Monday, January 21, 2019

Long Weekend Links

  • Modern Monetary Theory is the theoretical justification for the economic policies of every potential Democratic presidential candidate in 2020. Because with MMT, you CAN have it all. You can pay for wars without end. You can pay for universal single-payer healthcare. You can pay for everyone to go to college. You can pay for a universal basic income. I mean... why not? A caring sovereign's gotta do what a caring sovereign's gotta do. So yeah, you're going to hear a lot more about Modern Monetary Theory. And you're almost certainly going to get it. [Epsilon Theory]
  • You could be in a Japanese daydream of what America is, or you could be lost in a pocket of fantasy where an America of yore has remained intact. [Bon Appetit]
  • What's the lifetime value of a Netflix customer and how much does Netflix spend to acquire her? The company doesn't say. What's the share of people who quit Netflix every month, and how is that trending? Netflix doesn't say. What's the average time subscribers spend watching Netflix, and what are the company's costs for each hour of programming? The company doesn't say. Those metrics would help investors assess whether Netflix's strategy is working — far more than simple growth of new people coming on board to Netflix while it's engaged in wild spending. [Bloomberg]
  • For years, black Lululemon yoga pants and Uggs were the axis of the mom uniform, until the media cruelly shamed women out of them. Then last year, a pair of deliberately beaten-up-looking $500 Golden Goose sneakers and what is known as simply the "Amazon jacket," a $130 parka, was seen on moms in Chappaqua and Short Hills alike. [NY Times]
  • I certainly wouldn't want to own a company with a $55-billion market cap and $12 billion in debt if it had a CEO who can't legally deny having committed securities fraud who then put out forward guidance modifying the word 'profit' with the words 'hopefully, great difficulty, luck, target, and tiny.' [LA Times]
  • As someone too old and unhip to have a beard, I've been a loyal Gillette customer for decades. Now it seems that there is a virtue offset bonus. Gillette will take some of its spectacular gross margin on every blade and use it to educate un-woke men on how to behave. What about for the guys who aren't happy to support Gillette's new crusade? Can they buy a blade system that is actually as good or better? If so, what is it and who makes it? [Phil G]
  • In general, English is rather lacking in family words. For example, we have "siblings" as a somewhat rare but convenient word for brothers and sisters, but we don't have any similar word for nephews and nieces. My impression is that the English tended to less interested in extended families than just about anybody, and not even very interested in them: e.g., the rather horrifying English goal is to be rich enough to pack your children off to boarding school when they reach 7 or 8. [Sailer]
  • I learned from a patent litigator (one of the perks of being an expert witness is talking to these smart folks!) that the U.S. Patent and Trademark Office is going full steam ahead. They have money left over from the previous fiscal year so they're good through February and, should those funds run out, the Patent Trial and Appeal Board will declare that the folks who accept filings are "essential". Ergo, we live in a country where we can still fight about patents, but we can't visit the Smithsonian exhibits that celebrate our patent system. [Phil G]
  • The actual measurement process was exceptionally clever. The primary measurement point, what Michelson called "Mount San Antonio" (today known as Lookout Mountain) was 22 miles away to the northeast. The light pulses sent from Mount Wilson to San Antonio were created by reflecting the arc light off a spinning, multifaceted mirror with either 8, 12 or 16 sides. The time it took a pulse of light to travel from Mount Wilson to Mount San Antonio and back to Mount Wilson (44 miles) was 0.00023 seconds. This happened to be the same amount of time it took a 16 faceted mirror, turning at 264 revolutions per second, to move one facet. When all was adjusted just so, the light pulse went out on one mirror facet and returned on the next one presenting what appeared to be a single image to the observer. [Tom Mahood]
  • That's right: the company that sells an astounding total of ten different and unique sport-utility vehicles across two brands says that putting a stick-shift into its $53,000 coupe would somehow damage the sales prospects of its $27,000 coupe. Wasn't it just a few years ago that Toyota was selling three separate Prius-branded vehicles with extremely similar drivetrains, all priced within a few grand? [Jack Baruth]
  • Perfectly reasonable hypotheses get attacked as conspiracy theories, derailing the discussion into arguments over when you're allowed to use the phrase. These arguments are surprisingly tough. Which of the following do you think should be classified as "conspiracy theories"? Which ones are so deranged that people espousing them should be excluded from civilized discussion? [SSC]
  • Upon my first encounter it was clear to me that object oriented programming is something that appeals to algebraists. So if you're a programmer and found Design Patterns: Elements of Reusable Object-Oriented Software to be a revelation, it is highly likely that you lean towards algebra and eat your corn in neat rows. Going the other way, if the techniques described in On Lisp appeal, then you might be on the analytic side of the fence and eat your corn in spirals. This is particularly true if you found yourself agreeing with Paul Graham's thoughts in Why Arc Isn't Especially Object-Oriented. There was a period that I thought that the programming division might be as simple as functional versus object oriented. Then I encountered monads, and I learned that there were functional programmers who clearly were algebraists. (I know someone who got his PhD studying Haskell's type system. My prediction that he ate corn in rows was correct.) Going the other way I wouldn't be surprised that people who love what they can do with template metaprogramming in C++ lean towards analysis and eating corn in spirals. (I haven't tested the last guess at all, so take it with a grain of salt.) [Ben Tilly]

Monday, January 14, 2019

January 14th Links

  • If I've been doing South Texas Gulf Coast onshore oil leases for 20 years and I know the geology and I know the sellers and I know the whole market, and you come down from New York and bid against me for a lease, if you buy that lease, if you win that auction, you've made a bad mistake because effectively, in some sense, I sold it to you. [Kenkyo]
  • Having grown up in digital scarcity or perhaps 'photo poverty', one of the things I've had to learn after getting a smartphone is to take more photos, at the drop of a hat, for anything I might want to recall later. Caption on artwork? Photo. Item at grocery store? Photo. Interesting cat posture? Photo. Where I parked in a parking garage or giant parking lot? Photos. Gives one a hint of how useful good lifelogging could be. [gwern]
  • While Trump continued to portray Marla as a loyal and loving wife, everything irritated him. His club was shackled by onerous rules he had agreed to in order to get the town council to approve it—rules that the Bath and Tennis and the Everglades did not have to follow. The Mar-a-Lago Club was limited to 500 members (the B&T had nearly twice as many), and events were limited to 390 guests. Trump wanted to go back to the town council to get the rules changed. Paul Rampell cautioned Trump that they should wait five years, until he had built the membership into a political constituency to support him. Rampell also said that making anti-Semitism a part of their argument with the town council would backfire. [Vanity Fair]
  • Naturally, the question is, "If I sell the dollar, what do I sell it against?" I don't have a good answer for you. I've done a few global tours of the world's currencies while sitting at my trading desk. Technically speaking, they all suck, but some suck a bit less than others. In any case, I have increased the non-Dollar weighting of my basket in the past few days. I don't want to name them all as I suspect I'll get laughed at. All global currencies have flaws, but so does the Dollar. At the same time, there are a whole host of businesses (particularly commodity producers) that do well with a weaker Dollar—many of these have been crushed in the past few years. Could they be the real winners if the Dollar weakens? [AiC]
  • Although landing a rocket is certainly impressive from a technical standpoint, the ultimate judge of the merits of the idea is the financial benefit; there is little mission benefit to reusability, so reusability makes sense only if there is a financial benefit to designing and launching reusable rockets. These financial considerations largely explain why most of the world's rockets are not reusable. [Reddit]
  • One school of thought is endorsed by oral and maxillofacial surgeons who contend that most third molars are potentially pathologic and should be removed. The other holds that only third molars with associated pathology should be removed. The legal system, in which decisions are generally based on norms of practice or local or regional standards of care, credits each school of thought as having equal merit, ignoring the scientific evidence base. That is why oral and maxillofacial surgeons usually prevail in malpractice suits when patients are injured during elective surgery. After all, if the expert oral and maxillofacial surgeon says the surgery is necessary, then it is necessary. The fact that most third molars, impacted or not, do not become diseased and that the risk of iatrogenic injury from such surgery is greater than the risk of leaving asymptomatic, nonpathologic teeth alone does not override the expert opinion of oral and maxillofacial surgeons. Thus, the prevalent practice of prophylactic third-molar extractions is ordained as the standard of care, even though that standard is based on an erroneous evaluation of all outcomes and costs. Malpractice in dentistry is more common than is acknowledged, but the victim's recourse to redress the physical and financial injury is severely limited. The recovery amounts involved are usually too small to cover an attorney's expenses. However, there is something the legal profession could do to protect the public: abolish the fallacy of the standard of care and 2 schools of thought, which ignores evidence-based science and perpetuates and forgives malpractice. [NLM]
  • You know how I think this problem is going to be solved – for real? That big half dead premium outlet mall in Tejon Ranch is already a pretty good internment camp... There are no neighbors out there except for the Ikea distribution warehouse. It has enough existing bathrooms and lots of empty big box type space for dormitories. And as soon as retail fails for real the parent company of the property might be happy to subcontract the storage of a bunch of sad rejects for a few million dollars a month in government transfer payments. No need to let the homeless even touch the funds themselves. I'm dead serious. [Granola Shotgun]
  • In a nation where people lead ever more busy lives and increasingly view their dogs as family members, professional dog walking is flourishing. And along with it is what might be viewed as the unusual art of dog walker communication. Many of today's walkers do not simply stroll — not if they want to be rehired, anyway. Over text and email, they craft fine-grained, delightful narratives tracing the journey from arrival at the residence to drop-off. They report the number of bathroom stops. They take artistic photos, and lots of them. [WaPo]
  • What would the Grand Canyon look like as a Grand Mountain, i.e. if its depth became its height? Not quite as Grand perhaps, but still pretty cool. For reference, the depth at the deepest part of the canyon is ~6000 feet and the top of the canyon is between 6000 and 8000 feet above sea level, so the highest point of the Grand Mountains would be somewhere between 12,000 and 14,000 feet, in the ballpark of the Rocky Mountains. It would be fun to see what an inverted Kola Superdeep Borehole would look like: a 9-inch spire rising 40,000 feet into the air from a starting point very close to sea level, more that 10,000 feet higher than Everest. [Kottke]
  • The highest asphalted road crosses Tibet's Semo La pass at 5,565 m (18,258 feet). It is used by trucks and buses regularly. The Ticlio pass, on the Central Road of Peru, is the highest surfaced road in the Americas, at an elevation of 4,818 m (15,807 feet). The highest point accessible by oceangoing vessel is a segment of the Rhine–Main–Danube Canal between the Hilpoltstein and Bachhausen locks in Bavaria, Germany. The locks artificially raise the surface level of the water in the canal to 406 m (1,332 feet) above mean sea level, higher than any other lock system in the world, making it the highest point currently accessible by oceangoing commercial watercraft. [Wiki]
  • The most remote airport in the world, Mataveri International Airport is 2,336 miles (3,759 km) from Santiago, Chile (SCL) which has scheduled flights to it on the Chilean carrier LATAM Chile. The runway starts just inland from the island's southeast coast at Mataveri and nearly reaches the west coast, almost separating the mountain of Rano Kau from the rest of the island. [Wiki]
  • The Bingham Canyon Mine, more commonly known as Kennecott Copper Mine among locals, is an open-pit mining operation extracting a large porphyry copper deposit southwest of Salt Lake City, Utah, in the Oquirrh Mountains. The mine is the largest man-made excavation in the world and is considered to have produced more copper than any other mine in history – more than 19 million tons. [Wiki]
  • All of this technocratic obscurantism concealed a fundamental truth about American conservatism, at least as far as the Buckley version of it. It was never a movement based in a core philosophy. It was just a buffet of rhetoric and policy positions borrowed from movements rejected by the Left. For example, if the Left had retained its Christian roots and enforced that morality, Evangelicals would be on the Left. Most are indifferent to economics. Their interest in foreign policy begins and ends with Israel. No doubt, Christian readers would take exception to this, because they have been conditioned to believe Christianity is a right-wing phenomenon. That's a carryover from the Cold War where the Left was identified with godless materialism. In America, the Left has its roots in Christianity. The 19th century reformers were all explicitly Christian and working from Christian morality. Go back and read the writings of abolitionists and it is clear they saw their movement as a Christian movement. [Z Man]
  • There are no evergreen investment strategies that will always work. By the time an investment approach becomes part of the landscape, the people who were using it have generally gathered assets and are rich, fat, and lazy. The 80 year old fund managers who made it big 50 years ago by being the first people to get copies of filings dropped off at the SEC offices (once a great edge!) are not hungry enough to develop tomorrow's cutting-edge technique. [CBS]
  • For example, one might try to test the Copernican vs. Ptolemaic worldviews by observing the parallax of the fixed stars over the course of a year. Copernicus predicts it should be visible; Ptolemy predicts it shouldn't be. It isn't, which means either the Earth is fixed and unmoving, or the stars are unutterably unimaginably immensely impossibly far away. Nobody expected the stars to be that far away, so advantage Ptolemy. Meanwhile, the Copernicans posit far-off stars in order to save their paradigm. What looked like a test to select one paradigm or the other has turned into a wedge pushing the two paradigms even further apart. [SSC]

Monday, January 7, 2019

2019 Prediction Contest - Predictions Are In!

Here are the predictions sorted from highest standard deviation to lowest - most contentious to least. I do not know why anyone thinks that the Democrats will not have a crowded debate stage. At the August 6, 2015 Republican debate, there were 10 candidates on the main stage and 7 on the undercard. It was not until the 6th debate that Republicans had fewer than a dozen candidates debating.

