The McLaren drivers and beaming returnee Romain Grosjean on Saturday looked to have knocked Red Bull from its dominant perch.
“McLaren had an upgrade at the last test and it’s performed here at Albert Park,” said former team driver and BBC commentator David Coulthard.

Lewis Hamilton beat his teammate Jenson Button to pole in Melbourne, but just a few tenths behind is the reigning GP2 champion Grosjean.

Frenchman Grosjean’s teammate Kimi Raikkonen had a dire return qualifying performance by missing the Q1 cut, describing the session as “shit” according to the German press.

In total contrast, Grosjean was beaming: “A few people believed in me through the toughest time and I’m back — almost at the top!”

The surprises continued beyond the top three: Mercedes’ Michael Schumacher is fourth, and reigning champion Sebastian Vettel sixth.

“We are aware we need to improve,” said Mark Webber, who qualified the sister Red Bull in fifth as both RB8 cars had KERS issues.

In much bigger strife is fabled Ferrari, with neither F2012 making it through to Q3.

Fernando Alonso threw his red car into the gravel and Felipe Massa is a disastrous 16th, with Sky analyst Martin Brundle described the handling of the F2012 as “horrible”.

“Forget the reds,” the summary report at Italy’s La Gazzetta dello Sport website, written by correspondent Andrea Cremonesi, said.

Said Spaniard Alonso: “We need to change the direction quickly if we’re to challenge for the championship. We have to react.”

Meanwhile, Lotus boss Eric Boullier answered “maybe” when asked on Sky UK television if the team will lodge an official protest against Mercedes’ qualifying result, based on the belief the W03′s F-duct solutions are illegal.

There is little tension in the Red Bull driver line-up this year because Sebastian Vettel has the clear upper hand.

That is the belief of outspoken former triple world champion Niki Lauda, who predicts that Mark Webber will also struggle to keep up with his teammate in Monaco this weekend.

“No. Vettel is simply faster than Webber,” the great Austrian told Cologne tabloid Express when asked if the high conflict between the pair seen in 2010 might soon return.

Australian Webber appeared to get his campaign back on track last weekend with pole in Barcelona, but German Vettel ultimately won his fourth race of the season.

“We will see that again in Monaco, so again there will be no discussion or tension. I would bet already that he (Vettel) will be three tenths faster,” said Lauda.

He also commented on the decision by Ferrari and Fernando Alonso to extend the Spaniard’s contract through 2016.

“I don’t understand it,” said Lauda. “I always did two year contracts, which was a mutual actual on both sides to promote competition. With a long contract, you lose that.

“I am sure that with Ferrari this is a combination of Alonso and the sponsorship of the bank Santander, but if I was Ferrari I wouldn’t have done it for so long,” he insisted.

As the 2010 world championship battles heats up, so too is the competitive rivalry between Red Bull’s teammates.

Mark Webber and Sebastian Vettel are openly not friends, but with just two races to go this season and 14 points between them, some believe Vettel should now be helping his Australian teammate to the title.

“I am not giving up,” 23-year-old German Vettel said on Thursday in an interview with the DPA press agency.

“It would be stupid to give up the belief in the title. I will continue to fight,” he promised.

Vettel was asked whether he has a cooperative “deal” in place with Webber as the season winds down.

“That is too far away,” he answered. “I must just concentrate on my performance.”

Earlier this week, Webber indicated Vettel is only regarded as the team’s “superstar” because of his young age.

Vettel’s apparent rejoinder is a barb about the pair’s exits from the recent Korean grand prix, with Webber crashing and Vettel retiring with an engine failure.

“Let’s put it this way: I would have been far more disappointed if I had thrown away the car over a personal fault,” said the German.

He said he is not worried about losing the support of his team in deference to Webber.

“I know that my team supports me and that I don’t have to be worried,” answered Vettel.

The availability of a ‘monsoon’-type rain tyre might avoid future cancellations of track sessions due to extreme weather.

That is the belief of Sam Michael, one of the millions of witnesses to the tedious spectacle of Saturday’s delayed and ultimately postponed qualifying hour at Suzuka.

The FIA refused to show the green light due to the torrential rain and feedback from the drivers about rivers of streaming water causing dangerous aquaplaning.

