Wednesday, January 31, 2007

Book of the Day

Just yesterday, I recommended Ruby Payne's A Framework for Understanding Poverty to a former student and now fellow grad student (hmm, when your students become your peers, maybe it's time to graduate already?) Payne's extraordinary book is aimed at middle-class teachers to understand that poverty is much more than a lack of money, but I think the book does an extraordinary job of understanding the choices people, and not just those in poverty, make based on the resources at their disposal. I'm a strong believer that people are shaped by environmental cues, and this book helps remind me that people's behavior isn't always an indication of a rational choice, but often a function of learned behaviors (in the book, Payne talks about the "rules of being poor", but you could extend this to just about any situation)

Sunday, January 28, 2007

Unhappy Meals

You've got to love an essay that starts like this:
Eat food. Not too much. Mostly plants. That, more or less, is the short answer to the supposedly incredibly complicated and confusing question of what we humans should eat in order to be maximally healthy. I hate to give away the game right here at the beginning of a long essay, and I confess that I'm tempted to complicate matters in the interest of keeping things going for a few thousand more words.

What follows is Michael Pollan's brilliant (and humorous) essay in the International Herald Tribune, titled Unhappy Meals. But before you shut your browser and head out to snack on your favorite brand of potato chips, consider this:
And you're much better off eating whole fresh foods than processed food products. That's what I mean by the recommendation to eat "food." Once, food was all you could eat, but today there are lots of other edible foodlike substances in the supermarket. These novel products of food science often come in packages festooned with health claims, which brings me to a related rule of thumb: if you're concerned about your health, you should probably avoid food products that make health claims. Why? Because a health claim on a food product is a good indication that it's not really food, and food is what you want to eat.

In a piece that spans 14 pages, he turns to expose why our nutrition system is quite so confusing, exposing the politics and the economics of making things that way.
It's hard to imagine the low-fat craze taking off as it did if McGovern's original food-based recommendations had stood: eat fewer meat and dairy products. For how do you get from that stark counsel to the idea that another case of Snackwell's is just what the doctor ordered?

And fundamentally points to getting back to food, rather than nutrients in processed foods:
Of course it's also a lot easier to slap a health claim on a box of sugary cereal than on a potato or carrot, with the perverse result that the most healthful foods in the supermarket sit there quietly in the produce section, silent as stroke victims, while a few aisles over, the Cocoa Puffs and Lucky Charms are screaming about their newfound whole-grain goodness.

Here's another classic paragraph on why you should ignore the scientists and focus on what has worked for centuries:
Also, people don't eat nutrients, they eat foods, and foods can behave very differently than the nutrients they contain. Researchers have long believed, based on epidemiological comparisons of different populations, that a diet high in fruits and vegetables confers some protection against cancer. So naturally they ask, What nutrients in those plant foods are responsible for that effect? One hypothesis is that the antioxidants in fresh produce — compounds like beta carotene, lycopene, vitamin E, etc. — are the X factor. It makes good sense: these molecules (which plants produce to protect themselves from the highly reactive oxygen atoms produced in photosynthesis) vanquish the free radicals in our bodies, which can damage DNA and initiate cancers. At least that's how it seems to work in the test tube. Yet as soon as you remove these useful molecules from the context of the whole foods they're found in, as we've done in creating antioxidant supplements, they don't work at all. Indeed, in the case of beta carotene ingested as a supplement, scientists have discovered that it actually increases the risk of certain cancers. Big oops.

My intent is not to present too much of the article, for really it is best read as the author intended, in one piece, but I leave you with one last tidbit:
For reasons of economics, the food industry prefers to tease its myriad processed offerings from a tiny group of plant species, corn and soybeans chief among them. Today, a mere four crops account for two-thirds of the calories humans eat. When you consider that humankind has historically consumed some 80,000 edible species, and that 3,000 of these have been in widespread use, this represents a radical simplification of the food web. Why should this matter? Because humans are omnivores, requiring somewhere between 50 and 100 different chemical compounds and elements to be healthy. It's hard to believe that we can get everything we need from a diet consisting largely of processed corn, soybeans, wheat and rice.