* Any member of Congress posts a video “twerking” (or similar) at the Capitol or in a Congressional building. 33%
* Any of the Democratic presidential debates in 2019 has 12 or more candidates appearing (including undercard). 32%
* A year with no commercial jet aircraft fatal plane incidents. 27%
* Federal Reserve bank balance sheet total assets declines to below $4 trillion. 25%
* Tesla gets a going concern warning, has its auditor resign, or Musk is arrested, indicted, leaves the company, or is fired. 24%
* TSLA share price goes below $200 at any point. 24%
* USDJPY below 100 at any point during the year. 22%
* A primary challenger to Donald Trump emerges and polls higher than 10%. 22%
* The 13-week T-bill yield ($IRX) ends the year below 2%. 21%
* The most current 13F as of 12/31/19 of the Swiss National Bank shows a balance below $45 billion of equities. 21%
* The 10 year Treasury yield rises above the 2018 high yield of 3.24% at any time during the year. 21%
* The CBOE Volatility Index ($VIX) exceeds 40 at any time during the year. 21%
* The 13-week T-bill yield ($IRX) exceeds 2.5% at any time during the year. 20%
* Any of GE, JCP, or FTR file for bankruptcy protection or propose a restructuring where existing equity will receive less than 10%. 20%
* A tropical cyclone makes the list of 10 wettest on the U.S. Mainland (for the third year in a row). 20%
* Federal Reserve lowers target rate any times (in 25bps equivalents) in 2019. 20%
* Total return of 1 year T-bill outperforms S&P 500, Nasdaq, and bitcoin for the year. 19%
* The BBB yield closes above 5% at any time during the year. 19%
* Federal Reserve raises target rate two times (in 25bps equivalents) in 2019. 19%
* Hussman's fund (HSGFX) is up for the entire year including dividends. 18%
* The S&P has a one day percentage increase greater than 7.5%. 18%
* A Category 3 hurricane makes landfall in the continental U.S (for the third year in a row). 18%
* None of Uber, Lyft, Slack, Pinterest, Robin Hood, or Palantir complete an IPO or direct list their shares. 18%
* The S&P has a one day percentage decline greater than 7.5%. 18%
* The 20+ year Treasury ETF (TLT) has a positive price return (not including dividends) for the year. 18%
* Crude (WTIC) trades above the 2018 high of $76.90 at any time during the year. 18%
* One or more of Macron, Trudeau, or Erdogan loses power (dies, resigns, or is deposed). 18%
* The S&P goes below 2,000 at any time during the year. 18%
* One or more of Kim/Merkel/Saudis loses power (dies, resigns, or is deposed). 17%
* Buying equal dollar basket of FB/AAPL/NFLX/GOOGL returns below 0% for the year (including dividends). 17%
* One or more of Gross/Ackman/Miller/Hussman/Einhorn/Berkowitz leaves asset management in any manner. 17%
* The Vanguard Balanced Index Fund (VBINX, 60/40) has a positive return for the year. 17%
* A 2 year treasury yields more than 10 year Treasury at any time during the year. 17%
* An earthquake of magnitude 7.5 or greater affects the continental United States. 16%
* Donald Trump pardons anyone prosecuted by the Special Counsel. 16%
* Another Supreme Court seat opens. 16%
* A Decacorn (nonpublic company, peak valuation >$10 billion) is uncovered as a fraud. 16%
* The S&P Retail ETF (XRT) outperforms Amazon for the year. 15%
* Any of the following countries' 10-year government bonds yield more than US at end of year: Germany, Italy, Canada. 15%
* The USD/RMB exchange rate goes over 8 at any time during the year. 15%
* Gold trades below $1000/oz at any time during the year. 14%
* Global negative yielding debt goes under $1 trillion at any time during the year. 14%
* A Euro hits $1 US. (EURUSD parity) at any time during the year. 14%
* Gold trades above $2000/oz at any time during the year. 14%
* Jerome Powell is no longer Fed Chairman on 12/31/19. 14%
* The CBOE Volatility Index ($VIX) exceeds its 2008 record of 89.53 at any time during the year. 13%
* 2019 US vehicle sales (autos and light trucks/SUVs) are lower than 2018 vehicle sales. 13%
* USDJPY above 130 at any point during the year. 12%
* The S&P goes above 3,000 at any time during the year. 11%
* Donald Trump is still President of the United States at the end of the year. 11%
* Pelosi is no longer the Speaker of House as of 12/31/19. 10%
* Federal Reserve bank balance sheet total assets increase to above $5 trillion. 10%
* Trump announces that he won't run again in 2020. 10%
* The 10 year Treasury yield falls below the July 6, 2016 low of 1.336% at any time during the year. 9%
* Twitter is taken private. 9%
* Any country leaves the Euro currency. 9%
* Either Buffett or Munger dies. 9%
* A players' strike occurs in any of the four major US sports leagues (NBA, NFL, MLB, NHL). 9%
* The Flippening: Etherium market cap is greater than Bitcoin (core/classic) at any time during the year. 8%
* Any sort of #MeToo allegation is made against Warren Buffett in a mainstream newspaper. 7%
* Western Canadian Select trades at a premium to WTI at any time during the year. 6%
* Cryptocurrency combined market cap on exceeds $1 trillion at any time during the year. 6%
* Crude (WTIC) falls below the “modern” low of $26.05 at any time during the year. 5%
* The S&P has its largest one day percentage decline in history (bigger than 10/19/87 of 20.5%). 5%
* US ends daylight savings time. 3%
* Musk's “Boring Company” is revealed to be digging tunnels to smuggle drugs into the United States. 3%
* A nuclear weapon is used in anger. 2%

And here are the probabilities with the events sorted from most likely to least likely. Compared to last year's consensus, the likelihood of Trump finishing the year as President has fallen from 91% to 85%.

Prediction Average
* Donald Trump is still President of the United States at the end of the year. 85%
* 2019 US vehicle sales (autos and light trucks/SUVs) are lower than 2018 vehicle sales. 65%
* The CBOE Volatility Index ($VIX) exceeds 40 at any time during the year. 63%
* A 2 year treasury yields more than 10 year Treasury at any time during the year. 61%
* TSLA share price goes below $200 at any point. 57%
* Federal Reserve bank balance sheet total assets declines to below $4 trillion. 57%
* A primary challenger to Donald Trump emerges and polls higher than 10%. 54%
* Any of the Democratic presidential debates in 2019 has 12 or more candidates appearing (including undercard). 53%
* The 13-week T-bill yield ($IRX) exceeds 2.5% at any time during the year. 53%
* Federal Reserve raises target rate two times (in 25bps equivalents) in 2019. 53%
* A Category 3 hurricane makes landfall in the continental U.S (for the third year in a row). 53%
* The BBB yield closes above 5% at any time during the year. 52%
* Buying equal dollar basket of FB/AAPL/NFLX/GOOGL returns below 0% for the year (including dividends). 49%
* The Vanguard Balanced Index Fund (VBINX, 60/40) has a positive return for the year. 47%
* The S&P Retail ETF (XRT) outperforms Amazon for the year. 44%
* Any of GE, JCP, or FTR file for bankruptcy protection or propose a restructuring where existing equity will receive less than 10%. 44%
* A year with no commercial jet aircraft fatal plane incidents. 42%
* Hussman's fund (HSGFX) is up for the entire year including dividends. 42%
* The 20+ year Treasury ETF (TLT) has a positive price return (not including dividends) for the year. 42%
* Tesla gets a going concern warning, has its auditor resign, or Musk is arrested, indicted, leaves the company, or is fired. 39%
* The S&P goes below 2,000 at any time during the year. 39%
* Total return of 1 year T-bill outperforms S&P 500, Nasdaq, and bitcoin for the year. 39%
* The 10 year Treasury yield rises above the 2018 high yield of 3.24% at any time during the year. 35%
* A tropical cyclone makes the list of 10 wettest on the U.S. Mainland (for the third year in a row). 33%
* One or more of Gross/Ackman/Miller/Hussman/Einhorn/Berkowitz leaves asset management in any manner. 31%
* USDJPY below 100 at any point during the year. 31%
* Any of the following countries' 10-year government bonds yield more than US at end of year: Germany, Italy, Canada. 31%
* Donald Trump pardons anyone prosecuted by the Special Counsel. 31%
* One or more of Macron, Trudeau, or Erdogan loses power (dies, resigns, or is deposed). 29%
* Another Supreme Court seat opens. 29%
* One or more of Kim/Merkel/Saudis loses power (dies, resigns, or is deposed). 27%
* Either Buffett or Munger dies. 26%
* The USD/RMB exchange rate goes over 8 at any time during the year. 26%
* Any member of Congress posts a video “twerking” (or similar) at the Capitol or in a Congressional building. 26%
* The 13-week T-bill yield ($IRX) ends the year below 2%. 26%
* The most current 13F as of 12/31/19 of the Swiss National Bank shows a balance below $45 billion of equities. 26%
* A Euro hits $1 US. (EURUSD parity) at any time during the year. 25%
* Crude (WTIC) trades above the 2018 high of $76.90 at any time during the year. 24%
* Federal Reserve lowers target rate any times (in 25bps equivalents) in 2019. 21%
* A Decacorn (nonpublic company, peak valuation >$10 billion) is uncovered as a fraud. 21%
* Global negative yielding debt goes under $1 trillion at any time during the year. 20%
* None of Uber, Lyft, Slack, Pinterest, Robin Hood, or Palantir complete an IPO or direct list their shares. 20%
* The S&P goes above 3,000 at any time during the year. 20%
* The S&P has a one day percentage decline greater than 7.5%. 19%
* Trump announces that he won't run again in 2020. 17%
* Jerome Powell is no longer Fed Chairman on 12/31/19. 17%
* Gold trades below $1000/oz at any time during the year. 16%
* The S&P has a one day percentage increase greater than 7.5%. 16%
* USDJPY above 130 at any point during the year. 14%
* Gold trades above $2000/oz at any time during the year. 13%
* The CBOE Volatility Index ($VIX) exceeds its 2008 record of 89.53 at any time during the year. 13%
* Any country leaves the Euro currency. 13%
* Pelosi is no longer the Speaker of House as of 12/31/19. 13%
* An earthquake of magnitude 7.5 or greater affects the continental United States. 12%
* The 10 year Treasury yield falls below the July 6, 2016 low of 1.336% at any time during the year. 11%
* Twitter is taken private. 11%
* Federal Reserve bank balance sheet total assets increase to above $5 trillion. 10%
* The Flippening: Etherium market cap is greater than Bitcoin (core/classic) at any time during the year. 9%
* A players' strike occurs in any of the four major US sports leagues (NBA, NFL, MLB, NHL). 9%
* Crude (WTIC) falls below the “modern” low of $26.05 at any time during the year. 8%
* Any sort of #MeToo allegation is made against Warren Buffett in a mainstream newspaper. 7%
* Western Canadian Select trades at a premium to WTI at any time during the year. 6%
* The S&P has its largest one day percentage decline in history (bigger than 10/19/87 of 20.5%). 5%
* Cryptocurrency combined market cap on exceeds $1 trillion at any time during the year. 4%
* US ends daylight savings time. 3%
* Musk's “Boring Company” is revealed to be digging tunnels to smuggle drugs into the United States. 1%
* A nuclear weapon is used in anger. 1%

First Links of 2019

  • Researchers in Germany recently conducted an ingenious experiment designed to determine how the degree of freshness of polyunsaturated fats affects the metabolism of those fats in female lactating rats. They divided female rats into two groups, and the only difference between the test group and the controls was that the test group was given fats that had been left in a relatively warm place for 25 days, which caused considerable oxidative damage, whereas the controls were fed fresh fats instead. The rats' unusual diet was begun on the day that they gave birth to a litter. The researchers examined the mammary glands and the milk produced by the two groups for apparent differences. They found that the test group's milk was markedly reduced in the amount of fat it contained, and their mammary glands correspondingly took up less fat from the blood supply. One might surmise that the rats' metabolic mechanisms were able to detect oxidative damage to the fats, and therefore rejected them, prefering to do without rather than to risk the consequences of feeding their pups oxidized fats. Consequently, the pups of the test group gained significantly less weight than the control group's pups. [Stephanie Seneff]
  • Romney's main complaint in the piece is that Donald Trump is a mercurial and divisive leader. That's true, of course. But beneath the personal slights, Romney has a policy critique of Trump. He seems genuinely angry that Trump might pull American troops out of the Syrian civil war. Romney doesn't explain how staying in Syria would benefit America. He doesn't appear to consider that a relevant question. More policing in the Middle East is always better. We know that. Virtually everyone in Washington agrees. [Tucker Carlson]
  • Bret, I'm from a low caste background in the Midwest and currently attend your alma mater in Chicago. Cost of attendance is an eye-popping $78000 per year and the majority of teens walk around campus in Canada Goose and Moncler parkas, which retail for $1200-2000. Several times last quarter, my classmates would party, lose their posh parka, and chuckle about it the next morning. Back home over winter break – in one of those downscale Olive Garden equipped opioid plagued places you made fun of via proxy characters – over 1500 desperate locals just waited in freezing temps to apply for 300 positions at a new factory. The pay? 13 bucks an hour. Back of the envelope math tells me four or five weeks of net wages for a lucky local man to bootstrap his way to one of the parkas my teenage classmates casually laugh off losing. Thanks for this landscape, elites. [NYT]
  • Exactly who qualifies for racial/ethnic preferences is an interesting but highly obscure question. Bezos is a fun test case. We are not supposed to think about who exactly qualifies for affirmative action, in part because nobody seems to know the real rules, second because if you think about it, you come to the realization that, Elizabeth Warren aside, white people generally behave pretty honorably over not exploiting ambiguities in quotas for their own benefits (which is why Warren's opportunism remains a big story). [Sailer]
  • It turns out that the average rake at Priceline Group is even higher today, as they allow merchants to voluntarily bid up their rake for better placement in the network (you can see this in the table above). This is one of my favorite marketplace business model "tweaks." You start with a low rake to get broad-based supplier adoption, and you add in a market-driven pricing dynamic that allows those suppliers who want more volume or exposure to pay more on an opt-in basis. This way no one leaves the network due to excessive fees, yet you end up with a higher average rake over time due to the competitive dynamic. And when prices go up due to bidding and competition, the suppliers blame their competition not the platform (part of the genius of the Google AdWords business model). [Bill Gurley]
  • The magnesium supplementation was harmful enough to do a lot of cumulative damage over the months involved (I could have done a lot of writing September 2013 - June 2014), but not so blatantly harmful enough as to be noticeable without a randomized blind self-experiment or at least systematic data collection - neither of which are common among people who would be supplementing magnesium I would much prefer it if my magnesium overdose had come with visible harm (such as waking up in the middle of the night after a nightmare soaked in sweat), since then I'd know quickly and surely, as would anyone else taking magnesium. But the harm I observed in my data? For all I know, that could be affecting every user of magnesium supplements! How would we know otherwise? [Gwern]
  • The L-39 is a big step toward the reality of upset training. Here is a well-mannered aircraft capable of 8 G's. Although there is no need for that kind of "G", the strength of the airframe leads to a feeling of confidence when we are subjected to 4 G pulls. The L-39 is perfect for demonstration of descending spirals at airspeeds of 400 knots. Its high wing loading allows excellent stall demonstrations. It is also equipped with factory switching that allows failure of airspeed indicators, altitude indicators and directional gyros. [link]
  • Every year ancient DNA research deepens our understanding of history a bit more, and 2018 was truly a remarkable year for ancient DNA research. By February the total number of genomes characterized from ancient individuals surpassed 1,300. I want to highlight five of what I think are the most interesting discoveries made this year, although I had to cheat a bit by grouping multiple papers together under each topic. [Jennifer Raff]
  • "Fetal cells don't simply migrate around their mothers' bodies. They sense the tissue around them and develop into the same type of cells. In 2010, Gerald Udolph, a biologist in Singapore, and his colleagues documented this transformation with a line of engineered mice. they altered the Y chromosomes in the male mice so they glowed with the addition of a chemical. Udolph and his colleagues bred the mice, and then later they dissected the brains of the mothers. They found that the fetal cells from their sons reached into their brains, sprouted branches, and pumped out neurotransmitters. Their sons helped shape their thoughts." [Jennifer Raff]
  • We saw in the first study that metformin blunts the benefits of exercise. Therefore metformin has risks as well as benefits. It is not cost-free. The close relation between obesity and aging means that it’s difficult to separate the effects of one from the other. If you are lean, have low fasting insulin, exercise regularly and have a high VO2max, and do not eat ultra-processed foods made of refined grains, sugar, and seed oils, then it appears that any benefit of metformin would be minimal to none. [PD Mangan]
  • The wine program alone remains a thrilling pilgrimage for oenophiles. I don't know of a more profound selection in America. The tome has been pared down to around 200 manageable pages, with lists of marquee producers from around the world, many offering vertical vintages that go back fifty years or more.[Eater]
  • Without fresh cash, many of these businesses will collapse—quite rapidly. That is because they aren't businesses—they are market share grabs in highly competitive industries with few barriers to entry. Adding an ampersand to the logo and selling a product for a loss isn't viable if you cannot find someone to fund it. More importantly, after a decade of Profitless Prosperity, investors have a false sense of confidence. When the bubble unwinds, it will be fast and vicious as there is no natural buyer of a money losing business that's run out of capital. It took half a decade to create the internet bubble yet it all vaporized in a few months. This bubble will also collapse at a similar rate. [AiC]
  • Since the identification of the Messinian age by Austrian naturalist Karl Mayer (late nineteenth century) we know that the marine connections between the Mediterranean Sea and the Atlantic Ocean became small by the end of the Miocene. Modern chronostratigraphy has dated this at 6 million years ago, the time when our earliest ancestors started walking on two legs in Central Africa. As a result, the Mediterranean became a huge salt pan that accumulated about 10% of the salt dissolved in the world's oceans, during the so-called Messinian salinity crisis. The ongoing tectonic uplift of the Gibraltar Arc region finally emerged the last Atlantic seaway and isolated completely the Mediterranean from the ocean, about 5.6 million years ago. The Mediterranean then became largely evaporated as a result of the dry climate of its watershed. Finally, about 5.3 million years ago the Mediterranean was refilled from the Atlantic through the Strait of Gibraltar. The indications that this occurred geologically very fast (namely, the abrupt change from Miocene to Pliocene sedimentary layers) made this event be known as the Zanclean flood. [link]
  • It seems that all the Kennedy half dollars and Sacagawea dollar coins have ended up here. [Marginal Revolution]
  • Taleb went on a Twitter rant about how IQ is a "pseudoscientific swindle". His observation was based on his experience with "quants", high-IQ math people who work for financial firms. He found them to be good at numbers but lacking at other skills, e.g. LARPing like a New York downtown mafioso or taking instagram pics doing low-weight deadlifts. [Bloody Shovel]
  • Thirteen states have fewer white people living in them today than they did in 1970. We're not talking in terms of population percentages here–every state except for the Imperial Capital has seen a decline in its white population share over the last half century–we're talking in terms of absolute numbers of white people. Another way of putting this is that 100% of the population growth over the last fifty years in New York, Illinois, New Jersey, Pennsylvania, Massachusetts, California, Connecticut, Ohio, Michigan, Rhode Island, Iowa, Maryland, and West Virginia has come from non-whites. [Audacious Epigone]
  • At dinner my brother-in-law reminded me of a conversation we had a few years earlier when we were at the far end of Cape Cod in New England. (He lives in Boston.) An older couple were describing the dream home they were hoping to retire to. I advised them to consider a more central location instead. The nearest medical center is way off in Hyannis an hour or more away on a narrow county road. That road is bumper-to-bumper during the summer tourist season. The Cape is susceptible to winter storms. The older we all get the more dependent we become on external services. Do you really want to be 85 living that far from civilization? [Granola Shotgun]
  • Cuba was richer, per capita, than Singapore in 1959 (Forbes) and Havana was the richest part of Cuba. As such, the city enjoyed world class physical infrastructure circa 1959: roads, sidewalks, beautiful houses and colonial buildings, etc. Except for some central business district areas and parts of the city that have been restored for tourist, Havana today is essentially in ruins. [Phil G]

