The Search is On

I want to make reference to the sudden resurgence in the online search engine market that I am finding quite titillating at the moment. Within the past two weeks I have become aware of two equally impressive and significantly different search engines.

The first one that caught my eye was referred to a friend of mine who attends the University of Illinois (who is typically on the cutting edge of most technological innovations which I am continually in awe of). The website is called Scour and as the name suggests the website is a search engine that in effect “scours” the Internet combining the powers of Google, Yahoo!, and MSN. Who cares! You may think that this a show of hubris, attempting to topple Google and Yahoo! using their own technology.

Well, where Scour is slightly different is in that it pays you to search. I’m not sure of how this works exactly, but the best understanding I have of it is that you search enough times, accumulate enough points, and then they set you up with an online American Express card. Some people were weary that they didn’t ask for an address, but just because you don’t have an address doesn’t mean you can’t surf the Internet (at least these days).

There are several problems with this search engine, however, that I think will stop it from becoming the next big thing. First, the search itself is quite a lengthy process. When I say lengthy I mean it takes around 3 or 4 seconds to find the information you’re looking for. In the age of Google and Yahoo! blasting at relevant results in mere split-seconds, 3 or 4 seconds turns into an eternity very quickly. If they want to really compete with the big boys, they’re going to have to drastically lower this wait time.

Second, getting paid for search is great, but in order to reap any of the benefits you have to attain something ridiculous like 6400 points. In order to get a point you can do several things. You can search, this will result in 1 point being added to your total. So, getting to 6400 searches won’t take that long I guess, at around 20 searches a day for a year that’s an American Express card. Then again, when I look at my own Google search history (a very nice feature if you ask me), I’ve searched 4923 times in the past year. So, I suppose it is possible.

Aside from merely searching, however, you could also do two of the other options. You can vote on the relevance of your search by clicking the thumbs up or thumbs down icon. This will generate 2 points. Wow, now we’re talking. That’s going to cut my time in half in order to get that American Express card!

Another feature you’re definitely going to want to make use of if you’re on the 6400 point track is the comment section for each search result. By inputting a comment for a particular search this will yield 3 points. My goodness, this American Express card doesn’t seem so far off anymore.

I have some theories about these additional features that Scour has made use of. If you recall back to my post about Doogle, in which I explored ideas about creating the next generation search engine, I made it clear that the next generation search engine would have both the analytical capabilities of Google’s algorithm and also the compassionate understanding of humanity. The search engine must be both flawless in its approach to digging up data on the Internet, but it also has to have a human component.

I think that if Scour were smart, and the more I think about this the more I realize that they must be doing what I’m about to explain and are indeed smart, they would start compiling a database of the information that is being input into it at the moment. For instance, when someone searches “cat” using Scour, people can vote on and comment on the most relevant.

However, how often does someone actually search for something as trivial as “cat”? I’m not saying there is anything wrong with this search term, rather that searches are becoming more complex, and typing in the string, “how can I get from Memphis to Cincinnati by taking a plane and then a bus,” are probably becoming far more commonplace.

Google has excelled in simplifying search, and perhaps that is where it will find its limits. Typing in more complex strings don’t need algorithms, but rather human input to reach and arrive at an answer. At this point in our computing ability, no computer can truly answer some complex human queries in the most relevant way.

That is why I think Scour is smart to begin using everyone’s favorite search engines. Anyone who is anyone, literally almost anyone on the planet with access to the Internet, has used one of the three search engines that Scour employs. This makes people feel comfortable when they are searching. They see those happy symbols of accurate searches and feel warm on the inside.

Every time Scour gets a really complex search query and users put a thumbs up or thumbs down and comment on why the search they went to was more or less accurate, they can put another coin in the piggy-bank.

I think what they will eventually do after probably a year of compiling enough data is release another search engine that they claim to be the most accurate in the entire world, and you know what, they’re going to be right.

They’ll have both elements to the next generation search engine. Not only will their searches be faster (because it will be their own technology and draw from their own servers, etc.), but it will also be absolutely incredibly relevant, especially when it comes to asking it insanely hard questions.

I think that there is a tremendous amount of potential to Scour and they may not topple the giant that is Google and Yahoo!, but heck, I think that they’re going to give them a run for their money.

