http://www.cnbc.com/id/28511421
Worse yet, now I have to worry that, for the benefit of the world, Warren Buffett will send his goons to kill me. As long as I'm a dead man walking, I might as well make things worse before I go. Here now, more of my opinions about the economy.
I wonder what people mean when they say the economy will recover in 2010. The only way that can happen is if another irrational bubble forms thus creating an illusion of wealth similar to our previous illusions. If you take illusions out of the equation, there isn't anything to get "back" to. The wealth was never there in the first place.
I said before that I think we're on the cusp of a change as fundamental as the industrial revolution. But this time the change will be on the consumption side, not the production side. As a society we have dabbled with recycling and such, but it has always been fairly optional. There was no real penalty for waste.
The coming consumption revolution won't be strictly for the benefit of the environment. It will be an economic necessity, driven largely by the huge numbers of retired poor. There simply won't be enough stuff for everyone if waste is allowed.
The Internet will make this revolution possible. I've already written about the concept of ride sharing becoming widespread if the Internet and smart phones allow you to easily find rides going your way. That's just one example of how society could adapt to having less money without losing much in terms of happiness. Here's another example:
In California we're facing a severe budget deficit, and this will demand cuts in education among other things. I can imagine a future economy where everyone is home schooled over the Internet, and the average result is an improvement. With the Internet you could leverage the best teaching methods to the entire country. No one gets the bad teacher or the disruptive class. There are no bullies and no cliques.
Obviously you can see lots of problems with this approach. We assume that kids gain a lot from the social interaction of being in school. And of course personal attention from a teacher is important. But we have enough home schooled kids in the world to test that theory. My guess is that as long as home schooled kids have friends in the neighborhood, and siblings, they socialize just fine. The social skills can be learned on sports teams and at Girl Scouts. And I suspect a parent can give better personal attention than a teacher with 20 students.
Poor kids don't have computers and Internet connections. But subsidizing them would be far cheaper in taxes than sending them to school. And suddenly everyone would get the same quality of education.
I'm reading an excellent book called Outliers, by Malcolm Gladwell. One of the topics involves the huge academic disadvantage absorbed by kids who are the younger ones in a given class. Eleven months is a huge difference in maturity when you are in second grade. Home schoolers could start grades on their birthdays, and always be at the same maturity level as their peers. That change alone can buy you a big gain in average academic achievement.
Gladwell also discusses the disadvantage of having no school in the summer. It's a legacy of our farming past, with no current utility. Every summer the American kids lose ground to the Japanese kids who school year round. Home schooling would have no long breaks. Another problem solved.
This is the sort of change that could never happen if the economy was in a happy bubble and it seemed that money was abundant. But as the reality of our economic situation settles in, unthinkable options become thinkable. The good news is that the unthinkable options will have lots of advantages.
Votes: +3
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The other day I was at the Small Dog Park. It's a fenced area where dogs under 20 pounds can frolic with each other. I was chatting with a friend, whose dog is named Indy, about a movie I just watched involving a dog named Marley. After my friend left, I met a guy who has two Italian Greyhounds, coincidentally named Marley and Indy.
I don't know the odds of discussing two dogs named Marley and Indy, immediately followed by an unrelated discussion of two different dogs named Marley and Indy. I'm thinking it is in the smallish category.
Speaking of coincidences, I have started noticing that all movies are about me personally. For example, the Marley and Me movie is about a guy who writes humorous columns about his dog. My last blog post prior to watching the movie was a humorous piece about my own dog. (See below.) The writer in the movie worked in a cubicle at one point, and if you look closely at the comic hanging on his wall, it's Dilbert.
There's a bit of selection bias in this coincidence. I did know it was about a dog. But I wasn't aware it was about a writer who writes humorous bits about his dog. And I didn't expect to see one of my drawings in it.
Still, it seems that every time I watch a movie or a TV show lately there is at least one element that is yanked directly from my life. And I don't mean the obvious stuff such as "we are both humans." The connections are usually pretty obscure.
I have to remain true to my skeptical roots and explain these coincidences away with references to selective memory, and pointing out that it would be even stranger if there were no coincidences at all, given the richness of life's experiences. But it got me wondering if there is any way to design an experiment to test the theory that life is an illusion.
Obviously the illusion could be so well designed that all testing of it would be cleverly thwarted. So a negative result would mean nothing. But suppose this illusion was providing a fire hose of ongoing clues. What would those clues look like?
