Thursday, 31 December 2015

2015 HSC results show how little effect the school has on student outcomes

Well, the 2015 HSC results are now out, and the usual 'school ranking' list made the front page of many Sydney newspapers, followed shortly thereafter by the usual disclaimers that the school rankings don't really mean anything. But that doesn't stop many parents thinking that getting their child into the 'right' high school from Year 7 will have a major impact on their eventual HSC results.

The actual results however, show that individual schools have very little influence on the results their students achieve -- the predominant factor influencing HSC results (in terms of % of 'Distinguished Achievement' (Band 6 or E4) subject results, and % 'All Rounder' (students with 10 units of Band 6 or E4 results in total)) is simply the ability level (as measured by the 'cut-off' selective entry test result to gain entry into the school) of the cohort of students that entered Year 7 six years earlier...

The figures below show that a school with a high 'cut-off' mark (selective schools entry test) to get into Year 7 will end up with a high percentage of Distinguished Achievement and All Rounder results when that group of students sits the HSC exam. For example, a school with a cut-off mark for entry of around 200-210 will end up with around 25%-45% "DA" and 5%-20% "AR" six years later. And a school with a higher cut-off mark (eg. 230-240) will end up with around 60%-75% "DA" and 30%-60% "AR".

The slight impact that a school can have is only apparent when a school consistently gets HSC results significantly above (or below) what you would expect based on the 'cut-off' score (ability level) that the students had when they entered Year 7. For example, NBSC Manly seems to consistently achieve slightly higher HSC results than would be expected from the 'cut-off' mark required to gain entry into Year 7 (However, even that may not be a 'real' effect - there are geographic reasons why some high ability students that might otherwise have gone to a selective high school with a higher cut-off mark decide to attend Manly. It's a long commute to get to James Ruse or Sydney Boys High from the Northern Beaches suburbs! So the correlation between 'cut-off' mark and average student ability level may sometimes be weakened by .local factors). And Sydney Technical HS seems to get a lower %DA in the HSC than one might expect from the entry cut-off scores for that cohort going into Year 7. But again, the %AR results for Sydney Technical are much closer to the expected range, so it might simply be that students choosing to attend Sydney Technical HS are not particularly strong in the compulsory English subject for the HSC, which might explain why the %DA results are depressed while their overall %AR results are more in line with the level of student ability.

[note: each school has four data points on the above charts, as the release of the 2015 results means I now how four years where I have the cut-off entry score and corresponding HSC results for that cohort]

These results also help to explain why private schools offer full and partial scholarships to attract students with high selective high school entry scores (and scholarship test score results, which are comparable) -- they are simply underwriting their future HSC results and school rankings.

It also becomes obvious why James Ruse will continue to come top of the school rankings (but might get pipped by Baulkham hills in a few years time), and which schools will continue to be at the top of such 'ranking' tables in future. You simply have to look at the current Year 7 entry cut-off scores to get a good estimate of the school's HSC results for 2021:

School (2015 cut-off mark for Year 7 entry):
Baulkham Hills (235)
James Ruse (230)
Sydney Girls (223)
Nth Sydney Boys (221)
Sydney Boys (220)
Nth Sydney Girls (219)
Hornsby Girls (216)
Fort Street (216)
Normanhurst (214)
Girraween (210)
NBSC Manly (206)
Sydney Technical HS (197)

One interesting side-effect is that selective high schools that do well in the HSC 'rankings' tend to become a more popular choice for parents choosing a school, so their 'cut-off' marks tend to increase, which in turn means a higher average ability level for the next cohort of students entering Year 7, and better HSC results five years down the track. This seems to be the trend at Baulkham Hills, and to a lesser extent at Fort Street.

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Saturday, 19 December 2015

Glide Pro Fishing Kayak

I recently saw a TV for kayaks on 'Christmas sale' at BFC (Boating Camping Fishing) and decided to check them out online. The inflatable kayak I'd bought from Aldi had been fun, but turned out to be too small to be usable for someone of my BMI (100+kg). I'll relegate that one for DS1 and DS2 to use.

After looking at the cheapest 'Glide Junior' kayak (on sale for $149, with a maximum capacity of 60kg) and the basic 'Glide Adult' kayak ($199, max. 110 kg) I initially decided to spend a bit more money for the more upmarket 'Glide Reflection' ($299, 2.92m long, max. 110 kg) that looked a lot more stylish. But having decided to spend $299 on a kayak I checked out the other available models and found that the 'Glide Explore Fishing' kayak (in Granite [mottled light-grey] colour) was available at the same price, but had nicer features and a maximum capacity of 160kg. So I placed an order online for that model, with pickup from my local BFC (a few km from my home) to save me the $120 delivery fee. Pickup was supposed to be ready 'within four business hours' of ordering online...

