Saturday, January 7, 2017

...writing post title...quit check of email and facebook...back to post - 2016 Resolution Fulfillment

For the longest time I have held myself out as a master multitasker. Part of this was probably because being able to do more than one thing well at one time simply has to be superior to being only a unitasker. I share Alton Brown's loathing of unitaskers in the kitchen. [bonus points if you know the one unitasker he allows in the kitchen]

But I have had a volte–face: I now believe that multitasking is a bug rather than a feature. (I still share Alton's view regarding kitchen gear.)

My wandering mind is not the juggling Jedi I hold it out to be. Rather it is a bungling, distracted toddler that needs to concentrate for best results. As with all things of this nature it is a matter of degree along a spectrum rather than an absolute dichotomy. And to that end I have moved decisively from the position that multitasking is desirable (i.e., good performance at multiple tasks done in concert is possible) to the position that unitasking is desirable.

How well something can be done is directly proportional to how singularly it can be focused upon. Adding complexity is not an efficient way to use up slack resources (spare brain power, excess stress aptitude, extra time, etc.). It is simply a way to make the success in the original task less likely.

And of course there are TED Talks on the subject. The Instant Gratification Monkey will make you laugh as it indirectly touches on my position. This one really gets to the multitasking points about the 6 minute mark--so feel free to shop on Amazon while it plays in the background until that point.

Highly Linkable - Science! Edition

This is a special episode of highly linkable. Following my hiatus, a backlog of links has developed. I am breaking them down into a few groups to keep it organized. As always, extra credit if you follow and complete all links in a particular post. This one is focusing on Science--both the science version as well as the Science! version. Hence, there is a mixture of politics, public policy, and economics in all of these. Enjoy!

Starting with the small stuff, Juan Enriquez suggests Wise Reprogramming of Life and asks What Will Humans Look Like in 100 Years.

Now that the simple ones are out of the way, let's get just a bit controversial by diving into Climate Change first with Megan McArdle telling Global-Warming Alarmists, You're Doing It Wrong and second with Hooper & Henderson pointing out a A Fatal Flaw with Climate Models.

We've discussed in the past the predicted continued rise in crop yields. Read this to see how robots will help aid the process. (Beware: economic ignorance alert at the end. Next time someone says "there are no stupid questions", direct them to the one that concludes this article).

This EconTalk interview, "But What If We're Wrong", with Chuck Klosterman is quite rewarding. Of course I would like it. I have a perpetual New Year's Resolution on just that concept.

Matt Ridley supplies a great addition to the growing wisdom that dieting is not about reducing fat. Notice the echos to Chuck Klosterman in the article.

Sticking with weight-loss for a moment, check out this piece from Vox on "The science is in: Exercise isn’t the best way to lose weight".

But maybe Vox is wrong. Scott Alexander challenges them on another topic, EpiPens.

I could have inserted these two short posts from Arnold Kling anywhere here. The first is his thoughts on Earth Day. The second is a quick econ lesson on organic farming.

And that all brings us to discuss science versus anti-science including just how false that comparison really is. First Reason asks if Republicans or Democrats are more anti-science. Second John Tierney discusses The Real War on Science.

Tuesday, January 3, 2017

Welcome Back

So it is, I return. Been away awhile. Way longer than desired, but I found my way back. The names have changed since I hung around. My dreams might have been my ticket out, but they remained and turned me around. I have come home.

No, dear reader, I don't mean this return to blogging; although it might equally apply. Rather the hiatus from blogging was largely driven by a return to where I live. Back around the time of the last post, we began searching in growing earnest for a destination home in Norman, OK. We found that home, just a couple blocks from campus and all the eclectic life that brings.

We always knew we'd make the move, but always found reasons to postpone. Until one day, we didn't. We let one thing lead to another and all of a sudden we stopped dreaming and started pursuing.

Financially we could have waited longer--way longer. We could have taken a stepping-stone path into a smaller place not quite so close and not quite so right. Remember that quote about playing it safe and letting life happen to you? I don't either.