“You’d maybe only use them (monsoon tyres) once every three years, but at least you’d have something,” said Michael, technical director at the British team Williams.

He said the monsoon tyres would ideally have an extreme tread depth of more than 10mm, useful only for avoiding the sort of situation seen in Japan.

“It’s not good to go through an hour of television where everyone’s just watching people float little boats down the pitlane,” said the Australian.

“The cost of having a set of monsoon tyres for each car is pretty low compared to that.”

The Mercedes car is the reason for Michael Schumacher’s performance struggle in 2010.

That is the belief of F1 chief executive Bernie Ecclestone, when assessing the first half of the seven time world champion’s return season to F1 this year.

“He has found a much more difficult situation than he would have counted on,” the 79-year-old said in an interview with Italy’s La Gazzetta dello Sport.

“It’s not a question of him, but of the car. If Michael was sitting in the Red Bull, he would immediately be as he was before,” added the Briton.

Schumacher’s teammate Nico Rosberg told the German-language TV Movie: “The car is currently not fast enough.

“There are some things in the development that have not quite gone to plan.”

Jun.15 (GMM)  Vitantonio Liuzzi proved in Canada he still deserves a place on the formula one grid, his team boss Vijay Mallya insists.

Heading into the Montreal round, speculation was rife that Force India was considering replacing the underperforming Italian with the team’s rookie reserve driver Paul di Resta.

But Liuzzi, 28, travelled to Canada with a new VJM03 chassis and not only outqualified his teammate Adrian Sutil but put in the team’s best qualifying performance of the season.

Starting from fifth on the grid, however, he was hit several times by Felipe Massa and needed to pit for repairs, but still finished in the points.

“I am so happy to see Tonio back to his best again,” Mallya, not in Canada last weekend while he re-launched his career in Indian politics, said.

“We believed in him and wanted to give him the support he needed to realise the potential we knew was in there.”

As the F1 calendar looks set to expand, the sport should consider culling Friday’s 180 hours of free practice.

That is the belief of Williams’ chief executive Adam Parr, who revealed he has proposed to have the traditional race weekend format condensed to just Saturday and Sunday.

F1 supremo Bernie Ecclestone visited the media centre at Istanbul Park on Friday, and smiled broadly when a reporter said he had heard rumours about 24-race calendars in the near future.

But according to Germany’s Motorsport-Magazin.com, the 79-year-old Briton wants F1′s three-day weekend to remain in place.

Parr, however, questions the entertainment value of the current Friday format, and is quoted by The Press Association as suggesting that cutting out Fridays will mean less equipment for the teams to transport.

“I can see the calendar going to 24 over the next two to three years, and I’m not sure whether logistically, with these longer weekends, it will be easy to do,” he said.

Parr said he raised the issue recently in Barcelona, and teams including Ferrari, McLaren and Renault did not baulk at the idea.

(GMM)

Fernando Alonso has psychologically “destroyed” his Ferrari teammate Felipe Massa.

That is the belief of former Super Aguri driver Anthony Davidson, who now attends grands prix as a commentator for British radio BBC.

Ferrari incumbent Massa, 29, has struggled to match team newcomer Alonso so far this season, but the Brazilian has put the situation down to the F10 car and the tyres.

But Davidson has a different theory. “I can sum up Massa’s problem in two words — Fernando Alonso,” said the Briton.

“He has destroyed him mentally. Already. And I think that started at turn one in Bahrain,” said the 31-year-old, referring to the Spaniard’s pass on Massa on the outside of the first corner of the championship.

Alonso’s controversial pit entry pass in China recently was also widely interpreted as another psychological victory for the feisty double world champion.

Davidson added: “Every time he (Massa) goes out there, Alonso’s gone faster. He is driving hard, but in the back of his mind he will be thinking ‘yeah, but I bet Fernando has gone faster’.

“And you get back to the pits and he has. It does get you down,” he said.

Mark Webber is emerging as the favourite to win the 2010 world championship.

That is the belief of Mercedes reserve driver Nick Heidfeld, after seeing Webber’s second pole position within a week on Saturday.

Webber, 33, still lags his highly-favoured teammate Sebastian Vettel in the points standings, but won dominantly in Barcelona and is the favourite to hang onto first place in Monaco on Sunday.