The second search engine, which I have done considerably less thinking about and know far less about is Cuil.com. Apparently it was just launched within the past couple weeks and is doing fantastically well.

From the little I know about it, it was started by someone Google Executive who started their own company with what they perceived to be a better product.

After searching on it for a little, I can see why some may perceive it to be a little better. It provides the results in a far more stylish way. The layout is a little different with three columns of search results that have pictures associated with them and a little more description than the two-liner than Google typically provides.

I have to admit, the website is fresh looking and it is fast and semi-reliable. It will probably have to work out a couple kinks in the next couple weeks if it has any chance of competing.

I also have to commend the designer of the search engine for their idea about grouping information that is relevant to a particular search term. For instance you can type in “University of Michigan” and then the results will provide you with some categories that you can look into deeper if that was perhaps what you were really referring to when you typed in “University of Michigan.”

There are several problems with this. First, it is attempting to predict what you’re searching for and I think that’s a bad strategy for search engines. People typically know what they want, they don’t want to be led down random roads where they fall into an abyss of the Internet garbage that is out there.

Second, who and how is the determination made for particular categories that certain search queries get filtered into? I don’t like people to make decisions about my search habits and Cuil.com is attempting to do this. Not clever. Not Skoda.

Here is why I think Cuil.com is just Google with a pretty dress on, except now Google is more annoying and doesn’t give you what you want.

Cuil.com has nice pictures next to their search terms and sweet descriptions. Wow, these are all wonderful features, but Ask.com tried the same technique and they haven’t move an inch after their initial marketing push to gain market share when they made their changes at first. People want simplicity when they’re searching (unless they’re searching for really complex things, in which you need a more complex search engine like Scour).

The problem with entering into the search engine market right now is that if you’re not significantly better at doing something than Google, you’re not going to be able to take any market share away from them. They have a stranglehold on search. That is because they consistently provide relevant results in a quick and timely manner. That’s a tough practice to leave.

Cuil.com does the same thing. They provide search results quickly. It just looks a little different. It doesn’t really do anything much better.

Then again, I still need to do some searching with Cuil.com, and I could be wrong about all of these things. But, I just don’t know why I would stop using Google to use Cuil.com, there isn’t really anything in it for me. I’m so comfortable with my sweet sweet Google, for me to use anything else would take something drastic (or do something far better like solve my complex search needs).

• Conclusion

Scour.com is a search engine that uses the powers of the three largest search engines on the Internet to find the most relevant search results. However, through their implementation of voting and comments they are adding a human element to search, which I believe they will direct into a future enterprise that will be unbelievably helpful when dealing with complex searches. They also pay you for your hard work, so that’s not bad.

Cuil.com is a new search engine that has a fresh look and apparently the largest database of archived Internet pages within its system of any search engine, even Google. While this is a mighty feat, the Internet was big enough as it is, and having a couple hundred million more pages doesn’t really impress me all that much. Additionally, the interface is far “fluffier” than that of Google, which I don’t think provides it with a competitive advantage of any kind.

I think that Scour.com has a huge chance of stealing a ton of “complex” search market share in the coming years. They are building the foundation at the moment. But, like most thinks that attempt to take on Google, both of these search engines will probably be eaten up and fed to one of Google’s many spiders that scour the Internet.

Nobody outsearches the Googmonster!

Simply Syntroleum

I'm a big fan of the stock market. I enjoy following its movement, the stories behind the companies, and the people involved. I'm not sure what has made me the avid stock fiend that I am today, but I thought its a combination of a love of numbers, money, and suspense. The stock market has all of these bundled into one happy little 6 and a half hour session, typically five days out of every week.

For more esteemed reasons, I enjoy partaking in the stock market because it keeps me informed as to the pulse of the American economy. The American economy is a significant, if not the most significant player in the whole world when it comes to the economy. The stock market is a barometer of where America's economy is and by virtue of its power and enormity, where the rest of the world's economy is likely to head.