Sunday, January 6, 2019

Credit Bubble Stocks 2018 Book Review Compendium

The most important concept developed during the CBS reading program this year was that of the "high agency" person. This is a term which we first saw in this Ryan Holiday essay back in March, but originally came from the Eric Weinstein profile in Tools of Titans (review) - where Eric described The Martian as the "ultimate high agency film". The concept is this:

"When you're told that something is impossible, is that the end of the conversation, or does that start a second dialogue in your mind, how to get around whoever it is that's just told you that you can't do something?"
We saw the difference between high agency and non high agency people show up time and again this year. In two books, the difference was literally life and death. First, in The Outlaw Sea, a giant Baltic Sea motor ferry called the MS Estonia took on water through defective bow doors and began to capsize. Only those people that fled the interior of the ship immediately, before the heel became too extreme to escape, survived.

Then, in Surviving "Terminal" Cancer, Ben Williams was a professor at UCSD diagnosed with glioblastoma in 1995 at age 50. Once neurologists or neuro-oncologists make this diagnosis, efforts to actually cure the disease end. Ben came up with two big ideas to try to survive: using synergistic anti-tumor agents in parallel rather than in series (which ultimately results in a tumor cell population that is highly resistant to treatment), and doing his own research to find agents that were state of the art rather than just what his local MDs knew. He ended up driving to Tijuana to buy tamoxifen and Accutane as chemotherapy adjuvants. He also got one of his MDs to prescribe (off label) the calcium channel blocker verapamil, which is normally used for hypertension but is (still) thought to prevent tumor cells from using molecular pumps to remove chemotherapeutic agents.

Let's contrast with the nautical story that did not have a happy ending: Run the Storm, about the loss of the El Faro. This is a very American story: a ship carrying goods from Jacksonville to Puerto Rico for Wal-Mart (including fructose in tanks to give them diabetes). The ship was owned by MBA types in Seattle, by people who had never done the job of a ship captain. My theory on this is that people who have not done the job they are asking someone else to do are unable to tell if their employees are lying when they say they cannot do something. The way they deal with this is to just demand an outcome and then see what happens. The type of person who is an employee (not entrepreneur) does not understand this tactic and desperately tries to do the impossible. So, under pressure to meet the schedule, the master of the El Faro sailed this forty year old rustbucket right into a hurricane and killed everyone on board when it sank.

In the review of Exit 13A, we talked about John T Reed's writing, what organizations will ask people to do, and how they obtain the leverage to hurt their employees. In the context of the El Faro, the high agency person would lay down the law with the suits in Seattle and refuse to sail into a hurricane. (And also refuse to sail a rustbucket or work for shipowners who wouldn't think to cannibalize a sister ship for parts before it is scrapped.) But the real work of avoiding a situation like that happens long beforehand. Many people are not able to refuse an illegal or dangerous order because they can not live below their means and build up a surplus that would sustain them while being in between jobs or making a transition to entrepreneurship.

Another high agency idea is that if you are intelligent enough to do independent reading and thinking, you should expect much more of yourself than what the average American is achieving. From The Complete Guide to Fasting, there are Americans who don't realize that pita bread is "bread". Do not compare yourself to these people - compare yourself to success cases and see if you are measuring up or if you are leaving upside on the table. Look at PD Mangan, who is a high agency guy. Another general theme from the reading is that not only is no one looking out for you, but in fact most people are not even looking out for themselves competently.

The high agency concept carries over into business and investing. In How to Measure Anything and Guesstimation we saw that it is possible to get a pretty solid handle on physical quantities that most people would think are impossible to even estimate. Just bothering to make an effort can allow you to dramatically decrease the width of 90% confidence intervals around important decision-making variables.

As I have said, you can be a good investor without understanding Black-Scholes, but you need to understand dimensional analysis. You see people all the time who invest without doing dimensional analysis or reality checks of business model plausibility: the people who invested in uBeam, Theranos, Valeant, and Tesla.

In Bad Blood - the Theranos story - we saw that Elizabeth Holmes figured out that the "startup" ecosystem operates based on social proof, not scientific thinking, and played these billionaires and former cabinet secretaries like a fiddle. All an investor needed to do to vet Theranos was to conduct a simple experiment comparing Theranos results to those from a real blood lab. Even a sample size of one would have revealed the inaccuracy and prevented them from losing money on this!

The somewhat mediocre Lying For Money at least raised an interesting question: how can we explain the really easy to detect, but undetected, frauds that we have seen like Theranos and Madoff, either of which could have been detected with high agency guesstimation or dimensional analysis type checks. It also made the point that, "anything which is growing unusually quickly needs to be checked out, and it needs to be checked out in a way that it hasn't been checked before."

One last note from the Ryan Holiday article,
Thiel would say to tell me. "We tend to denounce 'conspiracy theories' because we are skeptical of privileged claims to knowledge and of strong claims of human agency. Many people think they are not possible, that they can't be pulled off." This is a self-fulfilling prophecy. People who don't believe in their own agency naturally find themselves with very little of it.
American elites are having an exceptionally easy time getting away with their conspiracies. Maybe it is because the population is so mentally and physically debilitated - by bad diet, television, and so forth - that it can not even imagine the type of person that could pull off a conspiracy?