Also, if you don't have the time to read the whole article (shame on you!), at least skip to page 12 to look for Pollan's tips on how to restructure your diet. You will lose a lot, but I guess it's better than losing it all!

Quote of the Day

Stephen Colbert, comedian and host of the Colbert report, on Bush's healthcare proposal to allow tax deductions to encourage greater access to health insurance among the uninsured:
It's simple. Most people who can't afford health insurance also are too poor to owe taxes. But if you give them a deduction from the taxes they don't owe, they can use the money they're not getting back from what they haven't given to buy the healthcare they can't afford.

Saturday, January 27, 2007

Bush and The 20% Reduction

You heard it on the State of the Union address by President Bush:
Let us build on the work we've done and reduce gasoline usage in the United States by 20 percent in the next 10 years.

Well, turns out this is a little different from what you might think. MSNBC reports the following:
environmentalists noted the 20 percent goal applies to how much gas is forecast to be used in 2017, not how much is used now. Because of an expected increase in consumption over the next decade, such a cut would not reduce the amount of gas currently consumed.

That is a big difference! The reality is the Bush administration is still not serious enough about the risk of climate change, and much of the moves interpreted in that direction are merely related to energy security, with Iran's threats to disrupt oil markets. Officials in California have pointed out that the Bush plan could raise CO2 levels by favoring alternate fuels that don't reduce the carbon footprint.

I didn't grade the SOTU on climate change, because I didn't consider Bush as having talked about it. But on the overall climate change issue, I give the administration an F grade!

Friday, January 26, 2007

Movie of the Day

The Boys of Baraka, an incredible story of a group of boys who were taken from their crime-ridden school in Baltimore to an experimental school in Kenya, and the dramatic turnaround in their lives. Without giving anything away, it's a damning indictment of the opportunities we afford our kids from the ghetto, and I think really makes a case for the voucher system.

While on the topic, here's a related quote of the day:
One of the most reliable predictors of whether a boy will succeed or fail in high school rests on a single question: does he have a man in his life to look up to? Too often, the answer is no. High rates of divorce and single motherhood have created a generation of fatherless boys. In every kind of neighborhood, rich or poor, an increasing number of boys—now a startling 40 percent—are being raised without their biological dads.

Be a mentor! You can't replace a dad, but if you can make a tiny bit of a difference in someone's life, then yours is a life worth living!

Wednesday, January 24, 2007

My Many Cents on the SOTU

So the State of the Union is out, and many have thrown in their opinions on President Bush's performance. Some called it tired, Bob Schieffer thought he'd done a better job than his press conference. So how could someone as opinionated as me not chime in?

I thought Bush didn't do very well, but not just because he appeared deflated. I thought he spent too much time with general cliches and not enough on specifics. Let's start with what he didn't, ...


The let-freedom-ring rhetoric is wearing thin. What I thought he should have pointed out, something I heard from an embedded reporter on the Newshour with Jim Lehrer was that the additional troops serve an important function - to date, American troops only patrol hotspots, and the insurgents just wait out the patrols before wrecking havoc. The additional troops would actually help establish bases in the hotspots, a significant function.

To be fair, he did, for the first time, seem to get tough on the Iraqi government, at least verbally, putting them on notice asking them to deliver. I suspect this will not yield much though, since Maliki's butt belongs to the Shiite militias craving Sunni blood, but it's a start. Maliki doesn't want US troops to leave, and we need to start indicating that if he wants to kiss up to Sadr, maybe he'll have to step aside for Sadr when American troops leave.