These are all fascinating things. I also find the ways in which stocks are picked just marvelous. There are two particularly different trains of thought that I'm aware of. The first is fundamental analysis, in which stock brokers and institutional investors (you know, the guys who all had to writedown billions upon billions of dollars in wake of the sub-prime mortgage crisis, which I read totaled a whopping 12 trillion dollars (92% of US GDP)) look at financial data for publicly traded companies and make judgments based on the current economic climate.

They take factors like the balance sheet and income statement into account, as well as, management practices. I'm a huge proponent of looking at management practices. I believe that with the right team and suitable actors in the correct places, a capable management team can make even the most desperate company rise from the depths.

Anyway, another way to look at stocks is through the lens of technical analysis which emphasizes the stocks historical data as it relates to price and makes its judgments based on these metrics. I've always loved deciphering charts and trying to gain a further understanding of them especially for various stocks in the market.

Recently, I've become enthralled with a particular type of technical analysis called Point and Figure Charting, which you can read about on Those Answers Inc. website. The main idea behind it is that it charts the price movement of the stock in terms of supply and demand, the main driver underlying all economic thought. Simply by creating a vertical column of X's or O's, a tremendous deal of information can be gathered about the buying or selling habits of a particular stock.

Another nice feature about it is that it doesn't take time into effect, which can often distort the movement of stocks. On the surface, Point and Figure Charting may look very simple, but there is a tremendous amount to it that has fascinated me and led me to one of the best looking and most promising stocks I can see available at the moment.

• Syntroleum (SYNM)
  

According to Google Finance, "Syntroleum Corporation is engaged in developing and employing technology to produce synthetic liquid hydrocarbons that are free of contaminants normally found in conventional hydrocarbon products. Syntroleum’s Bio-Synfining Technology processes triglycerides and/or fatty acids from fats and vegetable oils with heat (thermal depolymerization), hydrogen and catalysts to make renewable synthetic fuels, such as diesel, jet fuel (subject to certification), kerosene, naphtha and propane. Syntroleum has quantified in excess of 80 different fats and oils, for conversion to synthetic fuels via the Bio-Synfining Technology, which is a flexible feedstock/flexible synthetic fuel technology."

In a nutshell, Syntroleum has developed a new and special technology that is capable of creating diesel fuel using fat. This means, that instead of using corn to make ethanol gas, which ends up hurting us either way because then it makes corn really expensive, we can use the stuff we don't even want in the first place, fat, to make fuel through this incredibly innovative and breakthrough technology.

I have never felt a stronger buy in my entire life. I first saw this stock when it was wallowing in the sub $1 range, almost being thrown off of the NASDAQ, because it just couldn't keep up with regulations. Since then it has returned in excess of 400%. It is currently at $2.24 a share and shows me no signs of slowing down whatsoever.

Let's get back to the process though. They make diesel fuel. This is spectacular for several reasons. First, the price of diesel fuel, along with petroleum, has skyrocketed recently (I believe the price of diesel fuel has actually outpaced petroleum percetage-wise). This spike in prices has begun a paradigm shift to move away from oil and to some sort of alternative energy.

Last summer, the push to alternative energy happened with solar energy. Companies like First Solar (FSLR) grew impressively. Their stock is now trading above $200, up from around $5 early last year. Different alternative energies are getting their shots, its just a matter of picking the right company. There are several other solar energy companies that did not see the massive gains that First Solar did (however, they were still sizable).

With these high oil prices and no one really knowing when they will ever come down, alternative energy, especially that which produces diesel fuel, is ripe for investing. People want to believe in an alternative energy source, and Syntroleum seems to continually have the answer.

For instance, their Bio-Synfining Technology needs fatty acids in order to occur. So, Syntroleum has recently struck a partnership with Tyson Chicken, the largest chicken farm in the World (#88 on the Fortune 500 List), to use all of their chicken fat. Not only does Syntroleum have the greatest supply of fat on the planet, but it is an unending supply.

Chicken fat, or any sort of animal fat, is completely renewable. There is no end to how much of this stuff we can use, and for the most part, there aren't many other uses for chicken or animal fat, so this takes something worthless and makes it pure profit. Pure genious really.

But heres where things really get good. Syntroleum and Tyson, their joint-venture called Dynamic Fuels LLC, just received $100 Million worth of GO Zone Bonds. GO stands for Gulf Opportunity, and is a program that was established post hurricane Katrina by the State of Louisiana. The bonds are tax exempt are meant to promote investment in the area.

