Stock Pickers are Dumber than Dr. Phil

Excerpt from Jeff Brown:

So here are the two basic financial truths this job has taught me:

First, success comes from smart budgeting, not super-smart investing.
Thrifty budgeting isn't about a life of want, it's about trimming the things that don't really matter - so you can have the things that do.

The other essential personal-finance truth is that investors should suppress the ego.
Americans celebrate winning, and most investors define that as a big return - beating the overall market. That means buying and selling, which rack up annual fees and tax bills equal to 2 to 3 percent of the money invested.
An inexperienced, passive investor can escape those costs - and match the market's returns - simply by holding low-fee index-style funds long-term. Because of the extra costs, the active investor has to beat the market by 2 or 3 percentage points just to match the passive investor's results.It's like lifting your bowling score from 200 to 300 - and keeping it there. Forget it.

Nanoengineered concrete could cut C02 emissions

While government leaders argue about the practicality of reducing world emissions of carbon dioxide, scientists and engineers are seeking ways to make it happen.

One group of engineers at MIT decided to focus its work on the nanostructure of concrete, the world's most widely used material. The production of cement, the primary component of concrete, accounts for 5 to 10 percent of the world's total carbon dioxide emissions; the process is an important contributor to global warming.

In the January issue of the Journal of the Mechanics and Physics of Solids, the team reports that the source of concrete's strength and durability lies in the organization of its nanoparticles.

"If everything depends on the organizational structure of the nanoparticles that make up concrete, rather than on the material itself, we can conceivably replace it with a material that has concrete's other characteristics-strength, durability, mass availability and low cost-but does not release so much CO2 into the atmosphere during manufacture," said Franz-Josef Ulm, the Esther and Harold E. Edgerton Professor of Civil and Environmental Engineering.

Quotes for the day

"The whole dream of democracy is to raise the proletarian to the level of stupidity attained by the bourgeois."
-Gustave Flaubert

"Philosophers say a great deal about what is absolutely necessary for science, and it is always, so far as one can see, rather naive, and probably wrong."
-Richard Feynman

"You can pretend to be serious; you can't pretend to be witty."
-Sacha Guitry

"Trying is the first step towards failure."
-Homer Simpson

"Facts do not cease to exist because they are ignored."
-Aldous Huxley

"A university is what a college becomes when the faculty loses interest in students."
-John Ciardi

Cliché

From Peter Selgin:

The novelist Martin Amis calls all writing a "campaign against cliché." "Not just clichés of the pen," he writes,"but clichés of the mind and clichés of the heart."

A cliché is a figure of speech that once had its moment in the sun. Once upon a time, the phrase It's raining cats and dogs was poetry worthy of Shakespeare. Now it's just a poor little tired old cliché. Were you the first to coin that expression, you'd be rightly proud. But you're not, . . . .

Most clichés are fairly prosaic: desperately lonely qualifies; so does wreaked havoc; so does abject poverty (what other kind is there?) and sweating profusely and every name in the book. Said too often, even "the heaventree of stars hung with humid nightblue fruit," Joyce's most gorgeous line in Ulysses, risks turning into a cliché.

A fool and his money . . .

The Wall Street Journal. “Amid a continuing glut of homes for sale in most of the country, buyers should have plenty of choices and lots of bargaining power. In Miami-Dade, the number of existing condos on the market is enough to last 27 months at the current sales rate, says consultant Jack McCabe. The oversupply will grow, he says, as about 8,000 condos are expected to be completed this year and 12,000 in 2008.”

“‘It’s going to get bloody down here,’ Mr. McCabe says. He estimates that condo prices in Miami-Dade fell between 8 percent and 10 percent last year and will drop 20 percent in 2007. Eventually, he predicts, hedge funds and other investors will step in to buy surplus condos in bulk at huge discounts.”

Republican President suspends habeas corpus

edited excerpts from:wikipedia


A writ of habeas corpus is a judicial mandate to a prison official ordering that an inmate be brought to the court so it can be determined whether or not that person is imprisoned lawfully and whether or not he should be released from custody. The writ is "the fundamental instrument for safeguarding individual freedom against arbitrary and lawless state action."