Energy and Climate Change

Bush wants to cut oil consumption by 20% in the next 10 years - fuggadeboutit! Not happening! At present, none of the other technologies will dramatically reduce oil consumption by more than a few percent in the next ten years, as I understand it, and fuel efficiency standards improvements will probably be counterbalanced by greater consumption. Listen, it all comes down to this - now everyone's talking about this issue (don't get me wrong - as a tree-hugger, I love that people are) because of concerns about global warming, but especially because people still remember the high gas prices in the recent past. All the OPEC would need to do is allow low oil prices for a couple of years and people will return to their gas-guzzling ways!

I do think oil will eventually be on the downslide, but not quite yet. The optimists often point to how competitive alternate fuels are (I was in a talk Friday where someone from GE Energy has a similar chart) but these assume record oil prices which are largely driven by speculation. I do think every price spike encourages more money into R&D for alternate fuels, but I think Bush would have done well to detail more specific initiatives to help in the development of alt fuels. For wind power, for example, the greatest deterrant is that most farmers who can build the wind farms are not close enough to the grid to sell their generated power back. Tax and other initiatives in this area would go a lot longer than a wannabe green president.



I'm with Bush on needing to reform the healthcare system. The tax initiatives are an interesting step, as is his push for Health Savings Accounts. But again, I think his plan to help uninsured is flawed - most of the uninsured pay little by way of income taxes, so tax initiatives are unlikely to spur them to buy insurance. I do think there is a need for a creative solution, and this isn't necessarily it.



Finally a topic where I thought Bush whacked it out of the park. Short but sweet! Securing the borders is nice, but impossible unless we reduce the stress. Allow legal workers and border agents can focus on drug dealers, criminals and terrorists. And by documenting this workers, we can keep track of them. Excellent! I couldn't say much more.


Monday, January 22, 2007

Quote of the Day: The World's Happiest Man

Matthieu Ricard, 60, a French academic-turned-Buddhist monk, interpreter to the Dalai Lama, labelled the 'world's happiest man' after MRI images of his brain showed extraordinary left pre-frontal cortex activity associated with positive emotions, and suppressed activity for the right side associated with negative emotions. (The results were consistent with, although much more prominent than, images for other meditators)
The mind is malleable. Our life can be greatly transformed by even a minimal change in how we manage our thoughts and perceive and interpret the world. Happiness is a skill. It requires effort and time.

Sunday, January 21, 2007

Stay in College, Your Marriage Will Thank You!

The International Herald Tribune (a great newspaper to read, by the way!) had a fascinating story on why so many American women are single. You might imagine that it's because women are chosing careers over marriage. God, here's why you should love the numbers! It turns out educated women are more likely to marry, and less likely to divorce than their uneducated counterparts! The effect is true, although less significant for men. You should read the story for the full unadultered details, but I'll leave you with this quote:
"The way we used to look at marriage was that if women were highly educated, they had higher earning power, they were more culturally liberal and people might have predicted less marriage among them," [University of Maryland sociologist Steven] Martin said. "What's becoming more powerful is the idea that economic resources are conducive to stable marriages. Women who have more money or the potential for more money are married to men who have more stable income."

Yes, yes, I get excited when facts reveal distorted perceptions and urban legends!

Saturday, January 20, 2007

Book of the Day

The Initiate by Cyril Scott. This has many things a prospective reader may not like - archaic language, New Agey references, an excessively reverential style quite alien to the average American reader ... and despite all that, this book, if you are open to it, will blow your mind at times. The "Initiate" Justin Moreward Haig lives in the belief that it is possible to fashion a better life by simply changing your perspective - something that over the years I've had to remind myself.

Quote of the Day

To show that the quote of the day need not be inspirational, but can also be an indication of the retardness and partisan nature of our leaders, I give you Madame Speaker Nancy Pelosi:
The president knows that because the troops are in harm's way, that we won't cut off the resources. That's why he's moving so quickly to put them in harm's way.

War on Iran?