In late June, Dynamic Fuels LLC was approved for $100 Million, the maximum amount paid out in the program. Their plan is to build a synthetic fuel facility in Geismar, Louisana by 2010.

This was well received by Jeff Bigger, Senior Vice President of Business Development at Syntroleum, "We thank the Bond Commission for their decision to approve this application. Their timely action enables us to maintain our project schedule, creating new domestic fuel production capacity, high-quality operations and technical jobs, with initial production planned for early 2010.”

Everything is going absolutely right for this company. What's more is that now that it's above $2, stock brokers are legally allowed by the SEC to promote this stock to investors which will drive the price up as demand increases. As the price goes up, mutual fund managers will want to add this stock to their portfolios, and several institutional investors have already added Syntroleum, Goldman Sachs, Vanguard, Scott and Stringfellow Financial, etc.

On July 22nd, 2008, Syntroleum plans on holding a conference call for investors to discuss all the positive news that has been circulating around this company of only 24 employees. They will probably make reference to the GO Zone Bonds, Dynamic Fuels LLC, their joint-venture, and the approval of their synthetic fuel plant in Geismar, Louisana.

Syntroleum seem to be on the right track. They've got the capital they need, they have a mammoth partner on who to piggyback, an original technology that makes one of the most sought after commodities, and plans to build a facility in which all of this wonderful Bio-Synfining can occur. All this company spells out to me is growth and profits, over and over.

• Conclusion

At $2.24, Syntroleum is not only a buy, but highway robbery if you can steal it at this price. Over the next 12 to 18 months this stock is going to explode. They have the technology, capital, and partnerships they need all necessary to create a profitable endeavor.

What's more, the economic climate is just right at the moment. Oil prices are surging. People are looking for alternative ways to create energy and seeking out those that are the wisest investments.

Syntroleum has taken the necessary steps to get them to where they are, and I feel as though they will continue to meet and exceed the market's expectations.

If stock price is indeed the perceived future valuation of a company, Syntroleum truly has no limit. Happy investing!

Corporate Knowledge

I'm continually fascinated by companies. I think that if you look close enough, you will find that they can be as unique and interesting as people. All of them have personalities of their own, however, that personality is constructed by the collective unit of people that work to move that company forward.

Companies have identities. A large portion of this identity is presented via the media, especially advertising and the news. So, in a sense, corporations are similar to celebrities. You see them on the news now and then. Once in a while they do something stupid that gets them in trouble. You typically don't get the opportunity to actually meet the CEO of the company or visit its headquarters.

So, if you enjoying keeping up with the life and times of Brad Pitt, Paris Hilton, George Clooney, or perhaps even Eva Longoria, realize that my passion when it comes to following companies is in the same context. I find the story that they tell and the impact that they have on the world equal to that of prominent movie actors and actresses in Hollywood.

In an attempt to learn more about companies and how people perceive some of the most notable companies, I recently ran a survey on Those Answers Inc. website.

The goal of my survey was to compare how corporations from a wide spectrum of activities in the United States economy were perceived. I looked at four separate criteria, each composed of two diametrically opposed descriptors, that I eventually plotted against one another in order to see if there was any correlation. The four criteria were:

1. Success and Failure
2. Knowledge and Ignorance
3. Innovating and Stagnating
4. Good and Evil

By creating a x-y scatter plot or histogram comparing the scores that each company received for the four different criteria, I was able to make an assessment of whether or not there was a legitimate correlation between various combinations. In this study I looked at the correlation between, Success and Knowledge, Success and Innovation, Success and Ethics, and Knowledge and Innovation. I will address all of these different scenarios shortly.

• Survey

I sent the survey out via Facebook to a number of my friends. The survey began with a brief description of the definition of a corporation, "a legal entity that is used primarily to conduct business." This is a very generic and broad definition. I then explained my choice for using the companies I did. I picked the 10 companies in this survey for notoriety sake, they are all within the Fortune 100 and are generally well known, as well as for their diversity in corporate activities. I didn't want the bias of conflicting businesses to alter my survey results.