One possible clue is that your life might have what I will call a theme. For example, Steve Jobs' theme is that he can turn any business into a huge winner. You might call that skill, but he still had to be in exactly the right places at exactly the right times for his particular skill to be useful. I don't think he would have been much of a hunter/gatherer.
You probably know people who are the opposite of Steve Jobs, able to snatch defeat from the jaws of victory again and again, through no obvious fault of their own. It looks like extraordinary bad luck. That's a theme.
If your name is Kennedy, you might have good luck with love and money and power, but bad luck with transportation. Stay away from PT boats, convertibles in Dallas, cars in rivers, and small aircraft. That's a theme.
Some people are lucky in love, but unlucky in health. That's a theme. You get the picture. So ask yourself if your life would look entirely random from an objective viewpoint or is there a recurring theme. If you have a theme, you might be a product of design.
Another clue that life is an illusion is that perceived reality might have inexplicable dead ends or cracks. Consider the physics study of entanglement, where particles influence each other at any distance, which is seemingly impossible. Or consider that light is both a particle and a wave. Physics is full of examples where reality seems to have cracks and dead ends.
How would you test to see if life is an illusion?
Votes: +6
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I figured moving the dog was my best chance of not regretting this plan. She's a 12-pound toy Australian Shepherd and always in a good mood. When she's sleepy you can mold her into any position you like, Gumby-style. My idea was to bring her up toward my chest, with her back to my stomach, spoon position. Then I could turn sideways, insert my special small knee pillow between my legs and be good to go.
It was totally dark so I was operating by touch. I reached down and pulled little Snickers up to my chest, adjusted my blankets and pillows, and started settling in for a luxurious snooze. I love it when a plan comes together like that.
Few things are more soothing than sleeping with a warm puppy. I decided to use the dog as sort of a little pillow for my snout. It felt wonderful to snuggle my nose in between her ear and her neck area. She was totally unconscious so she took any position I assigned. It was great, but perhaps one more adjustment would make it perfect. I decided to put one arm around her and slip my hand under her head, just to get extra comfy. But there was just one problem.
HER HEAD WAS MISSING!
I was panicked, feeling around in the dark for where she must have contorted her head to make it so far from where I knew it had to be. I slipped my hand under my pillow and felt around, nothing. I checked to see if I was accidentally lying on her head: negative. Her head just wasn't there. In my half-asleep state, I worried that a horrible accident had happened during the night, possibly involving a circular saw. I realize that sounds unlikely to you, but keep in mind that my own snoring doesn't wake me, and I did have a headless dog.
I'm sure many of you readers are ahead of me on this story. Eventually I realized her head was on the other side of her body, exactly where it belonged. I had been snuggling my face into my dog's ass.
So that's how my 2009 started. I'm really hoping it isn't some sort of omen.
Votes: +10
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But I think I found the all-time winner in this category in a Forbes article about billionaires who lost some or all of their fortunes in 2008. Before you read about him, allow me to describe the conversation that the universe had with his soul before he was born. I think it went something like this:
Universe: I've decided to make you a billionaire.
Soul: Woo-hoo!
Universe: But you will lose more than half of it in one year.
Soul: I guess that's still okay. That's still a lot of money.
Universe: And you'll probably go to jail for two years.
Soul: Dang. I knew there was a catch. Still, it's only two years.
Universe: Actually, that's not the catch.
Soul: Uh-oh.
Universe: Your name will be Anurag Dikshit.
Soul: Ha ha! Good one. Seriously, what will my name be?
Universe: We're done here, Dikshit.
http://finance.yahoo.com/banking-budgeting/article/106352/Billionaire-Blowups-of-2008
Votes: +2
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Recently a reader sent me a link about a writer who has the same experience but better research to explain why. The bottom line is that writing requires will power to avoid distraction, and will power is correlated with your glucose levels. In other words, your free will is actually sugar.
http://scienceblogs.com/cognitivedaily/2008/03/practicing_selfcontrol_consume.php
This makes me wonder if there is an optimal food strategy for seduction. Apparently bringing a woman chocolate will only increase her glucose levels and with that her ability to resist you. In fact, a guy should want his woman to be good and hungry, preferably on a diet. It turns out that resisting one sort of temptation makes it harder to resist a different sort at the same time.
If that is not enough, I just did a Google search to confirm that alcohol lowers your glucose levels. That fits the theory. Everyone knows they have less will power after a few drinks.