One would be justifiably incredulous about suggestions that the US might go to Iran, but when someone of the stature of Ted Koppel suggests his sources in the military suggest this is a possibility, you naturally sit up. Koppel thinks there were indications in a recent Bush speech to point to this, and the deployment of additional strike forces there. Now, the Bush administration surely couldn't be serious. I mean, Iran is a threat, and my personal belief is that Iraq factored into the equation in the first place because of Iran. The plan was once Afghanistan and Iraq become key US allies, a two-pronged ground attack on Iran was now possible. Too bad it can't work! Neither Iraq nor Afghanistan are viable bases for a military campaign (and I say this as a supporter of the war!), and the US now has to look to try to redefine its once grand vision.

I must say I'm amazed at all the talk of a military campaign, be it by the US or Israel, given how foolhardy it would be. Now, Israel genuinely has reasons to be concerned with Ahmadinejad's map-altering desires, but a full-blown war would only expose the Israeli people to more hostility. The Mossad is one of the best intel agencies in the world - I would think they would be able to deploy shoes on the ground (as opposed to boots) and take out key facilities with low-level tactical nukes or appropriate bombs. Given the secrecy in Iranian society and the desire for the ruling class not to reveal their embarassment, Iran will probably never admit it had a nuclear facility, let alone one Mossad was able to take out - which is all the better!

Friday, January 19, 2007

A Radical Solution to Spam and More

The Red Tape Chronicles on MSNBC, one of my favorite columns, had a piece on the resurgence of spam e-mail. The discussions that followed focused on technological solutions, ranging from better spam filters to including Verisign certificates, to ISP monitoring. There are some more radical solutions that haven't been considered yet though. One of my pet ideas, one that isn't originally mine but came from hearing an interview with one of the early architects of e-mail, was to have users pay per mail sent.

GASP! Wouldn't that go against the very spirit of e-mail and our Internet age? Maybe so, but the reality is that history tells us free resources are the most abused (look at the global warming issue - since nobody pays economically in the near term for emission of greenhouse gases, there is little incentive for a modified behavior) If every e-mail required a penny to transmit, to be shared among the ISPs that participate in the transmission (just like usage fees in gasoline pipelines), a legitimate user feels little financial burden - even if he/she sends 10 e-mails a day, that's about $37 a year, small compared to the saved productivity of not dealing with spam. But for a spammer, the economics change dramatically - a spammer's relying on sending 10,000 e-mails a day maybe, so now his operating costs go from nothing to about $37,000 a day - a dealbreaker! The ISPs for their part promise to invest the money in better spam filtration techniques (maybe even charge ISPs a fraction of a penny for every spam that makes it through?)

As an additional bonus, we might all get fewer silly forwards. I remember in India, text messaging (SMS as it is known) used to be free, but the volume of SMSs were HUGE due to people forwarding all kinds of nonsense, and this caused a rather large drain on productivity. The implementation of a nominal fee (not large enough, in my opinion) have reduced unnecessary mass message volumes.

Of course, this isn't a complete solution. One of the complicating factors in recent times is that a lot of spam comes from hijacked computers, i.e. computers that have been attacked by malicious programs. In these areas, a technological solution is still needed. But maybe here the e-mail usage fees can be invested in better security protocols across the board?

Thursday, January 18, 2007

Thoughts on Risk

Non-sports junkies: This is not a sports post!

In the recent few days, many a sports column has criticized the coach of the San Diego Chargers, Marty Schottenheimer for choosing to go for it on 4th and 11, rather than making the more conservative choices to punt or try to kick a field goal. Never mind if the Chargers had pulled the play off, he would have probably been hailed about a genius!

All of this got me to thinking about something I've been pondering a lot recently - risk. Risk is an essential element of our lives, but do we truly understand risk? The daily exhibition of this is stock pickers, who brag about how wonderfully their stock picks did, often doubling in value after they picked it. And yet, they achieve that by picking a speculative issue that may have no profits and no prospects beyond hype and hope. And yet, the lay person doesn't seem to understand that it is quite possible to make superior returns if you are willing to accept sufficient risk. Even the popular Motley Fool website joins in this game, egging its readers to find the "next Microsoft or Apple", even if in this pursuit, substantial money could be lost.