Biology/Ecology/Science (n=8)
  • Sibley's Birding Basics: How to Identify Birds, Using the Clues in Feathers, Habitats, Behaviors, and Sounds (5/5) This was a great one. Author David Allen Sibley and (competitor Roger Peterson) are the kings of North American ornithological field identification guides. Look at their collections: Sibley and Peterson. Sibley says to train yourself to see details so you can make comparisons, and figure out what species of bird you are looking at. Form follows function, so many of the characteristics that differentiate are features that are specific to a certain lifestyle. He says the scientific names are less accessible but more valuable. And then once you are looking at the scientific names, think in terms of genera rather than just species. (Egrets and herons are both Ardea, for example.) Mentions the American Ornithological Society's Birds of North and Middle America Checklist - the official source on the taxonomy of birds. So you could see that there are many, many species of hummingbirds (and genera) all in the family Trochilinae.
  • The Fates of Nations: A Biological Theory of History (4.5/5) A deterministic theory of history based on ecology - Colinvaux examines wars, rises and falls of civilizations, and human history from ecological principles to give a predictive theory for the fates of civilizations. Reproductive effort makes no difference to the size of a population - which is set by niche size. Small young vs large young strategy. View: Malthus was right but technology has temporarily postponed. "The Earth is finite... we can defer the final poverty but not avoid it." So physicists and ecologists believe in Malthusian limits, but not economists. "When we gave up hunting for farming... we broke the primeval restraints on number and marched down a food chain to where the energy was." During the last ice Age there was more land in temperate latitudes than there is today due to retreat of seas into glaciers. Ecology's first social law: "all poverty is caused by the continued growth of population" after resources have stopped growing. Bill Gates is a lunatic who thinks poverty causes large families, rather than the ecological truth that large families cause poverty. Having the cause and effect backwards he is breeding a precarious population bubble. Social upheavals come from disaffected individuals of the middle and upper classes. (This agrees with Turchin's elite overproduction theory. Unprofitable startups made by Stanford students seem to be an indicator of this overproduction.) Social oppression is an inevitable consequence of the continued rise of population. 2nd law: "aggressive war is caused by the continued growth of population in a relatively rich society" that can steal niche space from its neighbors. Once an empire is crowded for the upper classes, collapse is near. At this point bureaucracy is more complex and bureaucrats more numerous. "Opportunity for betterment wanes and initiative must wane with it." 
  • Nature: An Economic History (5/5) By Geerat Vermeij, the blind Dutch evolutionary biologist. I mentioned this one all the way back seven years ago to talk about investor genotypes in an investing ecosystem. Decided to reread without any investing notions in mind. Plants make nitrogen or carbon toxins as defenses (depending on which is relatively more available in their environment), but never phosphate because it's so rare. So nothing was naturally resistant to our organophosphate pesticides. There are a million species of insects and 80% are parasitic. C4 photosynthesis has evolved 30+ times. Agriculture has evolved ten times and nine of the times are fungus farming insects! The equatorial zone is more extravagant in the number of species, their aggression, color, etc. Apparently the numbers on mass extinctions weren't truly compiled until 1984? The terminal Cretaceous extinction had a 96% species kill rate! No tetrapods weighing more than 25kg survived. The Chicxulub crater was identified in 1990 as the impact of the 10km asteroid. (A million times more explosive force than the biggest nuclear weapon.) 
  • The Nesting Season: Cuckoos, Cuckolds, and the Invention of Monogamy (4/5) By the great Bernd Heinrich. As with John McPhee, Peter Hessler, etc., one should have all of his books. I like the natural historian approach to birding: watching local species throughout their lives, over multiple seasons. As opposed to flying all over the planet just to see a bird for a few seconds to check it off a list. Bernd says that wherever he lives, he plants some trees and puts up some birdhouses. After reading about natural history and nest parasitism, it is amazing to see behavior like this in a species that has cognitive faculties and reasoning ability that birds lack. But actually, the human mind is extremely susceptible to (harmful) memes just as a sparrow is vulnerable to having cowbird eggs dumped in its nest for it to take care of.
  • The Best American Science and Nature Writing 2011 (3.5/5) Best pieces were: Fish Out of Water by Ian Frazier about the Asian-carp invasion; Lies, Damned Lies, and Medical Science by David H. Freedman about Dr. John Ioannidis; Letting Go by Atul Gawande; The Treatment by Malcolm Gladwell; Waste MGMT by Evan Schwartz; and The Killer in the Pool by Tim Zimmerman. It has been surprising how low the hit rate of really good essays are in these Best books. The pieces in our CBS weekly Links are of much higher average quality. 
  • The Geese of Beaver Bog (3/5) Continuation of the Bernd Heinrich natural historian approach to birding: watching local species throughout their lives, over multiple seasons - in this case geese. In this book he is living in the Vermont woods. Summary: "Geese do not, contrary to myth, mate for life. They are wedded to place, not to individual partners. Each year they return to the breeding area they know best, and a battle ensues for the right of parentage. Each large area that provides appropriate safety and food for the vulnerable three-week nesting period is permitted only one, or occasionally two, breeding pairs." Territory is life. He mentions Lorenz: "Given the specificity of adaptation, hybridization would break up genetic coherence and result in harm of the species."
  • Helium: The Disappearing Element (3/5) See full review.
  • World of Carbon (3/5) This is an old one by Issac Asimov, who actually wrote a fair amount of nonfiction. There are two halves of chemistry, organic and inorganic. Being the "world of carbon," this is about organic. Might be interesting to followup with his World of Nitrogen, which is about inorganic nitrogen-containing compounds.
Fiction (n=12)
  • The Shipping Man (5/5) Reread this, still great five years later. "Liquidity is nothing more than a function of finding a market clearing price. At the right price there is endless liquidity. And at an unattractive price there is no liquidity at all."
  • The Man Who Would be King (5/5) Rudyard Kipling's story is a rare case where the movie turned is as good as the book. 
  • The Dark Forest (4/5) Sequel to Three Body Problem by Cixin Liu, contains his axioms of cosmic sociology. "Survival is the primary need of civilization. Civilization continuously grows and expands, but the total matter in the universe remains constant." The result: "The universe is a dark forest. Every civilization is an armed hunter stalking through the trees like a ghost, gently pushing aside branches that block the path and trying to tread without sound. Even breathing is done with care. The hunter has to be careful because in the forest are stealthy hunters like him. If he finds other life - another hunter, an angel or a demon, a delicate infant or a tottering old man, a fairy or a demigod - there's only on thing he can do: open fire and eliminate them. In this forest, hell is other people. An eternal threat that any life that exposes its own existence will be swiftly wiped out. This is the picture of cosmic civilization. It's the explanation for the Fermi Paradox." It is scary how good Chinese science fiction is - while this guy is an award winning western science fiction author. Also, be aware that the Chinese have a grudge against the west. 
  • Exit 13A: A Control Tower Diary (4/5) A novel about bureaucratic organizational dysfunction, by a retired air traffic controller. Part of the story is the old-school USMC Irish protagonist's interactions with affirmative action hires in his Newark control tower, so it is shockingly (but hilariously) politically incorrect. The author's view was that the incompetent controllers (who don't measure up as "tin men") would cause catastrophes. This does not seem to have happened, even though there are occasional close calls. He seems to realize that police forces and newspapers are corrupt too, but does not form a generalized theory of corruption as agents responding to incentives. Exit 13A is the FAA equivalent of John T Reed's writing about being in the military. It isn't just the FAA, or the military, or government agencies that will expect employees to lie and cheat for them but then throw them under the bus for doing so when convenient. This would be true in any organization. I'm sure that many GE employees could commiserate with John T Reed or this tin man. Note - the way that John T Reed describes the workings of corrupt organizations is important and worth preserving here: "[W]hether it be Enron, the NY Police Department during the time that Frank Serpico was an officer, the Mafia, or the U.S. military, newcomers are tested before they are 'trusted'. As Al Pacino said over and over in The Recruit, 'Everything's a test.' Relatively new NYPD officers like Serpico, also played by Al Pacino, were invited to accept small bribes to show they were 'one of us' before they were permitted knowledge about bigger stuff. Mafia wannabes are required to commit crimes confirmed by Mafia guys before they are allowed into the inner circle. This has two purposes, to identify and screen out any 'boy scouts' or undercover agents who are squeamish about corruption, and to get something on everyone so no one can later change his mind and snitch. Signing false documents is a court martial offense. It violates the Uniform Code of Military Justice. If you sign a false document, you both gain entry to the 'club' and you put yourself in a position where you cannot get out because if you ever go over to the media or authorities, they can trot out the false documents they know you signed to discredit and court martial you." Also: "In his 2008 book The Logic of Life, Tim Harford uses a slightly different phrase describing the uncorrupt in corrupt organizations with a similar meaning: 'Your option to escape means you can't be relied upon.' I have seen this phenomenon in a number of different organizational situations that I and my family members have experienced throughout our lives. Organizations like employees who are dependent upon the organization. They fear independent employees." And also: "No man can be more honest than his boss. If your boss is dishonest and you are honest you will very quickly be forced to rat him out. If you can’t be more honest than your boss, your boss cannot be more honest than his boss, and so forth. So the comprehensive way to state it is that no one can be more honest than anyone above them in the chain of command in their organization." 
  • The Great Train Robbery (4/5) Michael Crichton was taller, smarter, and more successful than any of us. He was an ubermensch. This is one of his earlier novels, from 1975, a historical novel about the Great Gold Robbery of 1855. Thieves stole 200 pounds of gold off of a train from London to Folkestone, a payroll for the stupid Crimean War. It is not clear whether the real William Pierce (mastermind of the heist), got away with the money the way "Edward Pierce" does in the book. But stealing a military payroll is a time honored way to get rich.
  • The Analyst (4/5) Written by a Credit Bubble Stocks reader! This is potentially a new genre: investing science fiction. I won't give the plot away... You have never read anything like it. 
  • Enter Jeeves: 15 Early Stories (4/5) See Sailer on P.G. Wodehouse: "Wodehouse hit a long peak from his early 40s into his early 60s with six straight Jeeves novels rated above his career average". And Jeeves says: "If you have ever studied psychology, sir, you will know that respectable old gentlemen are by no means averse to having it advertised that they were extremely wild in their youth." 
  • Without Remorse (3/5) This was Tom Clancy's seventh novel. I would say his best are The Hunt for Red October and The Sum of All Fears. According to Wikipedia, Clancy started working on Without Remorse in 1971, abandoned it, and went back to the finish it in 1992. As with The Man Who Walked Through Time, it is a bit suspicious when a book sits on the writing table unfinished for a long time. Also amusing is that the book has been in film development limbo for the past 25 years, and Keanu Reeves was offered the role but turned it down. Imagine the timeline where Keanu made Without Remorse instead of Speed! 
  • Invisible Planets (3/5) Chinese science fiction anthology compiled by Ken Liu, the translator of Cixin Liu's Three Body Problem series which we read at the beginning of the quarter. We had mentioned that it is scary how good Chinese science fiction is, especially since the Cixin Liu books are advocating the survival of the fittest civilization rather than western transvaluation of values. (The Chinese would have gone extinct in the early 60s without western outgroup altruism.) The good news is that Cixin Liu and Ted Chiang are by far the best Chinese science fiction writers, none of the others come close, and they are the only ones whose thinking is superior to all current and most past western science fiction thinkers. The best story in this collection is "The Circle" by Cixin Liu.
  • Artemis (3/5) This is second book by the author of The Martian. Favorite idea was having "soft landed grams" be the unit of currency on the moon. Not as good as his first but wouldn't be surprised if it gets made into a movie too. Critics hate the book: "takes that same genial dad-joke personality and superimposes it onto a main character who’s supposed to be a take-no-shit brilliant young woman", "offers the same flat, sweary prose, fistfights and scientific mini-lectures - on the moon," "the author seems to be offering up this one as some sort of gift to the gods of political correctness". I think he still doesn't have a day job anymore though. See his conversation with MR. 
  • Airframe (2.5/5) Not my favorite Michael Crichton novel. His best was clearly Jurassic Park, and Andromeda Strain is up there too. "Airframe is unlike many of Crichton's other works in that the story has almost no outright science fiction elements." Having the airplane manufacturer conduct the investigation of an incident with one of its planes does not ring true. (In addition to reading all Delaware Chancery opinions, we like to read all NTSB reports.) Many of his novels were polemics, this one was against the media and television journalism. What a quaint concern.  
  • Based on a True Story: Not a Memoir (2/5) Norm Macdonald is only funny when he is not trying to be. Terrible standup and joke writer but very funny in casual conversation.
Politics (n=5)
  • The Philosophy of Friedrich Nietzsche (4.5/5) Never really understood Nietzsche until H.L. Mencken explained it here - consistent with our "old books are better books" program. "Germany is a great nation only because its people have so much Polish blood in their veins."
  • H. L. Mencken: Prejudices Vol. 2: Fourth, Fifth, and Sixth Series (4/5) This compilation of Mencken essays is full of gems, like "Who remembers that, during the Spanish War, the whole Atlantic Coast trembled in fear of the Spaniards' feeble fleet, that all New England had hysterics every time a strange coal-barge was sighted on the sky-line, that the safe-deposit boxes of Boston were emptied and their contents transferred to Worcester, and that the Navy had to organize a patrol to save the coast towns from depopulation?" (p 19). Other great essays are the anti-farmer one (p25), or his observations about the hopelessness of teaching the dull to write well (p295). Many of the cultural references and political concerns fall flat, though. (McPhee has an essay about how this happens). For example, it seems like every Mencken essay from the 20s has a reference to the Sinclair Lewis novel "Babbitt", which no one now has ever heard of. These essays are mostly from the 1920s, and at that time Mencken was irate about prohibition - for which he blamed Methodists. He was amusingly elitist and you realize that elitism has sadly gone totally out of fashion. Everyone now pretends to have common tastes - look at how our centimillionaires and billionaires like to claim that they are "middle class" and watch prole circuses like "professional" sports. 
  • Bad: Or, the Dumbing of America (3/5) Not as good as his Class, but some funny moments. "Washington, D.C. feels obliged to present itself as a locus of taste and sophistication... It likes to assert that the presence of all those embassies gives it an exciting international flavor, but it hopes we don't know that the occupants of embassies and consulates all over the world are very dull people, the sort you might find at, say, field-grade rank in the world's armed forces..." And this observation: "'Something of a psychiatrical clinic' is the way Thorstein Veblen described this country, and he regarded the whole place as 'a case'."
  • Ramp Hollow: The Ordeal of Appalachia (2/5) His summary: "How people get kicked off land and why we don't talk about them." Written by someone who describes himself as a "democratic socialist". His facts about the oppression of Scots-Irish Appalachians are interesting, but sadly he never read anything like Fates of Nations so his theories and conclusions are no good. Colinvaux mentions that conquered people are less often massacred than just forced to leave their territory. (But they leave fewer descendants, or none at all, like the birds each season who don't win a territory for a nest. This also happened to the Carthaginians.) This author's thesis is that Scots-Irish farmers in 1880 went through something like English peasants in 1650 enclosure movement. Unfortunately he's sympathetic to Marxist economics and also doesn't know his ecology. (p 146 Thinks that cattle raising households would allow predators like bears to feed on their lifestock at will so they could eat the predators if needed - this makes no sense as it would result in an energy deficit.) For example, he describes a population increase and says "the absolute number of cleared acres fell along with the relative area available to support each person. But why should this have cause a crisis?" The mistake is in thinking about the ecological forces effecting humans any differently than other animals or species. Also he talks about the plight of labor without talking about the market forces (supply and demand) that dictate how capital will treat labor. Interestingly he admits that "socialists hated Malthus, none more than Marx". Colinvaux explains the plight of Appalachia much better (FoN p122) "The poverty of people with compressed lives, which is always the result of letting populations rise to soak up the resources released by new technology or conquest."
  • Bronze Age Mindset (1/5) BAP is an amusing twitter account. I don't know how anyone was able to "review" his book (1,2,3) since it is incoherent gibberish.
Economics / Investing / Business (n=29)
  • When Genius Failed: The Rise and Fall of Long-Term Capital Management (5/5) They started the fund right after the 1994 rate surprise, when spreads widened, but then tightened again as bubble continued so they made money initially. Very high leverage on very small spreads. Betting on ~12 bps spread between on-the-run and off-the-run treasuries to narrow. Their trades were liquidity providing - they tended to buy the less liquid security every time. Always betting on spread convergence. Short vol: "The MIT types always want to short volatility". Ironically the August 1998 event that killed them was a great opportunity for their key strategies, which they had drifted from because those opportunities dried up!! They had plenty of money; if they had patiently waited in cash they could have taken advantage. Crazy huge and leveraged - $100 billion of assets on a few billion of equity. 
  • Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (4.5/5) Written by a prop trader who used technical analysis and then got interested in philosophy of science. He differentiates between subjective and objective TA. Subjective means too vague to be implemented by a computer. (Artisanal TA.) Frailty of the mind - reminds me of Drawing on the Right Side... TA has great appeal to retail investors who are intimidated by financial statements and primary research. (Not as hard as it looks - Sleuthing and Oddball Stocks.) Also relevant is ever changing investment styles. In the past, the signal to noise ratio of these technical signals may have been stronger, and fewer people were looking. Meteorologists and horse bettors have an easier time with calibrating their predictive abilities because they make explicit predictions every day and get swift and precise feedback. He thinks EWT is worthless: "loosely defined rules and the ability to postulate a large number of nested waves of varying magnitude [gives] the Elliot analyst the same freedom and flexibility that allowed pre-Copernican astronomers the ability to explain all observed planetary movements." Also, confirmation bias creates a "vicious cycle of growing self deception" and "TA practitioners most experienced with a useless method [are] least able to recognize its flaws because of more lengthy exposure to the method's chance based successes".
  • The Deals of Warren Buffett: Volume 1, The First $100m (4.5/5) Mentioned this last year, but rereading a book still counts as one of the two books per week. One of the hardest things to get right in investing is position sizing. I have seen many people blow up by going too big (i.e. close to all-in) into an idea where they were wrong - although never in a Grahamian type investment. And Geoff Gannon takes big stakes in those types of investments. Buffett's famous investment Sanborn Maps had $7 million of securities and a business worth maybe $500k. He put 35% of his money in it at a $4.7 million market cap - that was a 1/3 discount to the sum of the parts value. Management was against him so he had to fight for his return. Later he put 20% of assets in Dempster Mill at half of net current asset value. Again, he had to get Harry Bottle in there to turn it around, but it was close to failure so it was not a matter of fighting management but of fixing the business. He put ~40% of assets in "quality" company American Express. When he put 25% of the partnership in Berkshire Hathaway it was a bad business and was trading at a discount to working capital but had debt. His rationale for these huge positions was that they are good investments but they are rare. In general I think that a company trading at a big discount to liquidation value always has some sort of glaring problem - like incompetent or misaligned management.  
  • Bad Blood: Secrets and Lies in a Silicon Valley Startup (4.5/5) Theranos is an incredible story of business fraud but also the credulity of venture capitalists and elites. Elizabeth Holmes somehow figured out that this ecosystem operates based on social proof, not scientific thinking, and played these billionaires and former cabinet secretaries like a fiddle. She did not get money from investors with medical and scientific experience but from the type of people who cannot do guesstimation, sleuthing, or dimensional analysis. Some lessons from this quarter's books: no one is looking out for you, and in fact most people are not even looking out for themselves very competently. An economic cycle consists of ~80% ebullience and 20% comeuppance. During the ebullience stage, people and firms with strategies that will not last long term look like geniuses. All an investor needed to do to vet Theranos was to conduct a simple experiment comparing Theranos results to a real blood lab. Even a sample size of one would have revealed the inaccuracy and prevented them from losing money on this!
  • Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street Reread. (4/5) Main characters: Claude Shannon, John Kelly, Ed Thorp. All three had good insights into markets at the beginning of the hedge fund era. John Kelly died very young. Claude Shannon was odd, although he ended up investing in and being on the board of Teledyne. The best positioned to take advantage was Thorp who got famous with Beat the Dealer, but realized that casino gambling was a big waste of time. He starts an investing partnership and evolves from warrants to convertible bonds to options. Then there is LTCM. Such low ROA multiplied by 30x leverage. Stay in the game!
  • Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Second Edition (4/5) Now in its fourth edition. The 1990s had really bad accounting fraud. Ever wonder why you got so many AOL floppy disks in the mail in the mid 90s? They were capitalizing those costs as "deferred subscriber acquisition costs," and by June 1996 these were 61% of shareholder equity! Note that, like AOL, many of the companies that engaged in "aggressive accounting" did not fail. They got an edge with this type of behavior - and it worked. (Think of Larry Ellison.) A lot of these techniques were and are legal. The one thing that does not lie is a dividend or interest coupon check in the mail. Also, the more stupid investors in the market (who do not read financial statements), the bigger the advantage in cost of capital that crooks have over honest people. Perhaps this is why there is so much fraud at the top of economic cycles. Consider staying away from minority investments in businesses where the profitability is difficult to assess? Or at least be very careful of earnings quality (cash). A candy or soda company, or a book publisher, has fewer opportunities for creative accounting than an aerospace manufacturer or contractor.
  • No Exit: Struggling to Survive a Modern Gold Rush (4/5) About a hapless SF startup, written by Gideon Lewis-Kraus all the way back in 2014 - at the precise moment that the VC bubble seemingly peaked. Although somehow this has not (yet?) resulted in a crash. Three years later, the company he profiled in the story ended up being acquired.
  • The Bank Investor's Handbook (4/5) By Nate Tobik, see our update here about the Oddball Stocks Newsletter. One of Nate's very good points is that lenders get exposure to parts of the economy that are not otherwise investable, like very small businesses. And the interest coupon on a small business loan is often roughly the same as the return on equity of that business, so the lender gets a similar reward with less risk. Nate did very well investing in small banks post-crisis when they were trading at big discounts to tangible book value. They have three problems now though (not discussed in the book, but we are writing about in the Newsletter). First, they are trading at substantial premia to book. This does not make sense since they are levered credit funds run by idiots. Second, most of them have gotten massively long government debt even though the bond bull market is ending. And third, because the fixed costs of running the bank (including the cost of gathering deposits) are so high, the returns on equity of the banks are actually less than the coupons of the loan book! Bank investors do not seem to have noticed this, but we have been writing about it. (Catch up on back issues of the Newsletter, 19 and 20.)
  • Run the Storm: A Savage Hurricane, a Brave Crew, and the Wreck of the SS El Faro (4/5) In Japan, CEOs have often done the jobs of all of the people who work from them. But here they are MBAs and people who are bad at math, dimensional analysis, and reality checks. So, they are unable to tell if people are lying when they say they cannot do something. The way they deal with this is to just demand something and then see what happens. The type of person who is an employee (not entrepreneur) does not understand this tactic and desperately tries to do the impossible. The master of this rusting Jones Act ship, carrying goods for Wal-Mart to sell in Puerto Rico (including fructose in tanks to give them diabetes), faced that type of pressure from his employers who were lawyers and suits. He sailed a forty year old rustbucket right into a hurricane! When the suits had scrapped the El Faro's sister ship, it did not occur to them that it would be smart to cannibalize the decommissioned ship for parts. 
  • Fooled by Randomness (4/5) Reread this, see review.
  • The Forgotten Man: A New History of the Great Depression (3.5/5) "The Forgotten Man" is a concept from a brilliant William Graham Sumner essay which Roosevelt and his communist "brain trust" stole and turned on its head! (His words twisted by knaves to make a trap for fools.) See, the Forgotten Man is you and me, the Credit Bubble Stocks community of thrifty workers and investors. Sumner's point was that do-gooders steal money from the likes of us to give to other people. But FDR inverted it with the absurd notion that the millions of people on his dole were the forgotten. I would say that the Federal Reserve probably deliberately caused the initial crash, but FDR turned it into a decade-long economic train wreck by trying to impose socialism and settling for absurd micromanagement of the economy. Unemployment just would not get better while he was wrecking businesses big and small, and the desperate unemployed working classes (who should not be voting; they will only fall for charlatans like this) kept reelecting him in their ignorance. If only the polio had taken him in 1921. The type of person who becomes U.S. president is always a total misfit. Only someone deeply depraved psychologically would put up with the demands of the campaign itself, for example. You can't read two books a week as a politician. This goes to show you that the good guys always lose - that is the story of European civilization. 
  • Nature's Metropolis (3.5/5) This is an economic history of Chicago during the 19th Century. Chicago got its start by marketing midwestern grain, lumber, and meat. It beat St Louis because railroads beat barges. As an example, the changing seasonal height of the Mississippi River made it hard to site grain elevators along the riverfront in St Louis, which made Chicago the better city to site grain elevators. (Grain elevators came into being in Chicago. The first one was built in 1838 while St Louis didn't have one until after the Civil War.) From elevators you have the grain exchange (CBOT) and then financial and intellectual capital in place for deeper and wider marketplaces (Merc). See also our old dual review of Floored & The Futures books. Another way to put it: "In the mid-19th century, the railroads won out over the river boats in a bitter struggle for supremacy in transportation. This helped establish the mastery of the Great Lakes and East Coast ports, and strengthened the economy of the North." Suggested book to look at is a novel called The Pit.
  • Structural Holes (3.5/5) Know lots of people who know lots of people but who don't know each other. Then you can make money as a broker like Irving Lazar or Michael Ovitz. Summary of theory: "most social structures tend to be characterized by dense clusters of strong connections, also known as network closure. The theory relies on a fundamental idea that the homogeneity of information, new ideas, and behavior is generally higher within any group of people as compared to that in between two groups of people. An individual who acts as a mediator between two or more closely connected groups of people could gain important comparative advantages. In particular, the position of a bridge between distinct groups allows him or her to transfer or gatekeep valuable information from one group to another." 
  • Brokerage & Closure (3.5/5) This is the sequel to Burt's Structural Holes mentioned earlier this year. "Brokers do better." People who bridge groups are more likely to have creative ideas and be able to implement them. Creativity by brokerage is moving an idea mundane in one group to another where the idea is new and valued. Ways of thinking are more homogeneous within than between groups so people connected to otherwise segregated groups have more optionality from more ideas. Other ideas: Homophily in friendships [e.g.]. Paul Revere as a broker [Han paper]. (See also Using Metadata to Find Paul Revere.) Closed network ~ high trust society on macro scale. Schumpeter on heirs who have inherited his wealth without his ability (link).
  • Mr. Market Miscalculates: The Bubble Years and Beyond (3.5/5) We like James Grant. An excellent writer, he was way too early being bearish on bonds but he did not buy into the tech bubble or the housing bubble. He helps remind everyone that the central bank running our mixed economy is solely responsible for these ridiculous bubbles. "In the press release it issued to explain its last half-point easing, the FOMC sounded like a composite of the economic planning agencies of unredeemed socialist Britain and communist Poland." One good essay is from November 2006 about the ridiculous Freescale Semiconductor LBO (p336) which by April 2009 was in a "debt war with its noteholders". Another good one looks at Benjamin Graham's seven rule test for investing in companies (from Intelligent Investor) and finds that at the 1974 low 85 of the 500 S&P companies met the test; only 62 in August 1982; 6 in January 1991; and only 3 in March 2003. Market history is characterized by extremes that people psychologically don't really believe will ever reverse. But the lesson is the same as with Fooled by Randomness - things can change more than you think.
  • Compendium Compilation 2015 - Murray Stahl (3.5/5) Don't think this can be found online, I got it directly from Horizon Kinetics. But the new stuff they are publishing is available here. Murray points out: "Indexation in its current from has no future. The huge stimuli of the last 40 years - big national deficits, 30 years of falling interest rates, tax breaks, expansion possibilities in the formerly communist world have already occurred, and did so concurrently with the index revolution. The indexes are now composed of mature companies." Another thought, the consumer packaged goods industries used to have low profit margins, but now they are high. As we know, these earnings are being capitalized at high multiples because they are viewed as being steady, bond substitutes. As noted above in my review of 100 best stocks to buy, they sell middlebrow products that are vulnerable to competition from the bottom (generics) and top ends. 
  • Lying for Money (3/5) New this summer by British author Dan Davies. He divides white collar crime into four categories: the "long firm" (basically a bust-out), counterfeiting / forgery, control fraud (and distributed control fraud), and then "market crimes". His idea is that fraud is an "equilibrium phenomenon" - basically positing that people will substitute trust for precautions until the expected fraud loss begins to exceed the cost of precautions. The problem with this is that is does not explain the really easy to detect, but undetected, frauds that we have seen like Theranos and Madoff, either of which could have been detected with high agency guesstimation or dimensional analysis type checks. (See Q2 reviews for more on those important mental tools.) It actually seems to me that most people are only capable of believing some sort of average of what the people around them believe. (Maybe that saves the simulation a lot of processing power on the simulated non-player characters?) So to them, if Elizabeth Holmes is getting magazine covers it would be utterly unthinkable to actually try her testing device (even for n=1 sample) before sinking hundreds of millions of dollars into a business partnership with her. Davies has nothing useful to say about the social dynamics (or possible social mood causes) of these lapses in diligence. He also does not observe (as Glenn Chan or I have) that a lot of smart psychopaths are getting away with business fraud. See my review of Financial Shenanigans last quarter - "the more stupid investors in the market (who do not read financial statements), the bigger the advantage in cost of capital that crooks have over honest people. Perhaps this is why there is so much fraud at the top of economic cycles." The tales that Davies highlights are the comically incompetent frauds like Ponzi. He does point out that fraudsters try to "find a new and incredibly rich mug to defraud, and sell the control fraud's assets at a premium to the fraudulent valuation, making the original victims whole" which reminds me of Musk's plan to sell to the Saudis. Another good point is that "anything which is growing unusually quickly needs to be checked out, and it needs to be checked out in a way that it hasn't been checked before." "Nearly all of the frauds in this book could have been stopped a lot earlier if people had been a bit more cynical about growth." 
  • Permission Marketing: Turning Strangers into Friends and Friends into Customers (3/5) Interesting economic statistic is advertising expense per capita. Do we have the most impressionable rubes or what? Permission marketing (as opposed to interruption marketing) is "anticipated, personal, relevant". Newspapers and magazines developed as a vehicle to attract attention to advertisements for goods of the mass production age. Some of these new products were junk, like Crisco, produced by P&G and made out of the same thing (cottonseed oil) as ivory soap. This replaced lard and homemade soap from animal fats. Frequency is key in advertising but it is expensive and boring. The book is essentially saying you should have a mailing list. Same as Ryan Holiday links recently. He predicted (in 1999) that a car company would go direct to consumer with showrooms in shopping malls. Basically wrote the book to plug his company Yoyodyne which was bought by Yahoo. What's he doing now?
  • Capitalism without Capital: The Rise of the Intangible Economy (3/5) Intangible assets are a greater and greater share of the investment component of GDP. Intangible asset heavy companies change how to think about financial statements, e.g. price to book becomes much less meaningful because investments in the intangible assets are expensed not capitalized. Coca-Cola trades at 11x book value. (And over 400x tangible book value!) Mentions something interesting about this, The End of Accounting. (Of course, non-GAAP has already happened: "between 2003 and 2013, the proportion of public companies reporting non-GAAP (“pro forma”) earnings doubled from 20% to 40%.")
  • The Worst Poverty: A History of Debt and Debtors (3/5) Speaking of debtors' prisons - this is very informative on the history of how debtors were treated from the middle ages through present (but only in the U.K.). One reason for debtors' prisons was that English law "showed a mercy to house and land which they denied to flesh and blood": "If the English creditor has not taken his knife with Shylock or the old Roman usurer, he has wielded a scarcely less formidable machinery of bolts and bars. Engines of infliction he had in plenty, degradation and confinement for all, and starvation besides for the truly insolvent debtor. But the misfortune always was, he was yet without that for which all these instruments of evil were given him - a remedy." So realty was protected but debtors' persons were not - creditors could have debtors arrested and detained before even getting a judgment against them! Thus, "powers of vexation instead of powers of sale". Funny: "Among the creditors of the gentleman prisoner are always to be found a greater or less number of tailors. His tailor's bill is often indeed the largest individual claim against him." In 1793, Lord Kenyon had said, "Imprisonment for debt is virtually a part of the British Constitution, and without that, or some other strong mode to compel justice to be done to the creditor, our trade, commerce, and in short, the source of all our wealth, must soon be destroyed." But imprisonment for debt ended finally in 1869. Also: "It is the misfortune of many other gentlemen to turn out of the seats of their ancestors to make way for such new masters as have been more exact in their accounts than themselves." At the end of the 16th C, "moneylending was on the way to enjoy the legal security of recognised and reputable profession. Naturalistic political arithmetic was set in place of theology - part of a revolution that turned religion from the master interest of mankind into one department of life with boundaries which it was extravagant to overstep." Hilarious story about a noble who was three years behind on his wine merchant's bill. When the wine merchant threatened legal action, the noble's butler wrote to say that he was so dismayed by the amount due that he would need a case of the merchant's best brandy before he could recover.