Putting it all together, the best first date a guy could arrange would involve a woman who is on a diet to begin with. Eating is the first temptation she is trying to resist, making other temptations that much harder to resist. The date would start at around 5 pm when her glucose levels are starting to drop and the seducer should keep her hungry as long as possible. Add some alcohol to the mix and her glucose will drop further. Now add yet another temptation. I'm thinking a stroll through a high-end shopping center would work, as long as the woman believed it would be rude to actually purchase something while on a first date. She would be tempted to pop into the stores to take a better look, but she would resist.
And you thought science wasn't good for anything.
Votes: +7
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To defeat terrorism, specifically the most impressive attacks, you must cut off the terrorists' sources of funds. Mission accomplished. In fact, thanks to the mortgage meltdown, we cut off everyone's funding.
I heard on 60 Minutes that Saudi Arabia needs oil to be at $55 a barrel just to pay the bills. With oil near $40 a barrel they are in trouble. I assume other oil producing countries are in the same leaky boat.
When oil prices were high, most people assumed prices would stay high. So oil rich countries started investing and spending like crazy, getting their citizens and friends addicted to higher standards of living. When those countries need to pull back on that spending, where do you think they will cut first? I think it will be hard to fund terrorists when you can't afford to pay the garbage man. And keep in mind that a successful terrorist attack on U.S. financial infrastructure could further lower the demand for oil.
I'm overstating the case, as I like to do, but I have to think it is becoming clear to everyone that a frail U.S. economy is bad news for everyone who would prefer driving a car over riding a camel.
On a related note, you haven't heard much bravado from Chavez and Putin lately.
Votes: +7
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First, many of you pointed out that capitalism depends on people having the option of buying individual stocks. That's how companies raise capital. But surely there is a better way to raise capital than by convincing idiots they know more than they do.
Suppose citizens had two ways they could invest in equities. One channel is through the general index of all stocks (not just the S&P 500). The other is a fund managed by venture capitalists along with their own money. With this system startups still get funded, but only by experts who are close to the action, and citizens are still diversified. And I could imagine some sort of percentage-of-assets limit on how much individuals could invest in venture capital funds.
If a startup succeeds, it gets rolled into the index. From that point on its stock price would move with its actual earnings, as estimated by some sort of regulating board. It wouldn't matter if the regulators got the stock price wrong one year because it would average out with other stocks, and they could always go back and adjust it on appeal from the company.
Employees of a company could still own stock in that enterprise, so they are incented to get profits up. But outsiders could not own the individual stock.
The second objection to banning individuals from owning stock is the Warren Buffett argument. The thinking is that Warren Buffett's method of investing proves that individuals can succeed by buying undervalued stocks and holding them for the long run. So since we know individuals can somewhat easily succeed at investing in stocks, it would be an unreasonable limit on freedom to prevent them from doing it.
There are a few problems with that line of thinking. First, Warren Buffett buys companies, not stocks, in the sense that his stake is so large he can influence management. And his access to information about the company is much better than yours. He's a perfect example of why an individual should NOT be buying stocks; you're competing against the likes of Warren Buffett for limited resources. In the long run, Warren Buffett will have his money and yours too. You're no Warren Buffett.
Still, there are plenty of civilian investors who have done well buying value stocks and holding for the long run. But wouldn't you expect a wide distribution of luck in any gambling arena? If every investor picked stocks entirely randomly, you would still produce a good number of Warren Buffetts entirely by chance. And our brains are wired to assume those winners had the secret formula for investing.
If Warren Buffett's success is indeed a function of following a simple philosophy of investing, and that method has been well understood for decades, you would expect most managed mutual funds to beat the averages too. They don't.
Votes: 0
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http://www.nytimes.com/2008/12/21/business/21novelties.html?_r=1&ref=technology
I also came across an application that allows you to use the Bluetooth feature of your phone to lock your computer when you (and your phone) walk away. I'm guessing you'll see more of this, maybe for your home and car.
I also heard about an application that lets you take a picture of any item with your iPhone and it finds an online shopping site that carries that exact item. Very cool. (Update: Here's the link: http://www.amazon.com/gp/feature.html?ie=UTF8&docId=1000291661)
These applications got me thinking what else is in the pipeline. I'll take a stab at a few predictions with full knowledge that you will provide links to people already working on these ideas.
WHATS-HIS-FACE: This application would let you discreetly take an iPhone photo of an acquaintance whose name you can't remember then it uses face recognition to search for the name online. Someday everyone will have a Facebook-like web page, so searching for faces will be feasible.
