Tuesday, February 20, 2018

Partial List: Twin Peaks - Wax & Wane

Partial list of peaks...

Some I predict we are in (or recently passed):
  • Garage, driver, and long-haul truck driver
  • Oil, et al. price
  • Professional stock picker
  • Bank (traditional) - regulation and innovation are to "blame"
  • Farm (agricultural land use) - see here & here
  • Storage unit

And some I predict we are not:
  • Local truck driver and this
  • Oil, et al. quantity
  • Index investing (true, pure passive even without the growth of factor-based, which is active)
  • Bond price - relatively low rates as far as the eye can see
  • Reality TV
  • Zoning - the Complacent Class isn't done yet "protecting" us from new ideas and FOOL is all about
  • Authenticity - the desire for this is just building and its continued strength is evidenced by the concern so many have that it is going away.

Sunday, February 18, 2018

What's Ahead for Stocks - precise predictions

Seriously?!? You clicked thinking you'd find some nonsense about, say, money about to [do something in regards to] "the sidelines", or perhaps you wanted to know how many technical indicators were crossing arbitrary thresholds. Oh, maybe it was an insider's take on smart money that you sought. But what would make the traders behind it "smart", how would I know what "they" (in unison? all on the same side of each trade?) were doing, and if I did, why would I share it?

Markets recalibrate constantly to new information. They also recalibrate constantly to changes in the weighted-average risk appetite of market participants. Did something change over the past couple of weeks? Of course, there is always something changing. But what?...

John Cochrane offers a great post for that question. Short answer: nobody knows. It cannot be known.

But what if we're in a bubble? Yeah, about that... Scott Sumner has two recent posts on that topic and more. He suggests we not be so sure about labeling past prices bubbles and lower the status of pessimists (I agree). He also suggests we should not offer explanations for events for which we are ignorant (I agree).

The standard advice is still the best advice:

  • Set your asset allocation as appropriate for best achieving your goals and personal constraints.
  • Get broad (very broad) diversification . . . cheaply.*
  • Go for lunch.
  • Check from time to time (not minute to minute) readjusting if needed to more appropriately fit your current goals.

*There are LOTS of investment options out there. The links show just two--albeit, two very good ones for achieving broad, cheap diversification. Also, maybe this.

Highly Linkable - How Are *We* Doing?

This links post is comprised of several items I believe are linked together in theme or subject matter. See what you think...

First Don Boudreaux points to a great website and corresponding TED talk by Anna Rosling Rönnlund. The project is a photographic-based exploration of how people compare. The within-country and among-country comparisons highlight what wealth and poverty look like. Notice the similarities, notice the differences, and notice on what factors these things do and do not seem to correlate.

Steven Pinker makes a strong case that The Enlightenment Is Working--"Don’t listen to the gloom-sayers. The world has improved by every measure of human flourishing over the past two centuries, and the progress continues." Let's suppose you conducted a survey every year for the past two centuries asking people simply, "Are you better off today than last year?" My guess would be the average and very typical response would be hard to distinguish from 'basically no improvement'. YET, the improvement over that time span for all of humanity (not just the average but for EVERY cohort) is dramatic and undeniable (once you look at the evidence). Why might this paradoxical result occur?...

Part II of Russ Robert's The Numbers Game is an examination of economic progress which suggests answers to the prior question above. The subtle yet very dramatic, counter-intuitive lesson, Simpson's Paradox, is awesome. To be sure, Simpson's Paradox would not answer my hypothetical, but it relates to how we misperceive small but compounding change and growth. Also, don't miss the first installment of Russ's video series.

But wait, aren't there too many people (or soon will be) for all this good news to continue? Steven Landsburg explores this issue in this video. He starts where everyone should start but often does not by asking "How would we know?" I believe he makes a very strong case that the answer is 'NO' we don't have and will not have "too many" people.

Tyler Cowen pointed to a couple of posts by Katja Grace who ponders 'Why did everything take so long?' The first and second both cover how and why progress is so difficult.

Sunday, February 4, 2018

My 12 Rules for Life

Jordan Peterson started this. Many have been following. I like Tyler Cowen's, Megan McArdle's, and Arnold Kling's among others.

Here is my contribution to the cause:

  1. Try more things--reach out for more variety along all relevant dimensions.
  2. Quit more things.
  3. Read more (quantity, quality, and variety). 
  4. Practice ‘Hell Yeah!’ Or ‘No’.
  5. Listen with intention. 
  6. Smile more. 
  7. Choose honesty, demand the same, and respect when you get it. 
  8. Pursue what is being rewarded but always to the satisfaction of high ethical standards. 
  9. Trust your gut instincts. 
  10. Ask your spouse, children, immediate boss, and parents for permission. For everyone else, ask forgiveness. 
  11. Change your mind. Distance yourself from those who won’t. 
  12. Forgive and move on. 

Tuesday, January 23, 2018

Highly Linkable - Food and Health Myths

As you know, one of my soft spots is counter-conventional wisdom. Here are a few recent ones in the health and nutrition and food spaces.