He is 3:3 in his 2010 qualifying battle with Vettel, and now has the momentum of recent success, Heidfeld told German television Sky.

“We all know how strong Sebastian is,” said the German, “but Mark is now beating him. It’s his third pole position.

“More and more he is evolving into the world championship favourite,” added Heidfeld.

Also impressed with Webber is retired ten time winner Gerhard Berger, who is in the Principality this weekend and has spent time watching the cars from a trackside vantage point.

“What is great is that the driver can still make a big difference here,” said the Austrian. “At the chicane Webber is really very good — very aggressive, fast.

“We are seeing that it is not only the car but also the driver,” added Berger.

And triple world champion Niki Lauda told Kleine Zeitung: “Right now he (Webber) is almost unbeatable.

“Vettel’s problem is that suddenly his greatest enemy is within his own team, just as it was with myself at McLaren with Alain Prost,” added the Austrian.
(GMM)

If Mercedes has moved development of its 2010 car in the direction of Michael Schumacher, that tactic is “simply wrong”.

That is the belief of the seven time world champion’s first formula one team boss, Eddie Jordan, who gave a then 22-year-old Schumacher his grand prix debut in 1991.

Although denied by Mercedes, it was reported that the focus on the changes made to the W01 car ahead of Barcelona was with the former Ferrari driver’s preferences in mind.

But Irishman Jordan said that, five races into the now 41-year-old’s return to the grid in the wake of a three-year retirement, Ross Brawn needs to forget the way that he previously worked alongside Schumacher at Ferrari.

“Let’s be clear; in the Ross Brawn era, Ferrari was basically a one-driver team,” said Jordan, who now travels to the grands prix as an expert pundit for British television.

He told the German newspaper TZ: “This (approach) is a mistake.  The first four races showed entirely clearly who is able to keep up with the new generation of drivers such as Sebastian Vettel and Lewis Hamilton; namely Nico Rosberg.”

Rosberg, 24, was on the podium twice in the first four races.  With the revised car in Spain, Schumacher took over as the team’s pacesetter, but was a minute down at the chequered flag.

“Schumacher is now more capable of dealing with the car, but the gap to Red Bull has become much greater,” Jordan observed.

(GMM)

Breastfeeding and Formula Today, breastfeeding is being encouraged over baby formula feeding because of the many advantages for both mother and child. For the child, it gets all the nutrients it needs from breast milk, plus the mother’s anti bodies, which will help the child develop resistance to certain viral and bacterial infections. Breastfeeding also helps in developing physical and emotional bond between mother and child, since there is constant physical contact, and the baby feels secure in its mother’s arms. For the mother, breastfeeding is more convenient and is more practical because there is no need for milk bottles, no need to wash and sterilize bottles, and there is no need to get up at the middle of the night to prepare a bottle of milk. Breastfeeding also does not cause too much burping on infants.However, there are times when breastfeeding is no longer possible, for reasons such as the following:- The mother needs to take medication because of an illness or a deficiency in certain nutrients- The mother’s breast does not produce enough milk- The baby is not able to suckle on his mother’s breast because of some birth defect – The mother eats foods that causes an allergic reaction to the baby – The baby is not the biological child of the mother, in cases of adoption- The baby is being solely cared for by his father, or by a guardian- The mother has to go to work on a full time basisOther concerns such as personal or religious beliefs may also hinder a mother to breastfeed.In these cases, baby formula feeding can be a substitute to make sure that the baby still gets the nutrients he needs to maintain a healthy body. There are a lot of choices for formula feeding, and there are special infant formulas that address certain peculiar health concerns such as babies with sensitive digestive systems, where they cannot digest ordinary milk formula. There are also baby formulas that are fortified with certain vitamins and minerals that are helpful in the physical development of the baby. Before proceeding to using baby formula, parents should consult the baby’s pediatrician to make sure that their baby formula feeding is done right. Milk labels already have instructions on how frequent the baby should be fed, and the amount of powdered formula to add to a given amount of water. When changing milk formula brands, this should be done slowly, and it should not be a sudden change, because the baby might not like the taste of the new brand. It is advisable to first adjust the measurement, for example, for the first week, four scoops of formula can be divided into a ratio of three is to one (three scoops old brand and one scoop new brand), and the new brand can be increased until the baby has gotten used to the new brand. Baby formula feeding is not a hindrance to achieving a healthy mother and child bond. When bottle feeding, the baby should still be held in a way that it is still close to the mother’s breasts. Breastmilk may be replaced, but the mother is irreplaceable.