Mutual fund fund managers face it all the time - what GMO's Jeremy Grantham calls 'career risk'. If you want to be a brilliant stock picker, be prepared to have clients leave you by the drove when you deviate too far below the average, as happened to some of the most brilliant fund managers in the late 90s when they refused to buy into bubblevision.

But this isn't simply an issue in investing or sports. Every inspirational book or article you read is full of urges to follow your dreams, to believe in yourself. Don't take the safe route to a stable job; take risks and seek out your destiny. You'll read plenty of portraits of moguls who did that! Except Hollywood is full of washed-up wannabes, and the streets of America are lined with people who tried to make money with the next big idea.

To be fair, I'm not suggesting that we avoid risk. After all, risk avoidance presents its own risk, that of mediocrity. Bill Gates, Warren Buffet, Bill Bellichek and Morgan Freeman didn't get where they are today by risk avoidance. And risk avoidance can be detrimental - ask manufacturing workers who chose not to further their skills only to find their work outsourced to China. Or retirees who chose not to accept equity exposure only to find their savings corroded by inflation.

Nevertheless, it does strike me as odd that we persistently talk about success stories without talking about risk. That's like a group of gamblers talking about the one guy who hit the jackpot on the roulette!

Saturday, January 13, 2007

Schools and the 'Truth'

IDIOTIC! That's the best way I can describe a Seattle area school's decision not to allow the screening of Al Gore's movie, An Inconvenient Truth. It would have been one thing if their decision was based on a policy not to show movies, but instead it is based on a need to also then show a movie of the flip side of the argument. Great, so now our schools will have to wait for a global warming skeptic to make a movie calling the theory bunk! Oh no, wait, that's right, John Stossel made a special about global warming - maybe that can be the counterpiece ... so what if the scientific community thinks nothing of Stossel, or his science credentials! (For the record, I really like Stossel, even if he's out there at times, occasionally wrong and sometimes a damn liar!)

But in what I find most troubling was this quote from a parent:
The information that's being presented is a very cockeyed view of what the truth is. The Bible says that in the end times everything will burn up, but that perspective isn't in the DVD.

Wow, I mean ... wow! So now, we have parents who want us to teach science from the perspective of the Bible. I'm speechless!

By the way, if you haven't seen An Inconvenient Truth, do watch it - it is a great movie! There is some grandstanding by Gore, and some obvious efforts to influence potential future voters, but if you can ignore that, the pictures and facts are pretty amazing!

Thursday, January 11, 2007

Spiralling CEO Pay

While I am a firm believer that companies must pay for talent, and am opposed to mandated minimum wages, I have been disgusted recently by the megamillions CEOs have been drawing recently. This is a figure that brings home the reality of the recent years - it is from the group United for a Fair Economy, which describes itself as a nonpartisan nonprofit working for social change. I don't subscribe to their views, and have commented previously on how inequality doesn't mean prosperity for the poor (the poor in America compare favorably to the poor in Switzerland - they just make a lot less than the rich in America!). Nevertheless, this is part of what former Vanguard founder, John Bogle calls the battle for the soul of American capitalism.

Monday, January 08, 2007

Interesting News Articles

Here are some recent articles I found interesting ...

This article in the International Herald Tribune is about more that the mobile phone business. It shows how expanding to India and China is doing more than just cutting costs or opening new markets; it is transforming American companies too. One example:

"If we're going to be successful in Asia, we have to be successful in small cars," [Nick Reilly, president of GM Asia Pacific] added. "And that will give us the potential products to go back into our traditional markets of Europe and the U.S. with smaller cars, which we haven't had before."