On April 27, 1861, habeas corpus was suspended by President Lincoln in Maryland and parts of midwestern states, including southern Indiana during the American Civil War. Lincoln did so in response to riots, local militia actions, and the threat that the border slave state of Maryland would secede from the Union, leaving the nation's capital, Washington, D.C., surrounded by hostile territory. Lincoln was also motivated by requests by generals to set up military courts to rein in "Copperheads" or Peace Democrats, and those in the Union who supported the Confederate cause. His action was challenged in court and overturned by the U.S. Circuit Court in Maryland (led by Supreme Court Chief Justice Roger B. Taney) in Ex Parte Merryman, 17 F. Cas. 144 (C.C.D. Md. 1861). Lincoln ignored Taney's order. In the Confederacy, Jefferson Davis also suspended habeas corpus and imposed martial law. This was in part to maintain order and spur industrial growth in the South to compensate for the economic loss inflicted by its secession.

In 1864, Lambdin P. Milligan and four others were accused of planning to steal Union weapons and invade Union prisoner-of-war camps and were sentenced to hang by a military court. However, their execution was not set until May 1865, so they were able to argue the case after the Civil War. In Ex Parte Milligan 71 U.S. 2 (1866), the Supreme Court of the United States decided that the suspension of the writ did not empower the President to try and convict citizens before military tribunals. The trial of civilians by military tribunals is allowed only if civilian courts are closed. This was one of the key Supreme Court Cases of the American Civil War that dealt with wartime civil liberties and martial law.

In the early 1870s, President Grant suspended habeas corpus in nine counties in South Carolina, as part of federal civil rights action against the Ku Klux Klan under the 1870 Force Act and 1871 Ku Klux Klan Act.

Isaac Asimov - Three Laws of Robotics

excerpts and edited from: http://www.asimovonline.com/

In science fiction, the Three Laws of Robotics are a set of three rules written by Isaac Asimov, which almost all positronic robots appearing in his fiction must obey. Introduced in his 1942 short story "Runaround", although foreshadowed in a few earlier stories, the Laws state the following:

1. A robot may not injure a human being or, through inaction, allow a human being to come to harm.
2. A robot must obey orders given it by human beings except where such orders would conflict with the First Law.
3. A robot must protect its own existence as long as such protection does not conflict with the First or Second Law.

Later, Asimov added the Zeroth Law: "A robot may not harm humanity, or, by inaction, allow humanity to come to harm." This Law comes into play later in the internal chronology of Asimov's stories (as far as that chronology can be established).

Daniel Kahneman - pioneer in behavioral finance

In explaining why he entered the field of psychology, Kahneman once wrote:

It must have been late 1941 or early 1942. Jews were required to wear the Star of David and to obey a 6 p.m. curfew. I had gone to play with a Christian friend and had stayed too late. I turned my brown sweater inside out to walk the few blocks home. As I was walking down an empty street, I saw a German soldier approaching. He was wearing the black uniform that I had been told to fear more than others - the one worn by specially recruited SS soldiers. As I came closer to him, trying to walk fast, I noticed that he was looking at me intently. Then he beckoned me over, picked me up, and hugged me. I was terrified that he would notice the star inside my sweater. He was speaking to me with great emotion, in German. When he put me down, he opened his wallet, showed me a picture of a boy, and gave me some money. I went home more certain than ever that my mother was right: people were endlessly complicated and interesting.

Friedman quotes

“Nothing is so permanent as a temporary government program”

“If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand”

“Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.”

“The power to do good is also the power to do harm.”

“Concentrated power is not rendered harmless by the good intentions of those who create it.”

Equality or Freedom?

"A society that puts equality - in the sense of equality of outcome - ahead of freedom will end up with neither equality or freedom. The use of force to achieve equality will destroy freedom. On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality. Freedom means diversity but also mobility. It preserves the opportunity for today's less well off to become tomorrow's rich, and in the process, enables almost everyone, from top to bottom, to enjoy a richer and fuller life."