“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” – Mark Twain


Monday, April 11, 2016

Highly Linkable

I want to go to there.

For those of you pondering in your apartments 'why should I read in my shower when I could listen to a podcast in my tub', this edition of links is especially for you.

First of all, EconTalk has been on a tear lately. Three gems:
Marina Krakovsky on the Middleman Economy
Jayson Lusk on Food, Technology, and Unnaturally Delicious
Matt Ridley on the Evolution of Everything
Second, Bejamin Powell joins Free Thoughts to discuss Out of Poverty: Sweatshops in the Global Economy.

Third, Uber co-founder Travis Kalanick shares how Uber plans to kill Big Traffic. BTW, Lyft is getting in on the carpool action as well.

Now for those who prefer to click and read the way nature intended:

Kavin Senapathy writing in Forbes suggests we not get too excited about the prospects (and promises) of microbiome makeovers.

Leave it to Grumpy to throw cold water on the magical promises coming out of the Sanders for Tsar camp.

So a science professor claims to have discovered a hidden value accruing to certain members of a particular profession, and a history professor is pretty sure he knows how much several groups of people in a profession should be paid. Luckily, Andy Schwartz is here to disagree.

Phil Magness draws interesting parallels between failed economic modeling and failed climate modeling. The money paragraph (HT: Arnold Kling):
In a strange way, modern climatology shares much in common with the approach of 1950s Keynesian macroeconomics. It usually starts with a number of sweeping assumptions about the relation between atmospheric carbon and temperature, and presumes to isolate them to specific forms of human activity. It then purports to “predict” the effects of those assumptions with extraordinarily great precision across many decades or even centuries into the future. It even has its own valves to turn and levers to pull – restrict carbon emissions by X%, and the average temperature will supposedly go down by Y degrees. Tax gasoline by X dollar amount, watch sea level rise dissipate by Y centimeters, and so forth. And yet as a testable predictor, its models almost consistently overestimate warming in absurdly alarmist directions and its results claim implausible precision for highly isolated events taking place many decades in the future. These faults also seem to plague the climate models even as we may still accept that some level of warming is occurring.

Wednesday, March 2, 2016

Investment List Question Partially Answered

A few days ago I posted two partial lists of investments and posed the question to identify the key distinction between them. Here is the answer.

The key distinction is cash flows. I contend that the assets in list #1 meaningfully generate cash flows while the assets in list #2 do not.

Consider what a cash flow is: a stream of payments going (flowing) to asset owners generated by the asset itself. This does not include money or other assets taken in exchange for ownership of the asset. That trade value is important, but using it to evaluate current (present) value must ultimately rely on guess work--namely guessing what someone in the future will pay for it. Using cash flows is a very useful method to value assets and get around this resale (aka, "greater fool") theory of value. 

Once you have a guess as to what cash flows will be for a given investment, all you need to do is apply a discount rate, sum the results, and viola you have a net present value (current price). And more importantly you now have a method to compare various assets' valuations. Of course, it is not quite that easy. We have to guess/argue about the timing and amount of cash flows, and we have to appropriately guess what discount rate to apply for a proper time-value of money adjustment. But there is even more complication.

There is a tension between my logic and my lists. The implied rent payment one saves by owning their home is fairly vague while the returns from turning copper into the product of electrical wiring is not so vague. Conceivably, if you define "cash flow" broadly enough, everything has a potential utility value that could be described as a cash flow (or in cash-equivalent terms). For this reason I said list #1 meaningfully generated cash flows. I am assuming a reasonableness standard we can generally agree to. 

As such, I don't view gold as an investment in the same realm as I view, say, a share of stock. Gold's value is too reliant on the presumption that someone else will want to buy it at a later date. (Here is some of what the Oracle has said about gold. Read at least #4.)

My two lists of investments are not intended to be uniformly separate. Each item to varying and changing degrees exists on a continuum. Think of it loosely as the Beanie Babies to U.S. Treasury Bonds scale. The "cash flow" from Beanie Babies is only the joy one may get from holding one and the opportunity to sell it down the road. The cash flow from UST bonds is semi-annual interest paid and the promise to mature at par value. Where do you put gold on this scale? As you answer that question for each asset, you start to see a large gap forming naturally separating the two emerging lists of investments. 