One question almost every investor asks at some point is whether it is possible to achieve above market returns by selecting a diversified group of stocks according to some formula, rather than having to evaluate each stock from every angle.

There are obvious advantages to such a formulaic approach. For the individual, the amount of time and effort spent caring for his investments would be reduced, leaving more time for him to spend on more enjoyable and fulfilling tasks. For the institution, large sums of money could be deployed without having to rely upon the investing acumen of a single talented stock picker. Many of the proposed systems also offer the advantage of matching the inflow of investable funds with investment opportunities. An investor who follows no formula, and evaluates each stock from every angle, may often find himself holding cash. Historically, this has been a problem for some excellent stock pickers. So, there are real advantages to favoring a formulaic approach to investing if such an approach would yield returns similar to the returns a complete stock by stock analysis would yield.

Many investment writers have proposed at least one such formulaic approach during their lifetime. The most promising formulaic approaches have been articulated by three men: Benjamin Graham, David Dreman, and Joel Greenblatt. As each of these approaches appeals to logic and common sense, they are not unique to these three men. But, these are the three names with which these approaches are usually most closely associated; so, there is little need to draw upon sources beyond theirs.

Benjamin Graham wrote three books of consequence: “Security Analysis”, “The Intelligent Investor”, and “The Interpretation of Financial Statements”. Within each book, he hints at various workable approaches both in stocks and bonds; however, he is most explicit in his best known work, “The Intelligent Investor”. There, Graham discusses the purchase of shares for less than two – thirds of their net current asset value. The belief that this method would yield above market returns is supported on both empirical and logical grounds.

In fact, it currently enjoys far too much support to be practicable. Public companies rarely trade below their net current asset values. This is unlikely to change in the future. Buyout firms, unconventional money managers, and vulture investors now check such excessive bouts of public pessimism by taking large or controlling stakes in troubled companies. As a result, the investing public is less likely to indulge its pessimism as feverishly as it once did; for, many cheap stocks now have the silver lining of being takeover targets. As Graham’s net current asset value method is neither workable at present, nor is likely to prove workable in the future, we must set it aside.

David Dreman is known as a contrarian investor. In his case, it is an appropriate label, because of his keen interest in behavioral finance. However, in most cases the line separating the value investor from the contrarian investor is fuzzy at best. Dreman’s contrarian investing strategies are derived from three measures: price to earnings, price to cash flow, and price to book value. Of these measures, the price to earnings ratio is by far the most conspicuous. It is quoted nearly everywhere the share price is quoted. When inverted, the price to earnings ratio becomes the earnings yield. To put this another way, a stock’s earnings yield is “e” over “p”. Dreman describes the strategy of buying stocks trading at low prices relative to their earnings as the low P/E approach; but, he could have just as easily called it the high earnings yield approach.

Whatever you call it, this approach has proved effective in the past. A diversified group of low P/E stocks has usually outperformed both a diversified group of high P/E stocks and the market as a whole.

This fact suggests that investors have a very hard time quantifying the future prospects of most public companies. While they may be able to make correct qualitative comparisons between businesses, they have trouble assigning a price to these qualitative differences. This does not come as a surprise to anyone with much knowledge of human judgment (and misjudgment). I am sure there is some technical term for this deficiency, but I know it only as “checklist syndrome”. Within any mental model, one must both describe the variables and assign weights to these variables. Humans tend to have little difficulty describing the variables – that is, creating the checklist. However, they rarely have any clue as to the weight that ought to be given to each variable.

This is why you will sometimes hear analysts say something like: the factor that tipped the balance in favor of online sales this holiday season was high gas prices (yes, this is an actual paraphrase; but, I won’t attribute it, because publicly attaching such an inane argument to anyone’s name is just cruel). It is true that avoiding paying high prices at the pump is a possible motivating factor in a shopper’s decision to make online Christmas purchases. However, it is an immaterial factor. It is a mere pebble on the scales. This is the same kind of thinking that places far too much value on a stock’s future earnings growth and far too little value on a stock’s current earnings.