Milton Friedman

Friedman on Medical Care

"In the field of medical care. We have a socialist-communist system of distributing medical care. Instead of letting people hire their own physicians and pay them, no one pays his or her own medical bills. Instead, there's a third party payment system. It is a communist system and it has a communist result. Despite this, we've had numerous miracles in medical science. From the discovery of penicillin, to new surgical techniques, to MRIs and CAT scans, the last 30 or 40 years have been a period of miraculous change in medical science. On the other hand, we've seen costs skyrocket. Nobody is happy: physicians don't like it, patients don't like it. Why? Because none of them are responsible for themselves. You no longer have a situation in which a patient chooses a physician, receives a service, gets charged, and pays for it. There is no direct relation between the patient and the physician. The physician is an employee of an insurance company or an employee of the government. Today, a third party pays the bills. As a result, no one who visits the doctor asks what the charge is going to be—somebody else is going to take care of that. The end result is third party payment and, worst of all, third party treatment."
- Milton Friedman

Milk eliminates cardiovascular health benefits of tea

link to article

Sophia Antipolis, France, 9 January 2007: Research published online today in the European Heart Journal (1) has found that the protective effect that tea has on the cardiovascular system is totally wiped out by adding milk.

Tests on volunteers showed that black tea significantly improves the ability of the arteries to relax and expand, but adding milk completely blunts the effect. Supporting tests on rat aortas (aortic rings) and endothelial (lining) cells showed that tea relaxed the aortic rings by producing nitric oxide, which promotes dilation of blood vessels. But, again, adding milk blocked the effect.

The findings, by cardiologists and scientists from the Charité Hospital, Universitätsmedizin-Berlin, Germany, are bad news for tea-drinking nations like the British, who normally add milk to their beverage. The results have led the researchers to suggest that tea drinkers who customarily add milk should consider omitting it some of the time.

Their study showed that the culprit in milk is a group of proteins called caseins, which they found interacted with the tea to decrease the concentration of catechins in the beverage. Catechins are the flavonoids in tea that mainly contribute to its protection against cardiovascular disease.

Note - I have not done serious fact checking on this post -
let me know of any errors please.

Animation

Please click image.

Fact Checking 101 - update Grand Canyon

Thanks to a careful reader for sending this correction.



Fact Checking 101
How Skeptic magazine was Duped
by an Environmental Activist Group

by Michael Shermer

http://www.skeptic.com/eskeptic/07-01-17.html

The Grand Canyon

In last week’s eSkeptic , we published highlights from a press release issued by PEER (Public Employees for Environmental Responsibility), a Washington D.C.-based environmental watchdog group. That press release, dated December 28, 2006, was headlined:

HOW OLD IS THE GRAND CANYON? PARK SERVICE WON’T SAY
Orders to Cater to Creationists Makes National Park Agnostic on Geology

Washington, DC — Grand Canyon National Park is not permitted to give an official estimate of the geologic age of its principal feature, due to pressure from Bush administration appointees.

Unfortunately, in our eagerness to find additional examples of the inappropriate intrusion of religion in American public life (as if we actually needed more), we accepted this claim by PEER without calling the National Park Service (NPS) or the Grand Canyon National Park (GCNP) to check it. As a testimony to the quality of our readers, however, dozens immediately phoned both NPS and GCNP, only to discover that the claim is absolutely false. Callers were told that the Grand Canyon is millions of years old, that no one is being pressured from Bush administration appointees — or by anyone else — to withhold scientific information...

If asked the age of the Grand Canyon, our rangers use the following answer: ‘The principal consensus among geologists is that the Colorado River basin has developed in the past 40 million years and that the Grand Canyon itself is probably less than five to six million years old. The result of all this erosion is one of the most complete geologic columns on the planet.’

MARK HULBERT The value of doing nothing

excerpts and summary from article link to article-

I think we as investors have to face squarely the many lessons to be drawn from this newsletter rather than try to wriggle out from under them.

