making won't consistently stray from market returns.

In this example, the disturbing news about these companies (such as their CEO exhibiting erratic behavior, or developing an apparently useless product) is already public, and will presumably have been "priced in" to the market. This means that the stock price will have already dropped as much as it's expected to by most investors. At the same time, individual pieces of bad news don't necessarily mean the company will fail. If the CEO's eccentricities start to impact earnings, they'll probably be replaced. An ill-conceived product may indicate poor management, or it may be a one-off, and other product lines can keep the company profitable. As a result, dropping such companies after bad news, when the stock price is likely to be low, is unlikely to be a winning strategy.

In the title-text, another reason why it's difficult to pick bad stocks is highlighted. Due to a big investment (very possibly, Cueball's investment), the company in question has gotten a lot of attention and a spike in pre-orders. This emphasizes the unpredictability of the markets. People often invest (and even order) based on perception as much as on actual value, and so a company that might seem in trouble might see its fortunes turn around quickly. Because such things are so difficult to predict, beating the market is nearly impossible over time.

==Transcript==

[Cueball and Ponytail are walking together.]
:Cueball: I feel like by now I should know about the stock market.
:Cueball: What ''is'' investing? Do you just open a website and pick the companies you like?

[Cueball and Ponytail are still walking; Ponytail is holding out her hand palm-up.]
:Ponytail: Well, you totally can.
:Ponytail: But there's a lot of evidence that no investing strategy consistently picks stocks that outperform the average of the whole market. A lot of fund management is a myth.

[Close-up on Ponytail, who has turned to Cueball.]
:Cueball (off-screen): Huh, okay.
:Ponytail: But there's a weird corollary to that idea: it implies that, ignoring fees and stuff, it's just as hard to consistently ''lose'' money by picking ''bad'' stocks from an index.

[Cueball and Ponytail are both back in frame. They are standing still and facing each other.]
:Ponytail: If someone could consistently buy bad stocks, you could beat the average by hiring them, letting them pretend to invest, then buying every stock ''except'' the ones they pick.
:Ponytail: In a way, bad judgement is just as helpful as good judgement.

[In a frameless panel, Cueball and Ponytail are standing facing each other; Cueball is raising his hands.]
:Cueball: Oh my God.
:Cueball: I can do that!
:Ponytail: No, it's just an example--
:Cueball: This is the job I was born for.

[Cueball is either sitting in a box or being viewed on a camera screen. He is sitting in front of a computer console, and a camera is pointed at him. Megan and White Hat are viewing him, and White Hat is holding a tablet.]
:[Text box: Soon...]
:Cueball: Hey, this company's CEO wants revenge on the same ghost as me! I'm buying!
:Cueball: Ooh, and this one is planning to develop a "Camping Roomba." That's a sure bet!
:Megan: Drop companies #208 and #1434 from the index.
:White Hat: Done.

{{comic discussion}}
[[Category:Comics featuring Cueball]]
[[Category:Comics featuring Ponytail]]
[[Category:Comics featuring Megan]]
[[Category:Comics featuring White Hat]]
[[Category:Roomba]]
[[Category:Stock Market]]

2410: Apple Growers

2023-10-01T01:46:41Z

Besenj: Added date.

{{comic
| number = 2410
| date = January 11, 2021
| title = Apple Growers
| image = apple_growers.png
| titletext = Hopefully in a couple of weeks we'll be able to resume our apple-focused updates, because we have SO MUCH to say about Cosmic Crisp.
}}

==Explanation==
On January 6, 2021, a group of supporters of President [[Donald Trump]] {{w|2021 storming of the United States Capitol|stormed the United States Capitol}} while Congress was in session to certify the results of the {{w|2020 United_States_presidential_election|2020 election}}, in which President Trump lost a bid for re-election. The attack resulted in an evacuation of Congress, a disruption of the operations of the legislature, and the deaths of several people. While Trump was not directly involved with the riot, he has been accused of contributing to it by consistently refusing to accept the election results, claiming that his opponent's victory was fraudulent, and using inflammatory rhetoric when speaking to his supporters. As a result, officials from both major political parties have called upon Trump to resign, and other avenues to remove him from office have been proposed. At the time of publication, Trump's second impeachment had been mooted but it, and all other events that followed, had not yet happened.

Normal American life, already strained under the [[:Category:COVID-19|COVID-19 pandemic]], was dealt another blow by the conflict. Normally planned events continue to be held, but the shadow of current events impacts everything. This comic depicts one such event, a news conference hosted by the State Apple Growers (of an unspecified state). This group apparently had a scheduled meeting to discuss apple variety standards, but their meeting was instead dominated by discussions of events in government, resulting in them issuing a formal statement calling upon President Trump to resign. This statement obviously has nothing to do with apples,{{Citation needed}} and when pressed, the spokesperson makes generic statements in favor of apples, but points out that they're too distracted by more urgent matters to focus on their normal jobs.