P.S., When I first started to answer the question, I fell down a deep rabbit hole that took me quite a while to escape. Read on if you'd like to witness the journey. Bonus points for realizing the subtle point that creates the difference between the answer above and the answer below.

Consider what a cash flow is: a stream of payments going (flowing) to asset owners generated by the asset itself. This does not include money or other assets taken in exchange for ownership of the asset. Ultimately, for an asset to have value, it has to be intrinsically valuable to someone. Take a bond for instance. A bond is intrinsically valuable because it generates income in the form of interest. And that interest (cash) has value because it can buy stuff like beanie babies and food, which are intrinsically valuable because . . . because my daughter likes beanie babies and she and I both need food. . . okay, we might have a problem here. If you didn’t catch the circular logic, go reread that.

Any time you hear “intrinsic value”, your spidey sense should start tingling. That concept suffers from what I call the artificial logical stopping point. It is the fallacious attempt at halting what becomes “turtles all the way down”. In a chain of subjective value propositions we assert at some point that one of those values is so esteemed, so important, that it is an intrinsic value. If that sounds arbitrary, it’s because it is arbitrary. One can always challenge the leap to the intrinsic showing that leap to be invalid. Objectivism philosophically solves this conundrum by basically rejecting the need for an intrinsic value concept. I believe that is the correct way to conceptualize value—value is the relation between the object valued and the individual valuing it, but can I reconcile it with my belief that the two lists are distinguished by the presence of cash flows? I can because of what I am arguing cash flows are and what they are useful for... [this is where I caught my mistake and began anew].

Saturday, February 20, 2016

Highly Linkable

Thank God they don't make 'em like they used to.

Watch this and be sure to watch the last "magic" point about a 52-card deck which starts at the 14:06 mark.

Tucker Max offers great advice on why he stopped (and you should stop or not start) angel investing.

This is not a top ten ranking for a university to aspire to.

Steve Landsburg brings his always valuable counter-conventional perspective to Serial: Season One. It is as hard for me to argue with his logic as it is to accept his conclusion. I believe he is right, but I also believe he has introduced an implied simplifying assumption(s) that ignores principles of justice and that may reduce or even reverse his conclusion. I think these principles could impact the model in both a practical sense (given the iterative and complex/diverse nature of the world of crime and punishment, including these principles might get us to better outcomes) and an ethical sense (it seems problematic to have low thresholds for high severity crimes). I might also quibble with his standard of proof and his philosophical position that a juror should be trying to reach a state of belief rather than my philosophical position that a juror should be trying to validate that the prosecution "undoubtedly" proved its case.

Let's look in on how the nation's first experiment with a $15 minimum wage is going--"Look Away . . . I'm Hideous!" Wonder how the guy who wants to take this model nationwide would react? And keep in mind Seattle's cost of living index is about +20% above the national average. How would this minimum wage sell in Peoria, Illinois, to name just one low-cost-of-living place?

Finally and while we're mentioning The Bern, don't miss Reason's take on Charles Koch's friendly letter to Bernie.

Two Partial Lists of Investments

The following partial lists of investments have at least one key, distinct difference between them. Can you identify it?

List 1:

  • Stocks (equity ownership - residual claims on assets)
  • Bonds (credit lending - contractual claims on assets)
  • Real Estate (equity ownership of real, surface property such as your personal home, a home or apartment you rent out, a business building, a REIT, etc.)
  • Mineral Estate/Rights (equity ownership of real, under-the-surface property - the right to mine resources)
List 2:
  • Currencies (US Dollars, Euros, Yen, etc.)
  • Commodities (energy and agricultural such as oil and frozen concentrated orange juice)
  • Precious Metals (gold, silver, etc.)
  • Industrial Metals (copper, nickel, aluminium, etc.)
I will follow up with the answer in a few days.