One of the most profound of these lessons is that you don't always have to be doing something in your portfolio in order to make money. Indeed, I suspect, constant fine-tuning is done more for psychological reasons than rational investment reasons.

Believe it or not, in every year I have examined, the average newsletter would have been better off doing no trading and just staying with their original investments.

The average newsletter model portfolio in 2006 gained 11.35%, according to the HFD. If none of these model portfolios undertook any transaction in 2006, however, this average would have been 12.15%, or 80 basis points higher.

In terms of proportions, 53% of the newsletters would have done better by doing nothing.

Note ... calculations don't take taxes into account; if they had been, then the percentage of newsletters that would have been better off doing nothing last year grows to 72%.

Reign of Errors

From the Fortune Sellers by W. Sherden

In autumn 1989, earthquake prognosticator Iben Browning predicted that on December 3, 1990 (plus or minus forty-eight hours), a devastating earthquake would strike New Madrid, Missouri, very near the epicenter of an 1811 earthquake classified as the most severe to strike North America in recorded history. As December 3 approached, the town of New Madrid was seized by mass panic. Schools and factories closed; shopping centers taped up their windows; many residents left town, and others called the American Red Cross in tears of hysteria; and rumors spread that the town's reservoir had dropped fifteen feet (and New Madrid does not even have a reservoir). Radio and television media invaded New Madrid from as far away as Poland to cover the im­pending disaster. But the earthquake never happened. Browning had convinced everyone otherwise, including highly credible media such as the New York Times.

The building of Browning's credibility explains how everyone was fooled. The press referred to him as "Dr. Browning" and described him as a Ph.D. specializing in earthquake prediction, with a great track record. Also, David Stewart, a Ph.D. in geophysics at Southeast Missouri State University's Earthquake Information Center, attested that Brown­ing's prediction was sound and said, "Here's a man who has hit several home runs."

As it turns out, Browning's Ph.D. is in zoology, his stated profession is actually "business consulting," and his backer Stewart is a believer in the use of psychic powers to predict earthquakes.

Let's Get Lazy

excerpt from article-


Unless you're working full-time in the financial world, you don't have the skills, tools, information, time or interest in playing the market, especially the bond market. And even if you do play the market, the odds are you'll lose because the more you trade the less you earn; transaction costs and taxes kill returns. So for 94 million out of America's 95 million investors, being a lazy investor is the best defensive strategy.


In fact, even the hotshots working full-time in the financial world follow the same strategy with the bulk of their assets. It's their biggest secret. Mutual fund managers making an average $400,000-plus playing the market with your money, often lock away the bulk of their retirement assets in safe, untouchable portfolios using a variation of a lazy portfolio strategy. Why not, they're no dummies, they've got families to protect too.


Lazy portfolios are simple, well-diversified portfolios of three to 11 no-load index funds, either mutual funds or ETFs. But, unfortunately, Wall Street doesn't want you to use this Nobel Prize-winning strategy because it can't rake off enough in transactions fees from index funds.


link to lazy portfolio article

Creationism in Our National Parks

by Donald Prothero

If you thought that censoring talk about global warming and suppressing the free speech of government scientists was bad enough, last December the government reached a new low. According to documents released on Dec. 28, 2006 by the Public Employees for Environmental Responsibility (PEER), Bush administration appointees will not allow rangers at Grand Canyon National Park to mention that the earth is more than a few thousand years old. “In order to avoid offending religious fundamentalists, our National Park Service is under orders to suspend its belief in geology,” said PEER Director Jeff Ruch. “It is disconcerting that the official position of a national park as to the geologic age of the Grand Canyon is ‘no comment.’” I have been unable to confirm this report in my own enquiries among rangers and on the NPS website, but perhaps the order is still being considered at the NPS and has not yet been forced on the rangers.