There were 10 companies used in this survey. They were:

1. Boeing
2. Comcast
3. CVS/Caremark
   
4. FedEx
   
5. General Motors
6. Goldman Sachs
7. Home Depot
   
8. Microsoft
   
9. PepsiCo
   
10. Walmart

My instructions for the survey were to order the list of 10 companies used in the survey between the two diametrically opposed descriptors (i.e. Success and Failure) as though they were placed on a continuum. Therefore, the "most" successful company in the responders opinion would be closest the Success side of the input area, and as the companies moved further away from this side and closer to the failure side would thus be considered the "biggest" failures.

Companies would receive a score of 5 points for being the "most" Successful, Knowledgeable, Innovating, or Good, gradually moving to -5 points for being the "biggest" Failure, Ignorance, Stagnating, or Evil. Between these two extremes, companies would score points between 1 and 4 points if closer to the Successful, Knowledgeable, Innovating, or Good side, and -1 and -4 points if closer to the Failure, Ignorance, Stagnating, or Evil side. The continuum did not include the score of 0.

Based on the respondents ranking of the companies points were assigned for each criteria. The points were then averaged. Finally, the points were then plotted against one another for the varying criteria to see if there was a correlation between the two.

A correlation was determined by adding a trend line to the data that expressed and assisted in performing regression analysis. According to the Kellogg School of Management, "Regression analysis is a statistical technique for studying linear relationships." This type of analysis is beneficial, because it provides a goodness of fit for selected data points and compares two seemingly unrelated criteria that may indeed correlate to one another.

A further step is required. In order to determine the, "proportion of variability in a data set that is accounted for by a statistical model," a coefficient of determination needs to be assessed (Wikipedia). According to Duke University, a good value for the coefficient of determination is generally equal to or greater than 50%, but in most cases it just depends. We will make note of the coefficient of determination when presenting the results.

• Results

I was, at first, primarily concerned with the relationships of the three criteria plotted against the Success-Failure criteria, but I ultimately ended up comparing all the various relationships to find the strongest correlation. My original hypotheses were that Companies scoring highest in:

• Knowledge have a high correlation to Success
• Innovating have a high correlation to Success
• Good have a high correlation to Success

Now, I think we can take a look at the results and I'll try and explain what they are and possible reasons for why they turned out as they did.

• Knowledge - Success

Based on the findings in this survey, the coefficient of determination representing the correlation between a company's knowledge and the perception of a company's success is 0.603. This is a positive indication of a link between these two criteria if we draw on the assessment of Duke University.

As you can see in the graph, there are many companies within the first quadrant (Microsoft, Boeing, Walmart) that are all considered both successful and knowledgeable. Then there are several companies within the third quadrant (Comcast, General Motors, Home Depot) that are all considered failures and ignorant (or less successful and less knowledgeable than their counterparts in quadrant I).

You may also notice a lack of companies in Quadrant II and IV. Companies falling within this range would represent highly knowledgeable companies that are failures and ignorant companies that are successes.

Intuitively, the results make sense and the coefficient of regression further warrants this. Companies that are considered "knowledgeable" ought to be "successful." If we draw on my analogy from the beginning of this post (companies are like people), one would also believe that a knowledgeable person would become successful. Companies that are not as knowledgeable are therefore not as successful. The lack of companies within the II and IV quadrant also further prove this correlation.

• Innovating - Success

The coefficient of determination that represents the relationship between Innovation and Success is seen to be 0.2377. This is a lot lower than the first correlation that we looked at, Knowledge and Success. This is a relatively weak indication of correlation.

The reason that Innovation and Success may not be as strongly correlated is due to the fact that there is no direct link between Innovation and Success. Companies can be unbelievably innovative, developing new ideas everyday, but those ideas may not convert into revenue and ultimately profit.

In this scenario, there are companies that are seen as highly successful, Walmart and PepsiCo, but are stagnating at the same time. This is very accurate, especially when you look at the case of Walmart. While I would contend that Walmart's processes and supply chain integration are some of the most innovative in the world, as far as their product is concerned (consumer goods) they are relatively the same. This doesn't mean for one instant, however, that they are losing any bit of revenue or being any less of a successful company.

• Ethics - Success

The coefficient of determination representing the relationship between corporate Ethics and Success was a disappointing 0.0811. This is a very weak correlation.