From Vox, the science is in: exercise won’t help you lose much weight. Count this (that exercise helps weight loss) among the many things I adamantly believed up until few years ago.

In this James Altucher podcast Dr. Aaron Carroll explores some of his book The Bad Food Bible: How and Why to Eat Sinfully. Quit looking for magic food. Quit worrying about toxic food. Eat what works for you. Stay away from processed foods and too much (i.e., added) sugar.

Slate explores the implications of the junk science used to ban smoking on grounds of secondhand dangers. I believe we are in an age of rising puritanism. Tobacco is the drug in the cross hairs. It is low brow. Interestingly alcohol and marijuana are higher and rising status. Once again, mood affiliation and out-group shaming guides public policy. (HT: Robin Hanson)

On a more upbeat note, here is a great guide to finding a restaurant. Lots here about correctly interpreting the signals being given--both intentional and unintentional. (HT: Tyler Cowen)

Sunday, January 21, 2018

Forgiving and/or Forgetting

We live in interesting times. The scandals du jour are amplified in scope unlike in times past. This time is different not because we have scandals, but because the cycle is shorter, more intense, and much more wide spread. In many ways this is healthy--for instance in bringing about greater awareness and fuller cleansing. But in other ways it is unhealthy--for instance in progressing too rapidly for a deeper, more nuanced understanding and reconciliation.

Swift justice can be satisfying for victims, but it can also be incomplete ("Ah, good, we found the evil and dealt with it. All is now right with the world. No need to worry about 'that' again.") or it can be too widely applied ("Upon further inspection, all of the out group is guilty and we don't have time or need to gauge sinfulness; therefore, destroy them all." or "Upon further inspection, we are all guilty; therefore, let's just forget the whole thing and move along.")

Our social norms are evolving, which effectively means society is moving the goalposts on what we define as misconduct, injustice, harm, etc. This evolution is for the overwhelming most part rightful.  But now because of our technology our memories are longer and voices are stronger. I don't think we have yet fully appreciated this power or its ability to inflict damage. 

Consider the coordination of forgive and forget. This old adage was never more than an aspirational hope. I am very appreciative for how many of my past transgressions have been forgotten. I am even more thankful for all those that have been forgiven. The unfortunate truth is that forgiveness is less durable and more expensive than forgetfulness.

Here is my view on how we fit into forgive and forget.
And it is important to understand the implications . . .

Monday, January 15, 2018

Trump - One Year In

About a year ago, I posted on Trump looking at what I saw as the reasons to be optimistic and pessimistic. Let's revisit that now that we have a year under our belt.

Overall, I think my predictions were good with some notable variance in a couple areas. Of course, I was vague enough to prevent too much inaccuracy (or accuracy) by design. Here are the areas that standout to me with a look back at my prior comments.

The Good

  • Taxes - this one was somewhat surprisingly good, blemishes and all. [remember with all of these we are grading on a curve] Much like Chance, Trump only gets credit for being there to sign the bill. 
  • Regulation - 1.25 steps forward with 1 step back is still progress. Congress and Trump completely failed to reform much less repeal the ACA (Obamacare). I have low and ebbing faith Dodd-Frank, et al. will be meaningfully changed. Still, there are success stories, and slowing the rate of growth is itself improvement
  • Judicial Appointments - I somehow missed mentioning this previously, and it would have been in the optimism bucket. This one has lived up to realistic (not full libertarian) hope. 
  • Lost Respect for the Sanctity of the Office - yes this is a feature--let the scales fall from your eyes, the emperors have never been well dressed. But . . .
The Bad
  • Presidential Power & Authority - we may be chipping away at the Cult of the Presidency, but I don't yet see the groundswell from the left or the center that I might hope for. They are much to tied up in the emotion of this particular president's actions and words.
  • Immigration - unlike in trade (below), Trump's actions have matched his rhetoric in this area. Here it looks to be an on-going real fight and will perhaps be the most lasting and impactful negative consequence of Trump.
  • Trade - as I mentioned, his administration is a lot of (bad) talk on this, but so far little action. Still, he has many opportunities to make good on his very bad desires.
  • War - I was not pessimistic enough on this. Drone attacks have increased under Trump as the list of places we are at war have grown. The U.S. government with the help of a complicit even if blissfully ignorant populace continues to be wrongfully aggressive. Include in this the surveillance state, but I am fairly certain this one is sadly nonpartisan. 
  • Drug Policy - yep, unfortunately I nailed this one.
The Ugly
  • Hatred, Nationalism, Bullying, etc. - I was not as pessimistic as I should have been in this general area. The downside of losing the always undue respect for the U.S. presidency is that it took this buffoon to get us there. He is at best sloppy and inconsiderate, at worst hateful and demagogic. If you need links on this topic to prove the point, you have been in a coma for 12+ months.
On balance there are reasons to claim "silver linings" and reasons to claim "not so fast".

PS. For a better analysis of the economic policy results of Trump's first year, read Scott Sumner's take