DOCTOR-IN-A-BOX: Someday you'll be able to take an iPhone picture of your suspicious moles, abrasions, fungus, or whatever and get an instant automated diagnosis and suggested treatment.
WHAT'S-IT-LIKE-THERE? Imagine wondering how long the line is to an event, or what a particular forest fire looks like, for example. You send a query through your iPhone for anyone who is in that area, according to GPS tracking, and ask for a look. A kind stranger takes your query, sets his phone to stream video, and gives you the view from his perspective. You would have eyes anywhere there are people.
BRAIN-EXTENDER: Google and Wikipedia are already brain extenders. You can find almost any information you want and quickly. But imagine how much cooler it would be if your iPhone headset was continuously monitoring your conversations and answering your questions as they arise, or whispering suggestions in your ear. That application seems likely to me.
Do you have any more futuristic iPhone predictions?
Votes: +1
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I remind you that I lean libertarian (without the crazy stuff) so all of my impulses are to allow people the freedom to hurt themselves any way they choose, so long as their corpses don't block my driveway or cost me anything. So the argument I am about to make offends even my own sensibility. The troubling part is that it makes sense.
Let's begin by noting there are already plenty of restrictions on personal freedoms when the consensus is that these restrictions somehow protect people from themselves, or they protect society as a whole. For example, where I live you can't legally...
- - Drive without a seatbelt
- - Ride a motorcycle without a helmet
- - Commit suicide
- - Practice law, medicine, or other professions without a license
- - Operate a motor vehicle while under the influence
- - Gamble in most places
- - Carry an Uzi down the street
- - Buy dynamite
The list goes on, and that doesn't even include the many restrictions on underage activities. So there is nothing unusual or unprecedented about legal restrictions on freedom when an argument can be made that it protects lives or property.
My argument against allowing individuals to invest in stocks is that unless you have insider knowledge, which is already illegal, your odds of beating the index averages are slim. It is nothing more than gambling.
The myth of stock investing is that a person who does more research has better results. But there is no science to support that view. Indeed, the person who understands the most about individual stock investing avoids them completely and invests in ETFs or index funds.
The problem with doing your own research on stocks is that you must rely on the information coming from the management of a company, and managers are generally misinformed or lying. Even the most seasoned investment professionals running mutual funds perform worse than the indexes on average. Brains and research can't overcome the fact that much of your data is deliberately tainted at the source.
When people go to Vegas to gamble, they usually set some sort of limit for their losses. And they go with the full knowledge that winning is unlikely. It makes sense for that sort of activity to be legal, within limits, because it is viewed as entertainment and not investment. But if it were common for people to bet their retirement savings on Blackjack, you can be sure it would be illegal.
We don't allow unlicensed people to practice law or medicine, sell real estate, or even build a house. It is entirely consistent to restrict the untrained from making risky stock investments.
I reiterate that this runs against my own libertarian philosophy. I would feel I had lost something important if I couldn't invest in individual stocks. But it is also true that my net worth would be larger if I had never done it. And it would be larger still if I hadn't allowed professionals to do it on my behalf.
If anyone comments to this post by saying, "I do my own research and I made money in the stock market," it is proving my point. And if you don't see why that proves my point that further proves my point.
Votes: +2
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http://www.msnbc.msn.com/id/28182292
This idea appeals to me on many levels. Obviously I'd want a phone in my casket just in case I pop back to life. Although I'm fairly certain that if I wake up in a casket I would be able to scream through six feet of dirt, I'd still want a phone as a backup.
You might argue that the embalming fluid would eliminate any chance of going back to work on Monday. And the fact I specified cremation in my will reduces the odds of waking up in a casket. But I am cautious by nature when it comes to issues such as being buried alive. There is a non-zero chance my last wishes are misinterpreted then the undertaker runs out of embalming fluid and decides to fake it, and my purported death is nothing but an extra good nap. It could happen, and I want a phone. I also want an outlet and a charger. And I want my casket to be at least 2,000 square feet with 10-foot ceilings, ventilation, good lighting, and a bathroom. So yes, I get the whole cell phone thing.
I'm sure my readers realize this trend creates an opportunity for some world class pranks. Begin by pretending you are putting the deceased person's cell phone in the casket and then pocket it. Later you can call the relatives of the departed and ask questions such as "How's the weather out there?" You might accuse the living of being too hasty about dividing up your possessions. Tell them you have befriended some worms but you are concerned they are up to no good. If they ask how you are doing, say everything was fine until you farted. There's no end to the comedic opportunities.
Votes: +2
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