Unfortunately by the time my credit card payment was processed the next morning the last kayak of the model/colour I had ordered had just been sold at the local BFC store. I emailed a complaint to the online sales customer service and they replied very quickly that they'd arrange something to satisfy me. In the end it turned out that the 'Glide Explore Fishing kayak - Granite' wasn't in stock at any of their Sydney stores, so they offered to 'upgrade' my order to the 'Glide Pro Fishing Kayak' in Charcoal colour. This kayak has an RRP of $699 and was 'on sale' for $559.20, so I'm very happy with the 'upgrade', although it might be more 'yak than I actually need. It is quite a bit larger (3.65m long and weighing 31 kg) but has larger capacity (180kg weight) and comes with a foot-operated rudder system. A rudder probably isn't really necessary on a kayak under 4m in length, but it makes this 'yak look a bit more 'cool' (it certainly won't be 'cool' if left sitting in the sun too long -- the darker colour (almost black) makes it heat up quite fast - even after the ten minute drive home the hull was almost too hot to touch).

The extra length and weight don't seem to be an issue -- it still fitted nicely onto the roof rack of my Ford Escape (and the rear didn't stick out far enough to require a warning flag), and I had no problem lifting it onto the roof rack with another man at the BFC loading dock, or with getting it down with my 15-year-old son helping at home. At a pinch I could probably load and unload this 'yak by myself, but a mishap could easily see my straining my back or putting a ding in the car door, so it is generally a two-man operation.

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Friday, 11 December 2015

Atlassian -- Darling or Dud?

A local IT company Atlassian (founded by a couple of UNSW classmates who now find themselves in the top 20 richest Australians list) is a market darling, having seen the share price surge 32% after the IPO started trading. However, despite wishing the company well (Australia certainly could do with some more examples of successful high-tech companies), I have doubts about its success in the long term. At the current price, the company is 'valued' at around $8b, despite only having revenue of around $200m in 2014 (despite the 2014 revenue, up 44%, being trumpeted in a press release on Sep 10 2014, this years figures aren't announced yet -- not wanted to dampen the IPO party?). Also, while being in the enviable position of actually making a profit (albeit only about $7m!) for several years, it still reminds of the speculative bubble companies of the era at the start of this century, that relied on p/r rations instead of p/e ratios to justify their stock prices. While this worked out well for investors in Google, Amazon, and Apple, it certainly wasn't the case for investors in most of the '' era IT start-up companies.

I'll have to check my CityIndex CFD trading account tonight and see if Atlassian shares are available as a CFD -- I'm tempted to keep a close eye on the share price and be ready to short-sell Atlassian at the first hint that their bubble might burst. While the revenue chart for Atlassian currently has the exponential appearance of the SaaS market in general, indefinite exponential growth is next-to-impossible, and a reversion to an S-shaped curve (if not a boom-and-bust trajectory) is much more likely. If one assumes revenue merely quadrupled from 2014 levels (to $1b pa) before levelling off, and if one also assumed that all revenue beyond $200m was profit (ie. around $800m pa profit), that would justify current pricing and a market valuation of $8b with a modest (for an IT growth company) pe of 10. However, if costs (for R&D etc) continue to grow in line with revenue (as has been the case so far), it is hard to justify the current share price if profits are only ever in the tens of millions range. And if revenues plateau (or drop off)...

However, I won't be placing a huge bet on Atlassian either way (maybe just a few hundred dollars for fun), as my track record for making judgments about the potential of individual stocks (and IT stocks in particular) is exceptionally poor. I recall ignoring the float of Microsoft in the early 80s as it seemed overpriced already in the IPO, I bought CSL shortly after it floated and then sold it again when I'd quadrupled my investment -- only to see it increase another 25x since I sold out, and I still smart at the memory of 'investing' a couple of thousand dollars in GEN (Global Entrepreneurs Network) unlisted shares in the 1990s, only to see them go out of business before even getting to the IPO stage (if their attempt to raise even more cash from their investors had succeeded they might have hung around long enough to benefit from the madness).

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Wednesday, 2 December 2015

Net Worth: November 2015

A fairly flat month: Sydney house prices have definitely stopped rising, and auction clearance rates have apparently gone from 90% earlier this year to around 60% now. As usual the "experts" are of divided opion -- some predicting a bursting of the housing 'buble' and falls of 40%, some predicting a return to 'modest' price growth of  around 10% in 2016, and some predicting  a period of price stagnation resulting in a slight decrease in 'real' prices over the next year or two...

As a result our estimated current house valuation is $684,053 (my half share - I don't include DW figures in my personal NW calculation), a modest gain of $3,238 (0.48%) since last month's review. This, as usual, doesn't reflect any potential 'windfall' profit if the property gets rezoned next year and redeveloped into medium density housing apartments as part of the new hospital precinct. Recent residents' meetings have had real estate agents advise that things could finalized within 18-24 months, and some residents have signed 'options' to sell their property to developers for around $2.5m.

My retirement savings balance estimate dropped slightly to $715,783 (down $7,382 or 1.02%), due to weakness in the stock market. The valuation of my geared share portfolio dropped considerably (down $24,215 to $113,816) but this is likely to have been exaggerated due to my investment in IPE paying out a dividend/capital return of around $13,000 today, so the valuation at the end of November was probably 'ex dividend'.

As usual I haven't adjusted the 'cost base' valuation for the hobby farm I 'inherited' from my parents at the start of 2014.

Overall, my net worth was $1.800m, down $28,122 (1.54%) from the previous month end figure.

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