  • Warren Buffett's Ground Rules: Words of Wisdom from the Partnership Letters of the World's Greatest Investor (3/5) This was a quick read. Not as interesting as the Deals of Warren Buffet book by Glen Arnold from last year. Remember that the partnership was from 1957 until 1969, when valuations were high and he "quit" - wound it down and focused on Berkshire. The S&P PE in 1969 was 17.7; by 1980 it was only 7.4. (The PE10 peaked in 1966 at 24 and troughed, as we know, in 1982 at 7.4.) He believed in concentrated bets: 40% in AmEx, 35% in Sanborn Map, upwards of 20% in Dempster Mill. The concentration was because screamingly cheap investments were and are hard to find. Note that in the control situations, Buffett was valuing the companies himself, not using market prices (!!). So by taking control of a profitable net-net, higher and higher marks on the position with no downside volatility were assured. Speaking of Dempster, whatever happened to Harry Bottle who turned the operations around? It mentions that he invested in the Buffett Partnership after they sold the company. 
  • Against the Gods (3/5) Peter Bernstein treatment of the big names and discoveries in probability, statistics, and then finance and behavioral finance. I actually confused him with William Bernstein, author of the Birth of Plenty and Splendid Exchange books. Anyway, did not know that Edmund Halley (of the comet) put together life tables which were maybe the first ones since Ulpian in 225 AD. Speaking of probability, I thought that this Bayesian Python book looked interesting.  
  • The Collected Works of Armen A. Alchian: Volume 2 (3/5) See full review. I have had Alchian on my list to read since writing about his paper three years ago.
  • Calvin Pardee, 1841-1923: His Family and His Enterprises (3/5) Calvin Pardee as in Pardee Resources. Copies of this are scarce and expensive because it was a small printing of a family history for a wealthy family. A certain number were given to outsiders and have ended up on the used book market. Mine was given to Manford O. Lee of VF Corp - a big deal apparel company both now and when the copy was sent in May 1981. Pardees have been mostly on the right side of things for almost 400 years. Their ancestor was a Parliamentarian who came to New Haven during the English Civil War. They had family members in the Union army during the U.S. civil war. During the 19th century a Pardee got interested in Lehigh Valley anthracite coal, and that is where the story of wealth starts. The one mistake they made, or the reason they did not become a household name like Carnegie, is that they did not follow the coal and steel industry west to Pittsburgh. (The reason for the westward shift was that steelmaking using bituminous coking coal made more sense in Pittsburgh, nearer to deposits of that type of coal. Plus the market for steel rails was in the expanding west, not the east.) Ultimately, though, Calvin Pardee did take the cash generated by the eastern PA mines and reinvested it towards the end of the 19th century in lands in Louisiana (timber, later oil and gas), West Virginia, Kentucky, and Virginia (the latter three all coal). The Louisiana lands that were bought based on timber value but proved to have oil were the big winner. That leaves PDER as a family owned resource company that has been mining coal, growing timber, and producing oil and gas for more than a century. I can't think of anything else quite like it. Texas Pacific Land Trust has been around since 1888 but is not actively managed.
  • Something from Nothing: Joe B. Foster and the People Who Built Newfield Exploration (3/5) Great quote: "a seismic dollar is the hardest dollar to find in the oil patch". Newfield was founded by Joe Foster after Tenneco sold off Tenneco Oil (where he had been working) in pieces. Foster raised money from employees, the UT endowment, and from an instant coffee company heir. Newfield started out in the Gulf of Mexico, competing by operating on a shoestring and using 3D seismic to find hydrocarbons that had been overlooked. Basically they were small and scrappy compared to the majors and big independents in the Gulf and looked at times while the competition cared more about dollars. Also it always helps to start a commodity company right before a big bull market in that commodity. One thing that occurred to me reading this is that oil exploration in the Gulf of Mexico started in 1954, and while there were oil bear markets before, this is the first time that the GoM hydrocarbons have occupied such an unfavorable position in the marginal cost curve. Thus, Conrad Industries is in pretty uncharted territory, with a demand crunch in its primary market due to a technological innovation.
  • Mutually Beneficial: The Guardian and Life Insurance in America (3/5) Life insurer founded by German-Americans in New York. Originally as "Germania" but had to change name during WWI. Inflation is bad for life insurers, so in 1896 and 1900 employees lined up for McKinley "Sound Money Parades" in New York. They are still a mutual while most others demutualized so their managers could make a mint. The insurance and banking businesses are both full of shaky, leveraged bets on the term structure of interest rates (asset liability mismatch). I wonder how many businesses run by Boomers with zero interest in epistemology are going to fail in the next decade?  
  • Am I Being Too Subtle (3/5) Sam Zell got in trouble recently, but this is the autobiography of his real estate and distressed investing career. He started investing in apartment buildings while in law school. Law firms were not that interested in hiring him because he talked about doing deals on his resume, and they figured he wouldn't be able to stick to legal work. He acknowledges that the real money he made early on in real estate came from having nonrecourse, fixed rate debt during a big inflation. He actually did not see the Great Recession coming, he is just value oriented enough that when he got an offer he couldn't refuse for Equity Office, he sold. Since he did not see the crash coming, right before the crash he bought the troubled Tribune Company newspaper business. (He sold EOP in February 2007 and bought Tribune later that year.) The problem with buying something crappy and "cheap" at the top of the market is that the problems with it become a huge distraction as the cycle turns.
  • The 100 Best Stocks to Buy in 2017 (2.5/5) Bought this to get inside the minds of boomer investors like Mr. UWS. Quite a hodgepodge of ideas and it was very Boomerist - lots of talk of what Millenials are going to be buying. I thought they would be writing about stalwart companies that will be around forever, but they put in Amazon and Macy's, of all things. Another goofy example was that they like CVS, but they also like Target, and they like that Target turned over its in-store pharmacy business to CVS. Sure, there are some companies that have moats and will be around for a long time. But how do you know which is which? Unless they are offered at very low P/Es where you can earn your money back very quickly, you can't afford to be wrong. Even the best wireless companies (VZ and T) went from looking wonderful to not so great. I was left thinking that this could be a list of great shorts. They had a lot of consumer packaged goods stocks, which sell pretty middlebrow products that are vulnerable to competition from the bottom (generics) and top ends. Their picks Nike and Columbia Sportswear have a ton of competition, and again are vulnerable from bottom and top. Starbucks - same thing. They had a lot of healthcare stocks - these are overearning because Uncle Sam will be forced by rising bond yields to crack down on the waste. Also their picks in major integrated oils are extremely overpriced. In general, I think boomers will wish they had been in T-bills rather than these stocks.
  • Building on Air: The International Industrial Gases Industry, 1886-2006 (2/5) More than you wanted to know about the history of industrial gas companies, as opposed to the technology or the economics of the industry. Mentions David Landes book The Unbound Prometheus about the "second industrial revolution" starting late 19th C that relied on theoretical understanding as a prerequisite for further technological development. Linde patented process for liquefying air in 1895. His company is still around. The French equivalent, Air Liquide, was founded simultaneously and is still around as well. By 2007 four firms accounted for 75% of world industrial gas market. Earliest pure oxygen was generated chemically (from barium oxide) instead of physically (separated through liquefaction) and used in lighting: limelight. The Union Carbide Co was created to produce calcium carbide using hydropower, which was then used to create acetylene. The Nobel Prize in physics in 1912 was given for acetylene lighthouse keeping technology. An observation: "Until the 1990s, Linde was an engineering company that sold gasses, whereas Air Liquide has been throughout its existence a gases company that also built specialist plant." Early demand for hydrogen was for lifting gas, input into Haber Bosch process, and for the hydrogenation of fats. German inventor Carl von Linde lost his ownership interests - without compensation - in UK industrial gas when WWI broke out. Air Products invented the idea of locating an air separation plant just over the fence from a major customer (eg steelmill). Two innovations in the 1980s: pressure swing adsorption and a membrane process for separation.
History (n=13)
  • White Gold: The Extraordinary Story of Thomas Pellow and Islam's One Million White Slaves (4/5) Islamic pirates from Morocco capturing Europeans from ships and coastal villages all over Europe (and even the American colonies) and bringing them to North Africa and Arabia as slaves. The British under Charles II were extremely naive at dealing with the Moroccans who were abducting and enslaving British citizens. They invited the pirates' "ambassador" to London and entertained him for six months, even made an honorary member of Royal Society. In 1702 Queen Anne was able to free the remaining English slaves by agreeing to help attack a Spanish outpost, and it was the first time in 150 years there had not been English slaves held in Morocco. Only a handful of English vessels ever attempted to defend themselves. Salé did a brisk business in European slaves for centuries. European powers would clumsily allow arms to fall into Moroccan hands, e.g. when the Spanish surrendered two different heavily armed forts there without a fight. (Reminds me of the British in Kabul.) Bet you have never heard of the Society of Knights Liberators of the White Slaves of Africa. The Bombardment of Algiers was a big deal that finally ended white slavery by north Africans. Celebrate with a 9,000 piece jigsaw puzzle.
  • The 10,000 Year Explosion: How Civilization Accelerated Human Evolution (4/5) By Gregory Cochran and Henry Harpending (who write the West Hunter blog). We know the size of the genetic difference between chimpanzees and humans and we know the approximate length of time since the species split, so we know the long term rate of genetic change. The rate of genetic change in humans over the past few thousand years (i.e. since agriculture) is ~100x greater! Populations that experienced different ecological histories had different evolutionary responses. Thus, the various human subpopulations are astoundingly different, which is one reason that multiethnic societies tend to collapse. (The other reason is that people who aren't related can't trust each other and high-productivity societies run on trust.) This was published in 2009 so it's probably a bit out of date now. Reading Cochran's recent posts, like his review of the David Reich book on human population genetics, might be a better way to go. Cochran says that "hobbies" exist because in Malthusian farming societies people were selected to want to work, even where there was no immediate necessity to do so! A study of skull shape in Europeans showing changes over just the past 700 years: "our medieval ancestors had more prominent faces and smaller cranial vaults than modern man". Santa Maria del Mar church in Barcelona is as old as those archaic skulls. Cochran and Harpending observed that elites "raise" peasants, culling the aggressive ones. Humans have been domesticated / tamed by agriculture, resulting in changes analogous to ones wild animals have when domesticated. Their theory is that the Indo-European expansion was driven by the lactose tolerance mutation. Dairying produces 5x as many calories/acre as raising cattle to slaughter. And when two similar populations use the same resources, the one with greater carrying capacity wins. Someday it would be good to read Narrow Roads of Gene Land: The Collected Papers of W. D. Hamilton. There's a great quote from a Jared Diamond book: "When I was living among Elopi tribespeople in west New Guinea and wanted to cross the territory of the neighboring Fayu tribe in order to reach a nearby mountain, the Elopis explained to me matter-of-factly that the Fayus would kill me if I tried. From a New Guinea perspective, it seemed so perfectly natural and self-explanatory. Of course the Fayus will kill any trespasser: you surely don't think they're so stupid that they'd admit strangers to their territory? Strangers would just hunt their game animals, molest their women, introduce diseases, and reconnoiter the terrain in order to stage a raid later." 
  • The Perfectionists: How Precision Engineers Created the Modern World (4/5) Newly released, by Simon Winchester. It's about an orders-of-magnitude journey from a tolerance of 10^-1 to 10^-28 over the last three centuries. The end really reminds me of (and repeats) Measuring America (from Q1), but the beginning had some good stuff I have never heard of before. For example, gauge blocks, which you can buy cheap or expensive. Another precise toy would be high precision screws with lots of turns (250) per inch. 
  • Retreat From Kabul (4/5) The current British NATO occupation of Afghanistan is their fourth. During the first time, in 1842, the British presence was led by Major General Sir William Elphinstone who was too timid to fight with the result that all of their fighting force of 4,500 (but one man) were killed trying to leave Kabul. 
  • Massacre at Montségur (4/5) A history of a forgotten episode from 13th Century France. During the 11th C in the Languedoc region of France, Christianity spun-off a sect called Catharism, a Gnostic revival named after a Greek word καθαροί for the "pure ones". Cathars eventually spread to Eastern Europe (Bulgaria) as well. Cathars thought that the Old Testament God (YWH) was the evil God, in addition to being sole creator of the physical world. (Why doesn't anybody realize that Christianity is polytheistic?) Catharism in France was also a reaction to corruption of the Church. In reaction to this threat, Pope Innocent III launched the Albigensian Crusade against these fellow Christians. Might makes right, so Cathars' goofy beliefs (like not reproducing themselves) resulted in martial weakness and a dead end as a Christian sect. The ethnic cleansing was brutal (burning the "heretics") and Dominican inquisitors created what may be the first modern-style police state. The phrase "Caedite eos. Novit enim Dominus qui sunt eius" ("Kill them all, the Lord will recognise His own") comes from one of the slaughters of Cathars in this crusade. Author's conclusion: "From the thirteenth century onwards we no longer find saint or doctor in the Catholic Church bold enough to assert that a man who errs in religious matters is still one of God's creatures."
  • The Passing of the Great Race (4/5) Written in 1916 - more than a century old. As with reading Mencken earlier this year, it is interesting how people just do not write like this anymore: "Every generation of human beings carries the blood of thousands of ancestors, stretching back through thousands of years, superimposed upon a prehuman inheritance of still greater antiquity and the face and body of every living man offer an intricate mass of hieroglyphs that science will some day learn to read and interpret." Along the lines of First Five Pages suggestion to read more poetry in order to write better, reading more books, and older books, could help as well.
  • Against the Grain: A Deep History of the Earliest States (3/5) The neolithic revolution as a "deskilling" of men. As Alexis de Tocqueville said regarding division of labor in The Wealth of Nations: "What can be expected of a man who has spent twenty years of his life putting heads on pins?" States appeared and disappeared for several thousand years before becoming a permanent fixture of human life. Citizens of early (or all?) states are somewhere on a slave-serf continuum. Why was not Yahweh anywhere to be seen prior to 1,000 B.C.?
  • The Radicalism of the American Revolution (3/5) An interesting story here is the decline of the "gentleman" as a man who could afford to live solely off of capital. John Adams: "Leisure for study must ever be the portion of a few." This was something that colonial Americans aspired to but which was only tenuously possible here. "From the beginning of the eighteenth century a number of thinkers had attempted to reconcile the astonishing growth of English commerce with traditional notions of gentility." Now the word "gentleman" is meaningless. Also, America was more liberal than Britain: "on the eve of the Revolution the crown instructed its governors to veto all colonial efforts to liberalize the divorce laws." Mentions that the term "waiter" was adopted in the late 18th century because white servants preferred that term. 
  • Silent Coup (3/5) "We are witnessing the classically American genus of the coup d'état, achieved by folly as well as cunning, by commercial calculus, and by public relations, by both the manipulation of institutions and their own craven abdication, by cold intention and no little inadvertence, and - perhaps most essentially - at no sacrifice of the popular mythology. (A distinguishing mark of the American coup is that it should remain concealed from its victims and history even after its successful execution.)" Gary North has raised two good questions about Watergate that are still unanswered: "Historians have never figured out why somebody on Nixon's staff ordered the break-in. What in the world did this person have in mind? What did he expect to discover in the Democratic Party National Committee's headquarters?" and also "How did the government know which sections of the infamous Watergate tapes to demand from Nixon and his lawyers?"
  • Measuring America: How the United States Was Shaped By the Greatest Land Sale in History (3/5) Agrees with Spoils of War - restrictions on interior land purchases helped provoke colonials like GW to rebel. This ban and the Boston harbor blockade were mistakes by George. The result is the ultimate historical disaster, the American Revolution, which led the colonies to mistakenly believe they had anything in common. The U.S. is a nation of land speculators (like GW was) and every political decision happens to maximize value of raw land. Unrelated but good quote: "When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind..."
  • Love in the Ruins: Modern Catholics in Search of the Ancient Faith (3/5) Catholicism was repealed and replaced in 1965. The same year that Hart-Celler Act opened immigration floodgates to the U.S.
  • The Chief Culprit: Stalin's Grand Design to Start World War II (3/5) Vladimir Bogdanovich Rezun aka Victor Suvorov defected from the USSR to UK in 1978 and then wrote a number of books about WWII. The Bolsheviks thought that more mass slaughters like WWI would serve their purpose (of global takeover), so they started by backing the Spanish Civil War and when that failed, Stalin backed Hitler's rise to power. Thus Stalin agreed to divide Poland but let Hitler be first to attack, starting the another world war. Suvorov says that Stalin was weeks away from attacking Germany when Hitler preempted him, catching the Soviet military in completely helpless pre-offensive formations. The German attack was suicidal, so it caught Stalin totally off guard. (For example, no preparations for winter. If they had ordered sheepskin jackets, Soviet agents would have noticed falling lamb prices. If they had cold weather gun lubricants, Soviet agents would have picked them up on the used gun cleaning rags that they shipped back for analysis.)
  • Hillbilly Elegy (2.5/5) I wonder why this became so popular? The message of the book is that Appalachian whites are totally hopeless. It is true that they behave very differently than Germanic or Scandinavian whites (e.g. Minnesota and Wisconsin, see Sailer): more violent and less future oriented. But rural whites would be doing much better if the country had not been deliberately deindustrialized. All the more reason for Trump's tariff program. The problem is that for reindustrialization to occur, tariffs would need to be perceived as permanent, and Trump will be gone after one term. (Also, Trump is not smart enough to win Oval Office debates about this against his globalist staffers.) So, the 2019 crash will be blamed on Trump (because he was desperate to claim credit for the final years of bubble), and therefore blamed on populism and nationalism.