By looking at the chart, you can see that the companies are generally spread out showing no real signs of following any sort of linear relationship. This ultimately leads to a weak coefficient of determination.

You may also notice that even though the coefficient of determination is weak, the linear trend actually has a negative slope, indicating that the more successful a company is perceived to be the more evil it becomes. When one stands back and thinks about this correlation, it tends to make sense logically.

Consider highly successful companies; Walmart (#1 Fortune 500 List), Nike (Top Shoe Sales in the World), and Coke (#1 Soft Drink in the World). While all of these companies are considered extremely successful, they are also often questioned for their ethics and morality when it comes to how they treat their workers, smaller distributors, etc. Therefore, even though the trend isn't strong it makes sense.

• Innovation - Knowledge

The coefficient of determination representing the relationship between a company's Innovation and Knowledge was the strongest, 0.6436. This is our highest correlation and well within the bounds proposed by Duke University.

Similar to our scenario of Knowledge - Success, companies are generally found within the First and Third Quadrant, indicating a link between innovation and knowledge and stagnation and ignorance.

Similar to our other scenarios, just by thinking about these two criteria logically it clearly makes sense that there would be a strong correlation between them. Companies that have a lot of knowledge probably have the ability to innovate well. At least, one's perception of corporate knowledge must lead to a belief in that company's ability to innovate.

The reverse is also true. Companies that innovate are probably thought to be very knowledgeable about their particular field, because they can continually adapt and work out new possibilities with it.

• Conclusion

The object of this survey was to determine the relationship of various diametrically opposed criteria that included: Success and Failure, Knowledge and Ignorance, Innovation and Stagnation, and Good and Evil. Respondents were asked to rank the 10 companies in this survey on a continuum in which they were later assigned a point value. These point values were then averaged and then plotted against one another.

Regression analysis was performed in order to evaluate coefficients of determination. The coefficient of determination indicated a value between 0 and 1, 0 being least determinant and 1 being most determinant.

Based on the findings of this survey, the correlation between Knowledge and Innovation was highest, 0.6436. This was then followed by Knowledge and Success, 0.603. These two figures meet our Duke University criteria of being greater than or equal to 50% and can be considered legitimate correlations.

Our two other studies, Ethics and Success, 0.0811, and Innovation and Success, 0.2377, fall short of the generally accepted standard, and therefore, I cannot deduce any sort of correlation between these two criteria aside from logic.

Overall, I thought this was a really interesting and enjoyable study to perform. I was surprised at how well the results actually turned out. I feel like I learned a lot about companies and some ways in which they relate.

Ocean's 14?

About a week ago, I had the chance to go to the Arlington Park Racetrack, which is a venue quite close to where I live, in which you can watch and bet a little bit of money on the ponies. It was my first time I had ever been to a horse racing track, and I have to say it was quite a lot of fun to put down some money. I can see how a lot of people can get addicted to it and gambling in general.

Unfortunately, I wasn't able to come away the big winner for the day. I probably ended up losing around $20 or $30, but over a stretch of about 5 or 6 hours, I don't think thats too bad. Either way, I had a lot of fun.

I was with some of my friends and I'll tell you the story of one guy in particular. I have to admit that this is one of the most improbable scenarios I've ever seen, and I guess it part of the motivation for my most recent idea.

A friend of mine was betting some money before a race. He was putting $10 down on various types of bets. He put down a show, in which he had to pick a particular horse who will come first, second, or third, a win, in which he had to pick the horse who is going to win in order to succeed, but after this had about $1 left to put down on a bet. He didn't really know anything about the horses or the race in general, so he decided to go with this particular type of bet called a superfecta.

I came to learn that a superfecta is a particular type of bet in which you have to correctly predict the first four horses that come in. That is, you have to pick the first, second, third, and fourth horses in the exact order in order to make any return on your wager. This is by far and away one of the most ludicrous, outrageous, and downright improbable things to ever occur in my opinion.

I had hard enough trouble correctly predicting a horse to come in the top three, a show, and now here was this most ridiculous bet called the superfecta. Regardless, my friend decided to make the minimum $1 wager (and in my opinion, it's pretty much throwing away that $1). So, we were revved up and looking forward to the next race. I had a couple bucks on the race and was hoping to see my combinations come in.