This strip appears to be based on a number of private companies and other organizations without specific political missions, which nonetheless felt the need to respond to the event. Famously, both {{w|Twitter}} and {{w|Facebook}} banned the president from their platforms in the aftermath. The events of the strip are reminiscent of {{w|Signature Bank}} and the {{w|National Association of Manufacturers}} calling on Trump to resign. [https://www.axios.com/business-donations-capitol-riot-0b4e26df-ee16-4d5c-9604-e9a3c1e3f284.html Many national brands] released statements of condemnation and announced plans to cut political contributions for legislators who voted against certification of the election results. The joke appears to be that even small and local organizations feel compelled to weigh in on an issue of this significance, even though their influence in the matter is likely minimal. {{w|Cosmic Crisp}}, mentioned in title text, is a variety of apples developed in the Washington State University that has been on sale since 2019, amid a large marketing campaign. The implication of the title text is that the people involved ''are'' in fact, very interested in and concerned with details of apple cultivation and marketing, and hope to return to a state in which they they can focus on those. But the more immediate draw of events makes it difficult to focus on what they usually like to talk about.

[[Beret Guy]] is shown to be a member of the State Apple Growers' Association; in [[2209: Fresh Pears]], he sells "fresh pears" (so fresh, he doesn't even plant seeds until a customer pays for one) and expresses an interest in growing apples, and evidently has either figured out robotic grafting or chosen another approach (or maybe, given his usual eccentricity, he is only a member of the Association as an ''aspiring'' apple grower). This is one of very few comics with [[Beret Guy]] where he is not really doing anything, although this is also a weird turn of events that the Apple Growers discuss Trump. However, usually Beret Guy is not interested in real-life problems.

==Transcript==
:[Beret Guy and Cueball stand on either side of Megan with her hair unkempt. They stand behind a lectern with an image of an apple on the front of it. Unreadable text is written on both side of the apple in two rows.]
:Megan: *Ahem*
:Megan: The state apple-growers' association has decided to formally call on President Donald Trump to resign.

:[A wider shot shows Beret Guy, Megan, and Cueball on a podium behind the lectern. The visible audience consist of a Cueball-like guy, Hairy, and Ponytail, who is holding a microphone to her mouth as she addresses those on the podium.]
:Ponytail: Weren't you meeting to update the standards for new apple varieties?
:Megan: Yes, but we talked it over and this is what we decided.
:Megan: We feel strongly that this is important.

:[There is a narrow shot with a zoom in on Megan.]
:Ponytail (off-panel): Did you discuss anything on your actual agenda?
:Megan: Thanks for the question!
:Megan: We did not.

:[Beret Guy, Cueball and Megan is again seen from the front behind the lectern, Megan's hair even more unkempt.]
:Ponytail (off-panel): Do you have any apple-related announcements at all?
:Megan: Uh, apples are great. Best fruit. Everyone should buy 1,000 of them.
:Megan: '''''We're a little distracted right now, okay??'''''

{{comic discussion}}

[[Category:Comics featuring Beret Guy]]
[[Category:Comics featuring Hairy]]
[[Category:Comics featuring Megan]]
[[Category:Comics featuring Ponytail]]
[[Category:Comics featuring Donald Trump]]
[[Category:Comics featuring politicians]]
[[Category:Multiple Cueballs]]
[[Category:Food]]
[[Category:Politics]]
[[Category:Public speaking]]

2626: d65536

2023-09-09T21:19:52Z

Besenj: /* Explanation */ Added trapezohedra as exception case

{{comic
| number = 2626
| date = May 30, 2022
| title = d65536
| image = d65536.png
| titletext = They're robust against quantum attacks because it's hard to make a quantum system that large.
}}

==Explanation==
In binary computing, 16 bit unsigned numbers range from 0 to 65535, for a total of 65536 unique numbers, a number which is hence well-known to software engineers. Generating large numbers in a manner that is truly random is a recurring problem in cryptography, required to send private messages to another party. People today still use dierolls to generate private random numbers.

In role-playing games (and occasionally in other tabletop games), multiple shapes of dice are often used to generate random numbers in specific ranges. By convention, these are referred to as d''n'' according to their number of faces. A traditional six-faced die would be a d6, and many popular pen-and-paper role-playing games use dice ranging between d4 and d20. While there are larger dice used in tabletop games (most commonly d100), these are usually split into multiple smaller ones. For example, a d100 is often two d10s rolled together, with one die providing the first digit and the other die giving the second digit — the total number of possible combinations (100) is the product of the number of faces of the two dice (10 * 10). While "real" {{w|Zocchihedron|d100s}} and other large-numbered dice do exist, most people consider them to be impractical: they need to be either impractically large or have very small faces (resulting in small print for the numbers), they're close enough to being spheres that it's difficult to get them into a stable resting position, and even if they are stationary, determining which face is "on top" is difficult to do by eye. The Zocchihedron (d100) die is also difficult to ensure as unbiased because of geometry requiring dissimilar faces and therefore a different mixture of 'stopping factors' for each face it could land upon. The largest unbiased die is a [https://en.wikipedia.org/wiki/Disdyakis_triacontahedron d120] (excluding the bipyramids and trapezohedra, which can theoretically be made with arbitrarily many sides), so it is very likely that [[Cueball|Cueball's]] d65536 die is also biased.

