Nelson Complexity Index
Categories: Financial Theory
The Nelson Complexity Index, or NCI, is an index that measures the sophistication of oil refineries. Not like “Can it speak six languages and identify the vintage of this Bordeaux?” sophisticated, but more like “Can it make supremely refined, high-quality fuel products like kerosene?” sophisticated. Totally different scale.
Anyway, the index goes from 1 to 20. A refinery’s score is calculated using a complex bouquet of construction costs, secondary conversion costs, and distillation costs, but in a nutshell, the higher a refinery’s score, the more sophisticated—and therefore, more valuable—it’s seen to be.
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Finance: What is a Barometer (in a finan...3 Views
Finance a la shmoop what is a barometer you know in our financial sense well you
know what a non-financial barometer is this thingy tracks the pressure in the [A barometer appears]
air and more or less where the pressure goes well so goes the weather at 30 in
change well it's likely that the weather is mild and sunny at 27 you're thinking
about Dorothy and her little dog too... note that the barometers readings [Dorothy in a room and a witch appears by the window]
aren't a guarantee of what the weather actually is or definitely will be the
readings are just a "highly likely" indicator
well financial barometers work the same way well you pick one slice of data to [One slice of pie on the floor]
then represent a much broader slice that the whole financial world cares about
like you could sample the performance on a given day of a dozen tech stocks if
all of them went up two percent well it's likely that NASDAQ had an awesome
up 2% day how can this kind of barometer be wrong well if the sample size or data [Tech stocks stamped poorly selected]
mix was poorly selected then yeah the barometer could be really wrong like if
you only picked as your sample for the barometer 12 small biotech company
stocks on a day when the government mandated no taxes for companies in
biotech under a hundred million dollars in revenue well on that day it's likely
that the very highly weighted in the index large pharma companies actually [Share price of big pharma stocks graph]
went down because now they as high tax payers have to compete with schools of
small fish who are you know tax advantaged against them so then the
index would go down even though those 12 bio stocks went up got it so that's a
stock market barometer and there are other barometers like investors doing
channel checks with large customers of search engine marketing companies to see
how well Google is doing that quarter like what's their volume if volumes are
really high Google stock probably go up
That's a channel check or barometer for
likely outcomes of Google stock price after the announcement of their earnings [Google stock price announced on newspaper]
got it another barometer checking on the health
of the economy well an investor might cruise through the job listing services
on places like glass door or indeed note how many listings exist for
plumbers, coders and shrimp de-veiners other barometers in the financial
octagon include things like gross domestic product or GDP per capita...
that's a barometer for how well or poorly the economy is swimming along and
things like new housing starts yeah that's a barometer that's a commonly [Man discussing housing starts barometer]
reported stat and it functions to give more lines on the barometer dial that
they are mashed up with yet more data on things like on the current inflation
rate and all kinds of other things including whether or not aliens land
from Mars the before February is that a barometer must be a really powerful one...[alien spacecraft lands in city and man walks away]