And then, before you knew it, the race had finished. It's a quick burst of excitement, and then it's over. Yet again, none of my horses came in the order I would have liked to see them. However, my friend sitting right next to me was looking over his betting receipts and was frantically looking up at the television screen with the results and then back again at his receipts. I asked if any of his combinations came in.

Apparently, after needing further verification from about three other people, my friend had correctly predicted the superfecta. We were all speechless. How is it possible that my friend who knew absolutely nothing about betting on horses came through with the mother of them all?

The superfecta ended up paying out huge. The payout is dependent on the odds of the four horses that you predict, but due to the severe unlikely nature of this actually occurring, the payout is typically always a large amount. In this case my friend made a quick $125 by simply making a $1 bet. Not a bad day at the races.

The first thing that this got me thinking about, and I'm a little embarrassed to say it, is how on earth it would be possible to fix such an event such as horse racing? I was just thinking that with such an immense payoff, figuring out a way to fix one event could make a bundle of cash very quickly. However, very soon into my thought process, I started to think of more effective, and legal, ways in which to capitalize on the coolness of horse racing.

This is what led me to my idea of Ocean's 14. The Ocean's series has all revolved around very slick, cool, and fun ways of stealing money from Las Vegas or valuables from museums. Each movie has been really entertaining and has a blockbuster cast to go along with it. I thought what might be interesting is if they altered the theme slightly and entered the realm of horse racing.

In all of the Ocean Movies, there is always some ingenious plan that works flawlessly. Half of the time, you think they're all about to get busted, and even when they do get busted, it was all seemingly part of the plan. It would be really cool to see what sort of awesome strategy they could come up with to fix a crazily unpredictable event such as horse racing. They have already exhibited quite a competency in fixing Vegas, so why not move into a new realm, the realm of horse racing?

Yet, I also realized that there wouldn't be a good enough reason to make a fourth movie in a series if it wasn't necessarily going to be profitable. This led me to investigate the benefits of actually creating a fourth Ocean's movie.

• Explanation

My sample was made up of movies that have a minimum of four in the series. My results include 9 movies that have had four parts in their series. This list includes:

1. Harry Potter
2. Rocky
3. Indiana Jones
4. Star Wars
5. Star Trek
6. Rambo
7. Superman
8. Saw
9. Die Hard

For each of the 9 movies, I gathered information relating to the Gross Box Office Revenue each part in the series brought in, the Budget for each movie in the series, and then, based on this information, evaluated the Net Box Office Revenue for each movie in the series. For all of the movies, I made sure to adjust for inflation. In order to accomplish this, I used WestEgg.com, which is an inflation calculator that dates back to 1800. All the figures are therefore based upon 2007 dollars.

After compiling all of my data, I then made a determination about each movie in the series return on investment (ROI), which is easily calculated by taking the gain from an investment and subtracting the cost of an investment and dividing this difference by the cost of investment.

In our scenario, the mathematical equation is depicted as:
ROI = ((Net Box Office Revenue - Budget)/Budget)

I thought ROI would be a good measure to evaluate going forward with a fourth Ocean's movie, because it represents the benefit and rate of return that the large investment for the movie would necessitate.

Finally, at the end, I averaged my data from the 9 different movies with a minimum of four parts in the series to determine whether the intent of creating a fourth movie truly had any merit.

• Results

The data that I gathered can be summarized in the following chart:

First, let us take a look at some of the data. The highest grossing film in this sample of movies was the original Star Wars from 1977. When you adjust for inflation, the film grossed over 1.163 Billion dollars. That came from a measly investment of just 46.86 Million dollars. On the opposite spectrum of that, the lowest grossing movie was the fourth sequence in the Superman series. I am personally a big fan of Superman, and am unsure as to why this film did so poorly in 1987.

According to Imdb.com, the Internet Movie Database, the tagline for this movie was, "Nuclear Power. In the best hands, it is dangerous. In the hands of Lex Luthor, it is pure evil. This is Superman's greatest battle. And it is for all of us." It only grossed 29.32 Million dollars, and actually ended up losing 2.43 Million.