Biography/Autobiography (n=9)
  • A Sense of Where You Are (4/5) One of McPhee's earlier profiles, on Bill Bradley as basketball player. From Wikipedia: "Bradley's basketball ability benefited from his height—5'9" in the 7th grade, 6'1" in the 8th grade, and his adult size of 6'5" by the age of 15 - and unusually wide peripheral vision." After Princeton basketball, he played in the NBA, then was a senator for New Jersey, and challenged Al Gore in the 2000 primary - from the left. Hasn't been seen since. Every McPhee piece of writing is an investment in a certain topic, and when the subject vanishes from the earth (like Thomas P. F. Hoving), it must hurt the back catalog sales.
  • Audubon, On The Wings Of The World (4/5) This is a graphic novel of Audubon's life. Very much abbreviated (and some creative license) compared with the Rhodes biography. Excellent drawings and a culturally conservative children's book. Audubon represents early American pioneers, settlers, and frontiersmen (words you never hear anymore, replaced by "immigrants").
  • The Soul of a Tree: A Master Woodworker's Reflections (4/5) Wonderful furniture by George Nakashima. His children are still producing at his workshop in Bucks County, PA. One of his pieces (like a coffee table) is worth high five figures today.
  • John James Audubon: The Making of an American (3.5/5) Visits family in France, smuggled out to avoid military service. Moves to Louisville (fall line of Ohio River). When Audubon moved there the majority of the American population was under 20! Hunting and eating of all birds even songbirds. He lost everything in the depression in 1819. Traveled incredibly widely for the pre-railroad era - thought nothing of walking 50 miles to get somewhere. Could be worth reading more of the prolific Richard Rhodes. Audubons had trouble holding on to money. The copper plates used to print his bird portraits were scrapped after he died. He traveled so much. 
  • Scalia Speaks: Reflections on Law, Faith, and Life Well Lived (3/5) This is a collection of Scalia's speeches on various topics (law, religion, etc) published after he died. Scalia thought that the new constitutional law system where the Supreme Court legislates its opinion on social and moral issues, came from the Warren Court (1950s and 1960s). However, the anti-Federalists (such as "Brutus") predicted that the Supreme Court would be a super-legislature and would have no check against its power, being superior to and not coequal of the other branches. (All of the defects in the goofy Constitution that the anti-Federalists pointed out quickly came to pass.) For some reason Scalia repeatedly recommends that listeners read the Federalist Papers but never once the Anti-Federalist Papers. Scalia is the classic conservative as principled loser. He was "dear friends" with RBG who would like nothing more than to confiscate guns from Scalia's people so they can be ethnically cleansed. Scalia is also recognizably un-Anglo Saxon in his attitudes, which was perfect for the unrepresentative Court. He also believed that the 4th amendment did not protect against government wiretapping. Overall, it is no wonder that the country is in such marked decline with a guy like this representing "our" interests. If I have to acknowledge one positive thing about him, it would be his dissents.
  • The Eames Lounge Chair: An Icon of Modern Design (3/5) It turns out Charles Eames was a Steve Jobsian character! Did Don Albinson really design one of the only good Eames designs? Pat Kirkham said Eames was "not very mechanical or scupltural"! People are not happy to hear about this. (Remember Henry Ford was like this as well. A new archetype.)
  • Khrushchev Remembers (2/5) This was billed as Soviet premier Khrushchev's frank memoir, supposedly dictated by him onto tapes after he was removed from power in 1964, and smuggled to the west for publication. But reading it, I started to notice that - as the New York Times said of the book in 1971 - "it would take a small book to list the omissions, distortions and plain mistakes". He deflects all blame for the crimes that he and the other Stalin minions had a hand in. A convincing theory is that this book - which is anti-Stalin from a "true" Communist perspective - was published at the behest of Brezhnev to deal with problematic Stalinists still in the party. And to give Brezhnev plausible deniability, it was published first in America after being "smuggled out" by Time Magazine Moscow correspondent and deep-stater Strobe Talbott. (Regarding the transition of power from Stalin to Khrushchev, make sure to see The Death of Stalin.) Read Khrushchev's 1956 "secret speech" about the Stalin cult of personality.
  • Levels of the Game (2/5) This is my new least favorite McPhee. It is a joint profile of Arthur Ashe and Clark Graebner, centered around the tennis match they played at Forest Hills in 1968. How to structure a story like that is a major interest of McPhee in the art of literary nonfiction. Ashe died young and Graebner retired more than 40 years ago. Both are well on their way to being entirely forgotten. 
  • The One Percenter Code (1/5) Saw this on the front table at a used bookstore in hipster Wicker Park Chicago, which I thought was amusing. Very disappointing though. Here is a negative review summarizing many of the problems. I would read the bullish case on being part of a group of outlaws that recklessly risk their lives on motorcycles written by an intelligent, philosophical person. Perhaps that intersection is an empty set? It would be funny if this guy were made aware that motorcycle enthusiasm comes from living too close to cats.
Travel (n=12)
  • Moon Barcelona Walks (4/5) A very walkable city! Avoid the most touristy places and the hideous Gaudí architecture. A cityscape of five and six story apartment buildings (with retail on the ground floors) and everything connected by moped, pedestrian friendly sidewalk, or mass transit is the way to live. Wear dark earth tones and a navy blue or black pea coat to fit in best. Drink Spanish vermut on the rocks (with standard orange & olive garnish). Brilliant of them to sit out both World Wars.
  • Road Fever (4/5) Tim Cahill was one of the best in Best American Travel Writing 2004 (earlier this quarter), so I picked up his story of driving the Pan-American Highway in 1987 to set a Guinness World Record of 24 days from Tierra del Fuego to Prudhoe Bay, Alaska. (You actually can't drive the whole way because of the Darién Gap between Panama and Colombia but the car is loaded on a ship for that short part of the journey.) "I am constantly reading between the lines of the most recent adventure or travel book: how did the author finance this saga? Do we have an airline ticket scam here, a generous book advance, an articles piggyback, a cigarette company advertising expedition? Some journeys are clearly self-financed and they often result in the best books. A tight budget is the mother of adventure." Going through the Andes: "a series of high plateaus surrounded by higher peaks (Aconcagua in Argentina rises to 22,834 feet, the highest peak in the Western Hemisphere), stretch 5,500 miles from the tip of South America to the continents northernmost coast on the Caribbean. The mountains run generally north and south. For most of its length, the Andean chain of mountains is visible from the Pacific Ocean. In some places, the continental divide is no more than fifty miles from the Pacific coast. The great rivers of South America, then, run east, almost all of them." Like all adventure travelers, he is a weepy liberal: "a diplomat we'd talked to was the first to point out what I began to see as a bitter irony. Right-wing countries, known for abusing human rights, were generally the safest." The dry Atacama desert in northern Chile with places that get an inch of rainfall a century. The mountains in south America cause scary bus rides. "Sooner or later the bus will justify everybody's worst fears by plunging (Latin American buses never crash, they plunge) into a deep gorge, ravine, gulch, coulee, or canyon..."
  • Eiger Dreams (4/5) I forgot that Jon Krakauer is a great writer. This is a collection of mountaineering essays for magazines from the 80s, a solid decade before he wrote Into the Wild and Into Thin Air. This is his golden age, and the problem is that after this he went off the rails with some really boring and then politically correct topics: a book about a suicidal GenX'r who dies in the Alaska wilderness, a book about Pat Tillman, a book about "a white college football team with rape scandals", a book about kooky Mormon Fundamentalist communities as though they are some big problem. So, only Eiger Dreams and Into Thin Air are worthwhile  - and they are the only ones that have been translated into German! Regarding mountaineering: you could climb 20,310' Mt. McKinley, but should you? The "Type A" variety of high agency people can fall into a trap where they do something simply because it is hard and unpleasant. So the highest peak in North America and third most topographically prominent on Earth hijacks the "success center" in their minds. Climbing McKinley costs ~$10k, takes three weeks, is crowded and dirty (Krakauer lamented in the 80s!), and runs serious risks like falling, avalanche, and altitude related injury. (It's also easy to fail to summit.) Climbing at extremely high altitude may as dumb as scuba diving. Here's an experienced climber whose friend died on Mt Shasta (only 14k'!) in California. While it would be fun to accomplish, an economist remembers that every human action competes with the universe of other potential actions. With $10k and three weeks, you could do some serious exploration of Japan, including an inn-to-inn hike between onsen with hot spring soaks and Japanese cuisine. You could live like a king for 10 days of skiing in Utah or Colorado.
  • The Wilder Shores of Marx: Journeys in a Vanishing World (4/5) Theodore Dalrymple's tour of 20th C communist dictatorships right as that style of communism was collapsing: Albania, North Korea, Romania, Cuba, and Vietnam. "In my study of communist societies, I came to the conclusion that the purpose of communist propaganda was not to persuade or convince, not to inform, but to humiliate; and therefore, the less it corresponded to reality the better." The PC dictatorship in the west today has the stifling feel that he described in these countries. I have heard that certain countries in eastern Europe are places where it is possible to speak openly and honestly today.
  • Moon San Juan Islands (3.5/5) Apparently Antonio Garcia Martinez, the author of the book about Facebook which we reviewed in August 2016, lives part of the year off the grid in a yurt on Orcas Island. He mentioned that he was "burning the first firewood from trees I cut down myself, split myself, and seasoned myself in a firewood shed I made. This fire possesses a warmth no Nest thermostat can beat."
  • Travels With Samantha (3.5/5) By Phil G who often appears in our Links. He drove a minivan from Boston to Anchorage and back in the summer of 1993. You can't see the full route he took in the cool fold-out map leaves (why Phil?!) but it was close to 12,000 miles. [My conclusion is that driving to Alaska was a mistake - people do it because they can't comprehend how far away it is.] On the trip, he mostly slept in tents or at people's houses (he was a grad student at the time). He thought schoolteachers were the happiest people he met on the road (they had the best balance of time and money for travel). [My observation is that most of the people at places like the Grand Canyon are either early 20s or late 50s/60s empty nesters. Few people in the prime of life are having any fun.] In MN: "St. Paul is Minneapolis's plain sister." He mentions that Saulk Center, MN celebrates Sinclair Lewis even though the Nobel Prizewinner's novel mocks the town. He said that Edmonton was "Houston without the charm". He thought that eastern Washington was more backward than Alaska. [Which reminds me, the Great Basin is a fascinating place.] He did the crazy Slickrock mountain biking in Moab and mentions an interesting sounding Black Canyon at Gunnison National Monument which drops four times as much per mile as the Grand Canyon. He suggests reading Arctic Dreams and Remains of the Day. When he gets back to MIT, his ending thoughts were to "be a tourist in your own city" and encountering a typical Cambridge type, said "If tolerance was good in her feminist-liberal worldview, why was she upset with me for not hating my fellow Americans?" My thinking on road trips is that if there's an area you want to explore, fly there and rent a car. 
  • Travels (3/5) Michael Crichton actually wrote four nonfiction books, including Travels. (The others were about medicine, the artist Jasper Johns, and personal computing in 1983.) I knew that he had children with two different women but I forgot that he was married five times. I wonder how expensive that was - did he get taken to the cleaners in California? If you have to split your wealth four times you're left with only 6.25% of what you started with! Goes to show you how long there has been soft polygamy in the U.S. among elite men. While he was working in Hollywood (movies and TV), he would take trips to exotic places - and this was before many of them were over-touristed. I was also surprised that he really fell for hippie stuff in the 60s: psychics, meditation retreats, etc. "[S]cholars do not know how this ancient temple-building civilization of the Mayas arose, why it flourished, or why it died. Such reminders would be unnerving. Nobody on vacation wants to walk through a great ruined city and be told, 'we know nothing about this place.'" In Baltistan: "Ten of the thirty highest mountains in the world are strung along the small Karakoram Range, which extends barely two hundred miles, little more than a tenth the length of the Himalaya. I imagined the Karakoram to be green and forested, like the American Rockies. I did not understand that the major Karakoram summits were an average of two miles higher than those of the Rockies, and that they were in essence desert peaks rising above a high desert floor."
  • Geek in Japan: Discovering the Land of Manga, Anime, Zen, and the Tea Ceremony (3/5) Worth studying a culture that produces (by far and away) the most reliable automobiles in the world. This author (who's a nerdy white guy) thinks it is partly a product of moving very slowly and deliberately in decision making. Half of the 130mm country lives in Tokyo-Yokohama-Chiba (with 38mm) or Kyoto-Osaka-Kobe (Keihanshin, 20mm). The greater Tokyo area has the population of California! Few movie theaters - they prefer comic books? The best selling Japanese musician is Ayumi Hamasaki. Not mentioned in the book but here is a great tweetstorm by Marcin Wichary "things that surprised/amazed me about Japan".
  • Dark Star Safari (3/5) Yet another Paul Theroux book - picked this up at a used bookstore before a long flight. Important to remember that he's a 76 year old former Peace Corps hippie; sometimes his books say more about him than the places he's visiting. "He resides in Hawaii and Cape Cod, Massachusetts" according to Wikipedia.
  • The Best American Travel Writing 2004 (3/5) The best pieces were The Accidental Explorer's Guide to Patagonia by Tim Cahill, Chasing the Wall by Peter Hessler, and A Fleet of One by John McPhee. Here is a Stanford travel writing syllabus that agrees with these picks. Also Tim Cahill explored Patagonia with EarthRiver which is still in business doing those types of trips. Looks like he's written eight travel books. 
  • Ghost Train to the Eastern Star: On the Tracks of the Great Railway Bazaar (3/5) In 2006 Paul Theroux repeated his journey from thirty years earlier of The Great Railway Bazaar. "Purgatorial as a national crisis is for a traveler, it is preferable to public holidays, which are hell: no one working, shops and schools closed, natives eating ice cream, public transport jammed, and the stranger's sense of being excluded from the merriment - from everything." He says about India: "'The Indian miracle was a boasting rant in every Western newspaper and magazine, but on the evidence of Amritsar this assertion was a crock, not just a joke in bad taste but the cruelest satire. It seemed to be that little had changed except the size of the population, an unfeedable, unhousable, uncontainable 1.3 billion people..." "The landscape and the lifestyle of rural Cambodia were, and still are, closer to Africa than China." "The remotest parts of Russia - the farthest from Moscow - are easily accessible from Japan."
  • Forever Nomad: The Ultimate Guide to World Travel, From a Weekend to a Lifetime (2/5) The forever-traveling Nomads have not found solutions to the problems of constant travel (relationships, living out of a tiny suitcase) - they just do not care about them the way normal people would. These guys are the ultimate in the openness to experience personality factor. One funny thing though: "If you want a real treat, take a trans-oceanic cruise that goes west rather than east. On these cruises, you move your clock back an hour on around half the days, giving you a bunch of 25 hour days, known as Martian days. Forget about spas and fine dining; 25 hour days are the ultimate luxury of life." His favorite places to visit are Japan and Budapest.
Self-help or How-to (n=11)
  • Guesstimation: Solving the World's Problems on the Back of a Cocktail Napkin (5/5) This book goes along with How to Measure Anything (above). A high agency approach to thinking about quantities. (See previously 1,2,3,4) Suppose you wondered how much rubber your tires leave on the road as you drive around. Would you need a test track and precise measuring equipment? No - you can come up with an order of magnitude guess based on the thickness of tire tread and the number of miles a tire lasts. (Leave your answer in the comments.) You see people all the time who invest without doing dimensional analysis and/or reality checks of business model plausibility: i.e. the people who invested in uBeam, Theranos, the Valeant rollup, and so forth. Perhaps Tesla as well?
  • Surviving "Terminal" Cancer: Clinical Trials, Drug Cocktails, and Other Treatments Your Oncologist Won't Tell You About (4.5/5) Ben Williams was a professor at UCSD diagnosed with glioblastoma in 1995 at age 50. When he realized that his neuro-oncologist had no plans to see him survive, he researched options on his own. He had surgery, radiation, and chemotherapy. To make the chemotherapy more effective, he went to Tijuana and bought tamoxifen and Accutane. He was also prescribed verapamil (off label) which is a calcium channel blocker used for blood pressure treatment. It is (still) thought to prevent tumor cells from using pumps to remove chemotherapeutic agents. He also took supplements like melatonin and gamma-linolenic acid. He's still alive and doing research on treatments. His big idea was using synergistic agents in parallel rather than in series (which ultimately results in a tumor cell population that is highly resistant to treatment), and choosing agents that were state of the art rather than just what his local MDs knew. We like "high agency" stories of survival, a similar example will be Craig Venter in his autobiography.  
  • Hand Tools: Their Ways and Workings (4.5/5) There was a time when everything made out of wood was built with hand tools: hand saws, planes, chisels, etc. "No matter how simple a thing of wood, it is scarcely possible to put two sticks together decently without using a plane. Wood must be smoothed, squared up, and made to fit - the three main jobs of a plane." The illustrations are excellent. Aldren A. Watson was born on May 10, 1917; his daughter is a children's book illustrator. Aldren did a similar blacksmithing book. "Whether practiced as a trade, an avocation, or simply as a practical adjunct to daily exercise, working wood with hand tools satisfies some elemental needs of the human animal - for manual work, development of innate skills, peace and quiet, and a sense of control over his temporal affairs." 