The other two contrarian methods: the low price to cash flow approach and the low price to book value approach work for the same reasons. They exploit the natural human tendency to see a false equality in the factors, and to run down a checklist. For instance, a stock that has a triple digit price to cash flow ratio, but is in all other respects an extraordinary business, will be judged favorably by a checklist approach. However, if great weight is assigned to present cash flows relative to the stock price, the stock will be judged unfavorably. This also illustrates the second strength of the three contrarian methods.

They heavily weight the known factors. Of course, they do not heavily weight all known factors. They only consider three easily quantifiable known factors. An excellent brand, a growing industry, a superb management team, etc. may also be known factors. However, they are not precisely quantifiable. I would argue that while these factors may not be quantifiable they are calculable; that is to say, while no exact value may be assigned to them, they are useful data that ought to be considered when evaluating an investment.

There is the possibility of a middle ground here. These three contrarian methods may be used as a screen. Then, the investor may apply his own active judgment to winnow the qualifying stocks down to a final portfolio. Personally, I do not believe this is an acceptable compromise. These three methods do not adequately model the diversity of great investments. Therefore, they must either exclude some of the best stocks or include too many of the worst stocks. It is wise to place great weight upon each of these measures; however, it is foolish disqualify any stock because of a single criterion (which is exactly what such a screen does).

Finally, there is Joel Greenblatt’s “magic formula”. This is the most interesting formulaic approach to investing, both because it does not subject stocks to any true/false tests and because it is a composite of the two most important readily quantifiable measures a stock has: earnings yield and return on capital. As you will recall, earnings yield is simply the inverse of the P/E ratio; so, a stock with a high earnings yield is simply a low P/E stock. Return on capital may be thought of as the number of pennies earned for each dollar invested in the business. The exact formula that Greenblatt uses is described in “The Little Book That Beats the Market”. However, the formula used is rather unimportant. Over large groups of stocks (which is what Greenblatt suggests the magic formula be used on) any differences between the various return on capital formulae will not have much affect on the performance of the portfolios constructed.

Greenblatt claims his magic formula may be used in two different ways: as an automated portfolio generation tool or as a screen. For an investor like you (that is, one with sufficient curiosity and commitment to frequent a site such as this) the latter use is the more appropriate one. The magic formula will serve you well as a screen. I would argue, however, that you needn’t limit yourself to stocks screened by the magic formula, if you have full confidence in your judgment regarding some other stock.

These four formulaic approaches (the three from Dreman and the one from Greenblatt) will likely yield returns greater than or equal to the returns you would obtain from an index fund. Therefore, you would do better to invest in your own basket of qualifying stocks than in the prefabricated market basket. If you want to be a passive investor, or believe yourself incapable of being an active investor, these formulaic approaches are your best bet.

In fact, if I were approached by an institution making long – term investments and using only a very small percentage of the fund for operating expenses, I would recommend an automated process derived from these four approaches. I would also recommend that 100% of the fund’s investable assets be put into equities, but that is a discussion for another day (in fact, it’s a discussion for Tuesday; my next podcast is devoted to the dangers of diversification). If, however, you believe you have what it takes to be an active investor, and that is truly what you wish to be, then, I would suggest you do not use these approaches for anything more than helping you generate some useful ideas.

If you choose this path, you need to be clear about what being an active investor entails. Read this next part very carefully (it is correct even though it may not appear to be): I have never found a screen that generates more than one buy order per hundred stocks returned. Even after I have narrowed the list of possible stocks down by a cursory review of the industry and the business itself, I have never found a method that can consistently generate more than one buy order per twenty – five annual reports read.

Here, I am citing my best past experiences. In my experience, most screens result in less than one buy order per three hundred stocks returned, and I usually read more like fifty to a hundred annual reports per buy order at a minimum. You may choose to invest in far more stocks than I do. Perhaps instead of limiting yourself to your five to twelve best ideas as I do, you might want to put money into your best twenty – five to thirty ideas. Do the math, and you’ll see that is still quite a bit of homework.

That’s why remaining a passive investor is the best bet for most people. The time and effort demanded of the active investor is simply too taxing. They have more important, more enjoyable things to do. If that’s true for you, the four formulaic approaches outlined above should guide you to above market returns.