These two movies help contrast the impact of the first movie in a series and the fourth movie in a series. The highest grossing movie, Star Wars, was the first in the series, whereas, the lowest grossing movie was the fourth in the series. This is a general trend, as the average gross for the first movie in a series was 308 Million, and the average gross for the fourth movie in a series was 167 Million (a reduction of %).

However, in order to truly get to our desired valuation of ROI, it was important to seek out information regarding to the budget of each movie as well.

As you may notice, there is a wide array of budgets used on movies. However, to try and organize some of this data, it is best to look at what the overall average of budgets do as another movie is made in a series. My data leads me to the following deduction: the more movies one makes in a particular series the larger the budget gets. On average, I found that the first movie's budget was around 69 million, while the budget of the fourth movie was typically around 89 million (or an increase of 29%).

The largest budget was used in the original Superman movie. It had a budget of 186 million. The smallest budget was used on the original Saw movie. It cost a mere 1.35 million. The Saw series has consistently had the lowest budget in the group and thus has helped their ROI tremendously.

Next, it would be helpful to look at the Net Revenue that is associated with movies in a series with a minimum of four movies. To find net revenue, you just take the gross revenue and subtract the budget requirement for the movie. This will also be helpful in determining ROI.

Our chart of Net Revenues for these 9 movies reveal that as another movie is added to the series, the variance in the net revenue becomes less substantial. For instance, in the net revenue amongst the first movie in the series, the net revenue varies by 94% (1163.33M to 60.78M). However, by the time the movie gets to the fourth in the series, this variation decreases tremendously. The upper and lower bounds of Net Revenue have shrunk from 400.3M to -7.3M, a far tighter space. This ultimately means that there is far less uncertainty when it comes to how well the movie should fare.

On average, the Net Revenue from these 9 movies varied from 333M, for the first movie in a series, to 119M for the fourth movie in a series, or a decline of 64%.

The final piece of the puzzle was to determine whether or not going ahead with producing and investing in the fourth film in a series was indeed profitable. The mechanism through which this was evaluated was based on our model of return on investment (ROI).

The results of this are well summarized in the following graph:

Your attention may first be drawn to the extreme spike in the ROI for the first movie in the series of Rocky. This is valid observation. The first Rocky movie was unbelievably successful, but only needed a budget of 4.2 million to produce a net box office revenue of 442.81 million. This is a ROI of 10,443%. The following Rocky movies were successful, but not nearly in the same stratosphere.

As a general trend, I was able to determine that on average, the first film in a series of a minimum of four returns 1,782%, the second, 403%, the third, 175%, and the fourth, 35%. These are significant declines, but the ROI is still quite decent even in the fourth movie.

Additionally, it is important to add that just because the overall average shows a positive ROI, this is certainly not always the case. For instance, Die Hard, Superman, Rambo, Indiana Jones, and Harry Potter have all had instances in which they have had negative ROI.

• Ocean's Movie Recommendation

Based on my analysis, I have the following recommendation for the potential creation of a fourth movie in this series.

According to Imdb.com, Ocean's Thirteen (the most recent movie in the Ocean's series), grossed 117.2M, had a budget of 85M, and therefore netted 32.2M. The ROI on Ocean's Thirteen was dismal, -62%. According to Those Answers Inc. estimates on the change in average gross, average budget, and average net revenue earned between the third and fourth movies in a series, Ocean's 14 can expect the following results:

• An 11.2% decline in Gross Revenue
• A 16.3% increase in budget spending
• A 21.4% decline in Net Revenue

Therefore, Ocean's 14 should expect to gross 104.1M, have a budget of 98.9M, and therefore net 5.2M. This predicts a ROI of -94.7%. Additionally, both Ocean's 12 (2nd in the series) and Ocean's 13 (3rd in the series) had negative ROI's which does not predict any more favorably for a positive ROI in the 4th movie in the series.

The series of Harry Potter, Rambo, Superman, and Die Hard have not achieved positive ROI since falling into negative territory. There is no direct evidence to support the possibility of Ocean's 14 having this capability.

Therefore, although it would be a really fun movie and very entertaining to watch, Those Answers Inc. does not recommend a fourth motion picture in the Ocean's series.