Please note correction in post above-

or

http://www.skeptic.com/eskeptic/07-01-17.html

Quotes for today

"When did I realize I was God? Well, I was praying and I suddenly realized I was talking to myself."
-Peter O'Toole

"Always be nice to your children because they are the ones who will choose your rest home."
- Phyllis Diller

"Life is pleasant. Death is peaceful. It's the transition that's troublesome."
-Isaac Asimov

"Fashion is a form of ugliness so intolerable that we have to alter it every six months."
-Oscar Wilde

The Paradox of Choice: Why More is Less

How consumers are paralyzed by the bewildering array of choices in the marketplace.

Design teams can often assume that more choice means better options and greater satisfaction for their users. However, Barry will discuss why we must reconsider this assumption. Too many choices can cause users to question their decisions before they even make them, set them up for unrealistically high expectations, and make them blame themselves for any failures. In the long run, too many choices can lead to decision-making paralysis for your users.

For example, for every ten choices offered to users in a 401K plan, two percent fewer people decide to participate in the plan. The users who participate are more likely to go with the most conservative investments because of their uncertainty. Barry's conclusion is that the more choices users are presented with, the more likely they are not to act—not to purchase—at all.

link to The Paradox of Choice article

The Shredder Hand

The Shredder Hand is the most convenient and compact way to get rid of those expired coupons, unwanted papers and old, confidential paper documents. At first glance it's just a pair of scissors, but with further exploration you will see that you can shred documents, or just parts of documents, without any electric or battery-operated power. Being the cheapest shredding option around it is amazing to think that it also has a long life and is small enough to be transported easily from the home to the office or classroom.

Champagne Housewarming Toolbox

Champagne Housewarming Toolbox
Moving can be traumatic — this great gift will help take the edge off! Classic metal toolbox holds two small bottles of bubbly, gourmet cookies, chocolates, gourmet cheese & crackers and a current issue of DWELL magazine PLUS essential tools (hammer, screwdriver, flashlight, extension cord and tape measure).

Price $120.00

How to rule your empire.

Liddell Hart - Strategy:

"The peaceful nations are apt, however, to court unnecessary danger, because when once aroused they are more inclined to proceed to extremes than predatory nations. For the latter, making war is a means of gain, are usually more ready call it off when they find an opponent too strong to be easily overcome. It is the reluctant fighter, impelled by emotion and not by calculation, who tends to press a fight to the bitter end. Thereby he too often defeats his own end, even if he does not produce his own direct defeat. For the spirit of barbarism can be weakened only during cessation of hostilities; war strengthens it - pouring fuel on the flames."


Machiavelli - The Prince:

The ruler ". . . ought to examine closely into all those injuries which it is necessary for him to inflict, and to do them all at one stroke so as not to have to repeat them daily; and thus by not unsettling men he will be able to reassure them, and win them to himself by benefits. He who does otherwise, either from timidity or evil advice, is always compelled to keep the knife in his hand; neither can he rely on his subjects, nor can they attach themselves to him, owing to their continued and repeated wrongs. For injuries ought to be done all at one time, so that, being tasted less, they offend less; benefits ought to be given little by little, so that the flavour of them may last longer.

Sun Tzu - The Art of War:
"The reason why an enlightened sovereign or a great general consistently wins military campaigns and achieves deeds beyond ordinary militarists is that he has acquired vital intelligence concerning the enemy well in advance.

This foreknowledge cannot be obtained from the spirits, it cannot be acquired from deduction based on past events and it also cannot be sought through astrological observation. It can only come from human beings, spies who possess sensitive information."

An inconvenient truth

"Any fool can paint a picture, but it takes a wise man to be able to sell it."

Samuel Butler

Bubble Psychology in 1837

The spirit of speculation and adventure pervaded the entire community ... and crowds of individuals of every description--the credulous and the suspicious--the crafty and the bold--the raw and the inexperienced--the intelligent and the ignorant--politicians, lawyers, physicians, and divines, hastened to venture some portion of their property in schemes of which scarcely any thing was known except the name.

That description of U.S. business culture just prior to the Panic of 1837 is from Scott A. Sandage's Born Losers: A History of Failure in America (Cambridge: Harvard University Press, 2005, p. 90).