  • How to Measure Anything: Finding the Value of Intangibles in Business (4/5) Motto: anything can be measured. Another "high agency" approach to life, in this case gathering information to inform better decisions. Mentions a paper, "On the Theory of Scales of Measurement" (1946); scales of measurement can be nominal, ordinal, interval, or ratio. Also mentions a paper "The robust beauty of improper linear models in decision making" (1979); "improper linear models are superior to clinical intuition when predicting a numerical criterion from numerical predictors. In fact, unit (i.e., equal) weighting is quite robust for making such predictions." We have experimented with linear models in both net net investing and shortselling, so this is an interesting thought. This book suggests normalizing (z-score) the predictors. Overall, this approach to gathering data about the "immeasurable" in order to dramatically decrease the width of 90% CIs around important decision-making variables goes along with the Guesstimation book, ahead. 
  • Good Strategy, Bad Strategy (See review: 4/5)
  • The Complete Guide to Fasting: Heal Your Body Through Intermittent, Alternate-Day, and Extended Fasting (4/5) I would estimate that Americans need to lose about ten billion (10^9) pounds in order to look and feel healthy. It would mean destroying Buffett's Big Carb investments and it would be very bad for Big Diabetes. The country would be vastly richer overall. It is fun to imagine, but it will never happen. However, a small subset of high-agency individuals will discover fasting as a way to shed excess weight. Fat reserves are an energy battery - you are meant to be able to use them to last extended periods without food. Fasting may also be beneficial for people at a healthy weight, for example by promoting autophagy and increasing growth hormone. The author is a physician who says his patients don't realize that pita bread is "bread" (sad!- also remember "bread is poverty food" from DeVany). There is data from WWI and WWII showing that food rationing decreased mortality from Type II diabetes. If there is ever a major food supply interruption in the U.S. from EMP or something, the fattest people are not going to starve for over a year! 
  • Goodbye, Things: The New Japanese Minimalism (4/5) Even more extreme than Kondo! Minimalism is good for aesthetic reasons (see 1,2,3) but I have realized there is more too it than that: minimalism is also about focus. There are only so many things that you can do - time is extremely limited. (That's why spending three weeks camping in an ice field in order to try to climb a 20k foot mountain may not make sense.) Extraneous stuff crowds out what is important. These days I get rid of all books after I read them, unless I specifically want to read them again someday. If a book is worthwhile, share it with a friend. If it's not, sell it or throw it away. Minimalism is good practice for overcoming the sunk cost fallacy.
  • The 4 Hour Body: An Uncommon Guide to Rapid Fat Loss, Incredible Sex and Becoming Superhuman (3/5) We liked Tim Ferriss' Tools for Titans so we thought we might like this earlier book of his but... were not that impressed. Perhaps because this one is seven years old and a lot of the worthwhile ideas (low carb, lifting weights) have been picked up and carried further by guys like Mangan. One idea I did like from the end was that "your body is almost always within your control". He says you are a "Dow Joneser" if your self-worth is dependent on things largely outside your control (like watching the markets). But if you put your mind to it you can really improve your fitness and body composition and have satisfaction in that accomplishment. Hence deadlifting and impressive hiking feats.
  • Genius Foods: Become Smarter, Happier, and More Productive While Protecting Your Brain for Life (3/5) This is true stuff but no longer cutting edge: avoid industrial oils, eat low carb, fast, and so forth. Mentions a study I hadn't seen before: "Lower HbA1c and glucose levels were significantly associated with better scores in delayed recall, learning ability, and memory consolidation." Keeping insulin down is important. Another thought from an Alzheimer's researcher: "The inhibition of lipid metabolism by high carbohydrate diets may be the most detrimental aspect of modern diets" because in addition to being a fuel the ketones can be a signaling molecule in some circumstances. A reminder that anticholinergic drugs are associated with dementia. Also, another idea is that "once you are fat-adapted, periodic high-carb meals can be a potent way of promoting healthy leptin dynamics."
  • The First Five Pages: A Writer's Guide to Staying Out of the Rejection Pile (3/5) Things not to do: reasons that literary agents and publishers will immediately reject fiction manuscripts. But many of the principles apply to other types of writing. And good writing about investments tells a story. Maybe all good writing is storytelling? The problem with investment writing that limits its quality is that it needs to be done quickly. It can’t spend six months being polished like a John McPhee piece. He suggests reading poetry to improve writing by cultivation attention to language. What should I try - Kipling perhaps? He also suggests doing deliberate vocabulary building. 
  • Navy SEAL Mental Toughness: A Guide To Developing An Unbeatable Mind (1/5) This book is about how tough SEALs are not about how they get that way. What's the point of having mental toughness if you use it to be a neocon pawn? The real wisdom is knowing when to persist and surmount obstacles and when to try applying yourself to something else. 
Literary Nonfiction (n=7)
  • The Patch (5/5) John McPhee's latest: a collection of bits of his writing over the past 60 years, previously published in magazines but not in books - going all the way back to his Time magazine celebrity profiles from the 50s and 60s, where he got his start. The "patch" refers to a patch of lily pads where he would fish for chain pickerel and also to the patchwork quilt of the small excerpts. "Detonations of knowledge" as his profiler said. Some of these excerpts are so good you hate to imagine them not making it into print. He gives an explanation for his "congenital opacity to birds." The erosion of the granite rollers in the Hershey's chocolate conching machines. Bill Tierney leaving Princeton to coach lacrosse at Denver, "in every respect, including geography, a spectacular jump downscale." McPhee is going to be 88 in March.  
  • Looking for a Ship (4/5) More John McPhee: "Columbus sailed with fifty-two men on a square-rigger that was a hundred and seventeen feet long. Washburn is sailing with thirty-three on a merchant ship that is six hundred and sixty-five feet long. Washburn calls this undermanning. Steaming between the Scylla of automation and the Charybdis of bankruptcy, contemporary American shipping companies find ways to get along without crewmen." Remember the story of the El Faro?
  • The Outlaw Sea: A World of Freedom, Chaos, and Crime (3.5/5) We mentioned William Langewiesche (and his article about the El Faro) in a recent links post. He says that ocean shipping "is not exactly a criminal industry, but it is an amoral and stubbornly anarchic one." One of the stories is about a tanker carrying molasses called the Kristal, which coincidentally sank in a storm right off the coast of Galicia with a very unlucky Galician sailor on board. The rescue helicopter which saves much of the crew came from La Coruna - the same town as lives the author of Everything but the Squeal. Another story is about a terrible loss of a ferry, the MS Estonia in 1994, with the loss of many passengers. It was a giant Baltic Sea motor ferry that took on water through the bow doors and began to capsize. Only those high-agency people that fled immediately, before the heel became too extreme to escape, survived. 
  • Uniforms (3.5/5) By the great Paul Fussell, author of (not yet reviewed) 5/5 classic "Class". Points out that you see dark blue (naval inspired) uniforms everywhere.
  • Arctic Dreams (3/5) We've read McPhee on hyperborea, now it's time for Barry Lopez: "This is a land where airplanes track icebergs the size of Cleveland and polar bears fly down out of the stars. It is a region, like the desert, rich with metaphor, with adumbration. In a simple bow from the waist before the nest of the horned lark, you are able to stake your life, again, in what you dream." Trees in the Arctic: "A cross-section of the bole of a Richardson willow no thicker than your finger may reveal 200 annual growth rings... Much of the tundra appears to be treeless when, in many places, it is actually covered with trees - a thick matting of ancient willows and birches. You suddenly realize that you are wandering around on top of a forest." Niche space: "These Tununiarusirmut men... knew beyond a shadow of a doubt what made them happy, what gave them a sense of satisfaction, of wealth. An abundance of animals." He says that the Bering Strait is a paradise for bird watchers. Audubon: "all wildlife that live in the Chukchi and Beaufort Seas in the summer months funnel through the Bering Strait twice each year". Mentions the diary of an Arctic ship captain (from the age of sail) trying to navigate through a day of dangerous squeezing ice: "I did the heaviest smoking of my life. I smoked twenty-two cigars and numerous pipes, and I had coffee brought to me every hour. I don't know whether it was the tobacco or the coffee that brought us through, but we made it with no damage." The original nootropics! Mentions William Parry's drawings of solar arcs and halos. Also about niches: "The itineraries of arctic animals are not obvious. [...] The land in some places is truly empty; in other places it is only apparently empty. To those who had no interest in the movement of animals, the entire region seemed empty. They could not grasp a crucial fact - semi-nomadic people living here in such small numbers were an indication that the animals themselves moved around. Either the animals did not stay very long in one place, or there were not very many of them to begin with, or they were very hard to kill. Or there would be more people, living in more permanent dwellings. The land was not empty, but it teemed with animals that would sustain men only in a certain, very limited way." Only tiny portions of the Earth's surface are habitable, and these are now desperately crowded. 
  • A Burglar's Guide to the City (3/5) Written by Geoff Manaugh, who has appeared in the Links. This was not as good as Where the Money Is, about bank robberies and heists in Los Angeles during the 80s/90s bank robbery renaissance. Some of these heists and robberies are done by incredibly high agency, clever, intelligent people. (Remember The Great Train Robbery from the second quarter.) That type of person probably just goes where the opportunities are. In a bubble it is cryptocurrency startups, but in a recession it will be something dangerous or harmful like robbing banks or being a revolutionary. This is why elite overproduction is a threat to the ruling elite. It really seems as though the current globalist elites are desperately using bubbles to cope with that problem, which is why we have had three bubbles in twenty years. Other lesson: burglars don't go through doors! "[Doors] are a distraction and a trap. By comparison, the wall itself is often more like tissue paper, just drywall and some two-by-fours... Like clouds, apartment walls are mostly air; seen through a burglar's eyes, they aren't even there."
  • Inside the Sky: A Meditation on Flight (3/5) William Langewiesche is the son of the author of Stick and Rudder, and went into a career writing about transportation disasters. He gets called by Atlantic or Vanity Fair if a ship sinks or a plane crashes. In Q2 we read his book about the "stubbornly anarchic" world of ocean shipping. One part is the early history of instrument flying: "Those veterans [who] kept insisting they could fly by the seat of their pants, and they thought less of those who could not. Their self-deception now seems all the more profound because the solution - a gyroscope adapted to flying - was already widely available." "The sense of accelerating into a turn is the same as that of decelerating from the opposite turn. Here at last was the explanation for the persistence of so much confusion and death." The gyroscope for aviation was invented by Elmer A Sperry and it was "like cutting a porthole through the fog to look at the real horizon." The "gyro" in gyroscope and in gyros meat both refer to "turning" or "rotation"! Also, "William Ocker was giving birth to modern instrument flying. He had discovered the most disturbing limitation of human flight - that instinct is worse than useless in the clouds, that it can induce deadly spirals, and that as a result having gyroscopes is not enough, that pilots must learn against all contradictory sensations the difficult discipline of an absolute belief in their instruments." The dark ages of weather forecasting based on pattern recognition: "they called it the 'analog approach' but might more honestly have called it educated guesswork. The results were poor for the obvious reason that no two storms are ever the same. A weather pattern today that looks like one last year will become something quite different by tomorrow."
Geology (n=5)
  • In Suspect Terrain (4/5) More McPhee! Highlights: "The Pleistocene - the Ice Age - is all behind us. The Holocene appears to be nothing more than a relatively deglaciated interval. It will last until a glacier two miles thick plucks up Toronto and deposits it in Tennessee." "Rocks are the record of events that took place at the time they formed. They are books." When the book was written in 1982, a character mentions that "he would not go near Williamsburg, or for that matter a good many other places in Brooklyn" - what a time to buy! Less skilled geologists in the USGS were sent to "penal quadrangles" such as "the lesser bayous of Louisiana." "If they did not know strike from dip, they could go where they would encounter neither." If a Chinese geologist wanted to see exposed rock, "they don't depend on streambanks and roadcuts as we do... the peasants dig out a mountainside." "Figuring out the Appalachians was Problem 1 in American geology, and a difficult place to begin, for it was scarcely a matter of layer-cake legibility, like the time scale in the walls of the Grand Canyon." Check out these slabs of Martinsburg slate. "The mountains of Pennsylvania are far less known and visited than many of the American ranges at much greater distance, and even less than many of the European ranges, while they may be said to vie in beauty with any others upon Earth..." This is a good scientific history of two revolutions: acceptance of glaciation (Agassiz in the 19th century) and of plate tectonics, which was new and controversial when McPhee started writing about geology.
  • Rising from the Plains (4/5) McPhee follows a geologist born in Wyoming whose mother moved there to be a one room schoolteacher and whose father came from Scotland to be a rancher - both pioneers, not immigrants. There was a saying among homesteaders in Wyoming: "If summer falls on a weekend, let's have a picnic." Wyoming hematite made Rawlins Red paint. Geologists are influenced by rock where they grew up. Also, "in the contrast between erosion and orogeny, erosion never loses." The Union Pacific runs across the famous "gangplank". (This is where the Union Pacific crossed the mountains.) Interstate 80 runs through Wyoming and it can get closed by snow in every month but August. Geologist lived to be 90. McPhee could really use diagrams and maps in his books - wonder if he has ever read any of Tufte's thoughts on information density? 
  • The Map That Changed the World: William Smith and the Birth of Modern Geology (3.5/5) Simon Winchester's verbosity is almost unbearable at times, but he picks excellent subjects, which is half the battle of being a nonfiction writer. Unexpectedly, in addition to being a history of geology this is also partially a history of the decline in educated people's religious belief. For example, fossils were first thought to be lapides sui generis ("stones unto themselves"), created to "reinforce in humankind's collective mind the omnipotence and imaginative beneficence of God". However, this view ran into trouble when people started to notice that the fossils represented animals and plants that no longer existed. How could parts of Creation go extinct? Winchester's view is that "for the first time the earth had a provable history, a written record that paid no heed or obesiance to religious teaching and dogma..." Geologists as big walkers theme - "a trek of fifth miles seemed to Smith no more than a casual stroll". Great quote - "The Mearns Pit at High Littleton has a standing in the history of geology that is comparable to the one that Gregor Mendel's Moravian pea garden has in the science of genetics, the Galapagos Islands in evolutionary theory, and the University of Chicago football stadium in the story of nuclear fission." The protagonist and "first geologist" William Smith was a canal and mining engineer who invented stratigraphy based on the identification of fossils. Unfortunately he had immense difficulty shipping work (maps, papers) which reminds us of Audubon. So much difficulty that he ended up in debtor's prison briefly! Reminds us of this thought: "it's a very bad sign to have a lot of projects that are '90% complete'". Another interesting idea is the Earl of Leicester who took over farming when one tenant did not renew his lease. He has a lot of fun experimenting with new soils and fertilizers, crossbreeding sheep and pigs - all part of the beginning of the British Agricultural Revolution.
  • Grand Canyon: A Natural History Guide (3.5/5) A good overview of the geology and ecology of GC. Great part: "Grand Canyon is remarkable not for its bigness but for its smallness. The Grand Wash trough just below the GC is much bigger in terms of sheer volume removed by erosion, but it is nowhere near as impressive to look at because it's too big. And for real size, consider what the Mississippi River has done. It has eroded a volume of material that would fill the GC many times over. Yet no one stands in Denver and looks out to the east thinking what an amazing erosional feat has been performed between the Rockies and the Appalachians. [...] Canyons, as opposed to valleys or larger landforms, are created by a tension between erosion and the lack of erosion. They are features of arid regions, where a river or stream works at the bottom, but there isn't enough erosion to widen the sides. This is best illustrated by slot canyons, where walls actually overhang and in places block one's view of the sky." Also: "Rock type influences the shape of the GC. Softer rock forms slopes. Harder forms cliffs. The hardest of all, the Vishnu [at the bottom] forms a steep walled V. In combination, the varying hardness of rocks account for the canyon's distinctive starstep profile."
  • The Man Who Walked Through Time: The Story of the First Trip Afoot Through the Grand Canyon (3/5) Books can't describe what the canyon is like. Colin Fletcher did the first recorded through hike entire length of Grand Canyon national park as it was defined in 1963. Strangely, the book was not published until 1968. Reading it, it seems like he really struggled to come up with 230 pages of material about the two month experience. Maybe a good sign that spending more than a few days at a time in the canyon would have seriously diminishing returns? Lucky that the USBR was not able to dam the Grand Canyon. Another canyon through hiker is Kenton Grua who hiked the expanded national park and therefore the entire canyon in 1977.
Cooking (n=2)
  • The Great Chile Book (4/5) By Mark Miller who created the Coyote Cafe in Santa Fe. Two kinds of chiles: fresh and dried. A "chipotle" is a smoke-dried jalapeño, by the way. The eponymous restaurant uses them to flavor the meats and beans. If you are using store bought chili powder instead of making your own, you are missing out on a lot! I have never seen most of these chiles at a grocery store, but on the other hand most recipes call for ones that easier to find.
  • Everything but the Squeal: Eating the Whole Hog in Northern Spain (3/5) Emigration from Spain picked up beginning in 1853, to places like Cuba (a Spanish colony from 1492-1898), Mexico, Argentina, Uruguay, and Chile. Around two million Galicians emigrated over a period of a century - it was a poor province with surplus population. He says "Spanish breakfast, in case you didn't know, is coffee and cigarettes." Points out that Galicia has been conquered at least a dozen times over the past few thousand years. This book did not instill any desire to eat uncommon pig parts - he did it for the sake of checking them all off, which the Galicians found amusingly peculiar.