Another article from the IHT - this time, about Asian enrollment in American universities. Here's the number that stunned me - this fall and last, the number of Asian-American freshmen at Berkeley has been at a record high, about 46 percent.

A Dallas food chain is starting to accept Mexican pesos instead of American dollars. While this will obviously outrage immigration opponents, this is interesting from a business perspective, especially for a company which caters predominantly to immigrants.

I was really terrified to read about this man losing his retirement savings due to identity theft. J.P.Morgan did refund his balance, but it hightlights the very real risks we face in a connected world. I called my broker, Scottrade and checked on their security policies, specifically under what circumstances they would send a check to a third party, and would suggest you all do the same.

Sunday, January 07, 2007

Played by the Shiites!

Even before I read this piece by John Burns of the New York Times detailing the execution of the former Iraqi dictator Saddam Hussein, I disapproved of the decision to hang him now. Not because I'm a death penalty opponent, and heaven knows if anyone needed to hang, it was Saddam. My objection was he was being hanged for the murder of just over a hundred Shiites, while his trial for the genocide of Kurds, ruled a genocide by The Hague, where Saddam established Holocaust-style concentration camps, using chemical weapons and sarin to exterminate anywhere between 50,000 and 170,000 Kurds was still underway. (More on the Al-Anfal campaign) A central mission in our criminal justice system is to allow victims to testify against the perpetrators, and justice to be delivered. What did the Iraqis achieve by failing to wait a few more months?

As the NY Times piece indicates, it really was all about the Shiites thirst for revenge. President Bush was generous in turning a blind eye, but the events indicate that the Shiites intended to send a message to Sunnis, hanging Saddam on a holy Sunni day, despite American pleas to avoid escalating the situation. But besides the motives, the Iraqis have made choices they never would have because of American protection. After all, when an inflammation in violence would have to be handled by US troops, it is hard to be overly concerned about not bowing to the thugs in your community. And yet, I wonder why the US bent over quite so easily. Not a single international observer at the hanging ... what an outrage!

And yet, despite my disgust with Maliki and his fellow scum, I do not support an American withdrawal. I think the vengence shown towards Saddam is just a preview of what might happen if American troops leave - masses of Shiites eliminating a Sunni population, and reprisal attacks from the Sunnis. I do think more though of another idea I used to oppose, partition of Iraq into independent ethnic countries.

Tuesday, January 02, 2007

Ignore the Press

Wish all you readers a wonderful new year, filled with love, happiness and success! While I'm not much of a resolution-type of a guy, now's a great time to reflect on your life and your own outlook.

Ok, so much for that! Now, with the new year comes many a piece arguing that you should invest more (which I support) in stocks (I'm not quite so sure of that) because the stock market is cheap (which I disagree!). During one such piece in USA Today, the author argued that one of the reasons stocks would go up is that "the supply" of stocks was reducing because of mergers & acquisitions. What a bunch of baloney! Investors in firms collectively often take on debt to buy stocks of other companies, and those left standing are suddenly worth more? (M&A's are only worth it when the acquired company is selling at a discount to intrinsic value - I'm yet to be convinced of the intrinsic value of Youtube!)

If my memory serves me right, I seem to recollect having read a few instances of M&A activity preceding a bear market, but since I'm trying to graduate, I don't have the time needed to research the topic further. M&A activity recently hit its all-time record of $3.76 billion, besting its Y2K record of $3.4 billion. Wikipedia reports historical M&A activity since 2001, and sure enough, M&A activity fell from $3.4 billion in 2000 to a low of $1.149 trillion in 2003. Let's see, using this relatively short period (which I would never do if I had access to better data or was being paid for it), it looks like M&A activity would serve better as a indicator of when to sell, peaking before the bubble burst and bottoming right before a decent runup to the S&P.

The M&A activity is especially focused on commodity businesses like steel and oil, the very businesses that have been having record profits, and more importantly strong stock market performance. Sounds eerily like the tech companies in 2000!