Here, Cueball has constructed a d65536 for generating random 16 bit numbers. It may have solved the problem of generating large random numbers with fewer die rolls, but it magnifies all of the problems with large-numbered dice to ludicrous extremes. In order for the faces to be readable, the die is ridiculously huge, dwarfing the human standing next to it. Rolling such a die is not only physically challenging, but it would also need a huge space in which to roll if the result is to be random, and that space would need to have an extremely flat and rigid surface in order for the die to come to rest. And even if those problems were solved, simply getting to a vantage point to see the top of the die would be a major challenge, and determining which number was truly on top would be near impossible to do by eye. If one really wished to use dice, it would be much easier to simply use multiple dice rolls. For instance, one could roll eight d4 dice (or use 16 coin flips), and convert the result into binary. This has the same randomness as a single die roll{{fact}}, but can take much longer, so people do purchase d16s to simplify it and speed it up.

The closest regular shape similar to the depicted in the comic could be a {{w|Goldberg polyhedron}}. However, no such polyhedron exists with exactly 65536 hexagonal faces. The closest Goldberg Polyhedron has a mixture of 65520 hexagons and 12 pentagons, totaling 65532 faces. It is possible to construct a fair die without a matching regular shape by limiting the sides which it could land on and designing those sides to be fair (for instance, a prism with rectangular facets that extend its entire length, and rounded ends to ensure it doesn't balance on end).

The title text references how cryptographic systems (especially RSA and other factoring-is-hard based systems) are vulnerable to quantum attacks as quantum computing technology develops. The title text is essentially punning on the idea of a "large" quantum system. "Large" in the quantum computing sense would be on the order of 64 qubits each of which would be an atom or two at most. This would still be microscopic and will never be as large as the giant die the comic is centered on; but for a well-observed environment and human rolling without sufficient entropy (consider somebody obsessed with a certain number dropping the die on something soft), a conventional computer could predict some rolls. See also [[538]] for non-mathematical paths of cryptography.

Since 65536 is 2^16, if for some reason you must simulate a D65536 using nothing but D&D dice, the most efficient method is to roll a D8 4 times and roll a D4 twice (2^(3×4) · 2^(2×2)), or roll a D8 5 times and toss a coin (2^(3×5) × 2).

==Transcript==
:[A large sphere with a several lines, and in some places grids, are shown. Cueball, standing next to it, is dwarfed by its size, as it is at least seven times as tall as he is. The sphere has many lines following various great circles or parallel lesser circles around the curve of the sphere, and some patches of cross hatching to suggest further texturing along these lines hovering just below the degree of most of the illustrative detailing. The lines and grids cover the sphere in three layers of parallel axes, angled sixty degrees from each other, implying a huge mesh of equilateral triangles or hexagons. In the top right part of the ball is a black circle. An arrow points to this circle, and the end of the arrow goes to a larger circle that partly obscures the rightmost part of the sphere. The circle shows a zoom in on the surface in the black circle on the sphere. The zoom shows a small portion of the sphere's surface, showing that the grid comes along because the sphere is divided into elongated hexagonal faces with numbers up to at least five-digits. Seven numbers can be fully seen, but there are nine other faces partly shown, five of these with part of their numbers visible, one of these clearly only have four digits. One of the empty faces must also have a number with only 1-3 digits, as no numbers are visible although a significant part of the face is visible.]

:[Here follows the numbers in the zoomed in part of the sphere, with "..." represents numbers being cut off. The numbers are read in lines left to right, even though the numbers are tilted from down towards the right, which could have suggested a different reading order.]
:30827
:16[bottom part of a cut-off line][small cut-off circle]
:...38
:11875
:25444
:...[top part of a cut-off line]5
:12082
:28525
:3 [left part of a cut-off line]...
:13359
:13874
:[Two cut-off lines, likely the start of the number 2]...

:[Caption below the image:]
:The hardest part of securely generating random 16-bit numbers is rolling the d65536.

==Trivia==
*If a real d65536 were constructed with each number having an equal area and each printed in 12 point font, the resulting die would be about 5 feet (1.5 meters) in diameter, which isn't several times the size of a person as the comic suggests, but is still large enough to be hilariously inconvenient. If it were made out of standard acrylic, and not hollow, it would weigh about 2 tons (1700kg).
*This die would have a 0.00001526 chance of rolling a natural one (or any other number).
*There are seven 16-bit numbers fully visible in the picture: 30827, 25444, 11875, 28525, 12082, 13874 and 13359. [https://dotnetfiddle.net/fjLYZe They conceal a message.] If these numbers are split big-endian into two 8-bit ASCII characters each, the result is <code>xkcd.com/2624/</code>. For example, converting the first number 30,827 to hexadecimal (in which a four digit number covers exactly 65,536 different values) converts to a hex value of 786B. Splitting this into 78 and 6B, these are the hex ASCII codes for "x" and "k" respectively.

{{comic discussion}}

[[Category:Cryptography]]
[[Category:Comics featuring Cueball]]
[[Category:Binary]]