Eastern Telegraph Company System Map

visualcomplexity.com | Eastern Telegraph Company System Map
Project Description:
Established in 1872 by Sir John Pender, the Eastern Telegraph Company (today Cable & Wireless) was an amalgamation of a number of British telegraph companies founded in the 1860s and responsible for the implementation of important lines such as Malta to Alexandria and London to Bombay.

Alvarez Bravo photographer at image blog

This is for entertainment purposes only.

How to Encourage Vermin in Your Neighbor’s Yard


Sometimes it’s not enough to have the greener grass or newer car when a neighborly enmity goes unchecked; amp up your ammunition and launch a rodent invasion against your antagonistic neighbor, in his own backyard.


STEP 1: Begin your vermin campaign in late summer, when rotting vegetables are abundant. The secret to a rodent invasion (and a rodent invasion done in secret) is to let the vermin come to you. If you build a compost pile with all that rotting vegetation, they will come!

link to article

The Spirit of Invention

" ... look at certain walls stained with damp or at stones of uneven color. If you have to invent some setting you will be able to see in these the likeness of divine landscapes, adorned with mountains, ruins, rocks, woods, great plains, hills and valleys of great variety; and then again you will see there battles and strange figures in violent action ... "
Leonardo Da Vinci

The Cat in the Hat

I like nonsense, it wakes up the brain cells. Fantasy is a necessary ingredient in living, It's a way of looking at life through the wrong end of a telescope. Which is what I do, And that enables you to laugh at life's realities.
- Dr. Seuss

Art of Learning

"Learning from books and teachers is like traveling by carriage," so we are told in the Veda. The thought goes on, " But the carriage will serve only while one is on the highroad. He who reaches the end of the highroad will leave the carriage and walk a foot."

Itten -The Art of Color

“Pick me up!” or “Bao bao!”

Great Toddle Forward

To make their babies competitive in the global economy, parents are making them learn Chinese.

• By Alexandra Wolfe

Hilton Augusta Rogers and her mother at home. (Photo credit: Joshua Lutz)

Hilton Augusta Rogers, 1 year and 10 months old, as blonde and blue-eyed a baby as ever was born in Manhattan, looked at the waitress taking her parents’ order at Shun Lee West, and said, “Bao bao!” which means “Pick me up!” in Mandarin. Startled, the waitress picked her up. Soon, other wide-eyed waitresses gathered around. One said, “Point to your nose” in Mandarin, which Hilton Augusta promptly did—as her parents, Jim Rogers and Paige Parker, a private investor and an aspiring author, looked on, beaming.

In an age when even a venerable New York institution like IBM has sold its most visible element to the Chinese, the city’s mandarins have realized, for class-preservation reasons, their children must adapt. Which is why Hilton Augusta knows more Mandarin than English: She has a Mandarin-speaking nanny. The lycée is passé (old Europe has no trade surplus), and some parents are scouring Craigslist and placing ads in the China Press for sitters who speak Mandarin, China’s official language.

Thanks to Jim Tyson for letting me know about this story.

Robert Frank - from my image blog

http://arthasreasons.blogspot.com/

Liberty is the right to do whatever the law permits.

"If you think you'll achieve happiness by hiring a lawyer to beat up on someone, hire a mugger. It's much cheaper." D. Campisi


"Lawsuit, n. A machine which you go into as a pig and come out as a sausage." A. Bierce


"For certain people after fifty, litigation takes the place of sex." Gore Vidal

Eta and Keyhole in the Carina Nebula

Dumbest Decisons?

Total Film described Connery's costume in Zardoz (consisting of a ponytail wig, leather knee boots, and a loincloth which bears a strong resemblance to a giant orange nappy or diaper) as the number 1 "dumbest decision in movie history".


During filming, Beatty lectured his Russian extras on the capitalist exploitation of labour, attempting to inspire them. According to the magazine Total Film in 2004, this was the 4th "dumbest decision in movie history": the extras duly went on strike, demanding higher wages.

I found these references on Wikipedia, but couldn't find the whole list of "dumbest decisions."
I anyone can find the whole list, let me know.