Thursday Night Links

• It seems like Philip Morris knows they are outgunned in vaping which is why they are trying for something that would have a stronger "razor & razorblade" model: heated tobacco. Big tobacco investors have been conditioned to be complacent. We have a mutual on Twitter who says, "I've seen doomsday proclamations for going on 20 years now despite ever higher earnings and dividends." The companies - quite ingeniously - settled the 1990s litigation in a way that resulted in very profitable competitive dynamics. That does not mean that selling nicotine is inherently profitable. If the cigarette businesses go away and the replacement risk market is fragmented, some of the tobacco enterprises values may be smaller than the outstanding liabilities. [CBS] 
• The maker of Lucky Strike and Dunhill cigarettes pointed to economic challenges in the United States, where some inflation-weary consumers are downgrading to cheaper brands, and the rise of illicit disposable vapes. BAT said these factors combined with the broader move away from smoking meant it would adjust the way some of its U.S. brands are treated on its balance sheet, shifting their value to a finite lifetime of 30 years. [Reuters]
• The ideal strategy in such situations is constant percentage betting, specifically the Kelly criterion, a formula deriving from information theory well-known to professional gamblers that also happens to specify the ideal amount of money to bet when one has an advantage over the house. For even money payoffs, the “Kelly” sized bet is simply the odds of winning minus the odds of losing, so for our 60% coin, this is 0.6 - 0.4 = 0.2, or 20% of the bankroll on each 60/40 even-money bet. The Kelly bet is mathematically certain, on average across repeated trials, to grow wealth the fastest on a percentage basis. In practice, most professional gamblers bet “half Kelly,” or 10% in this scenario, and indeed when most people are shown the matrix of outcomes, good and bad, they are most comfortable giving up a relatively small amount of return to smooth out runs of bad luck. The full Kelly betting level is optimal in the same way a stripped-down Corvette with a roll cage and no passenger seat is optimal. [The Tom File]
  
• He began his oil exploration career as a bottom-rung roustabout in the rough-and-tumble Louisiana oil fields by lugging pipe, unclogging pumps and digging ditches. By 1969, he formed an exploration company with two partners, W. K. McWilliams, Jr. and B.M. Rankin, Jr. They took the first two letters of each of their last name and called it the McMoRan Oil & Gas Co. In 1981, with Jim Bob as Chairman and CEO, McMoRan Oil & Gas merged with Freeport Minerals Co. to form Freeport-McMoRan Inc., a Fortune 500 company. At the time it was one of the largest mergers in Wall Street history. In 1988, under Jim Bob's leadership, Freeport-McMoRan discovered the Grasberg mine in Indonesia, which is considered one of the largest copper and gold mines in the world. Jim Bob's longtime Oil Patch buddy, billionaire T. Boone Pickens said, "Moffett's oilfield exploits rank him in the top five of any list of U.S. wildcatters". [James Robert "Jim Bob" Moffett Sr.]
• If you go to a store to buy vitamin E, unlike some other vitamins, 90% of the vitamin would be TOCOPHEROL, which means that you don’t want it. You have enough tocopherol from your food. So you want to look for the word tocotrienol and 10%, which means one in every ten bottle of vitamin E would be that. And then further, you want to distinguish it. There’s only three sources of tocotrienol. In all three I have discovered over my 30 years career like that. What, from Rice, from Palm and from Annatto? From Rice and from Palm about 25 to 50% of the vitamin E is TOCOPHEROL. So they’re good, but they’re not good enough. And then in Annatto is the only source in my entire life of studying these that it is free of tocopherol. It contains vitamin E only tocotrienol. Hence, in the last 25 years we have committed to do 20 over clinical trials on tocotrienol so I don’t have to waste time on including tocopherol when tocopherol does not work. [Dr. Barrie Tan]
• Natural vitamin E includes eight chemically distinct molecules: α-, β-, γ- and δ-tocopherol; and α-, β-, γ- and δ-tocotrienol. In the current literature, more than 95% of all studies on vitamin E are directed towards the specific study of α-tocopherol. The other forms of natural vitamin E remain poorly understood. The abundance of α-tocopherol in the human body and the comparable efficiency of all vitamin E molecules as antioxidants, led biologists to neglect the non-tocopherol vitamin E molecules as topics for basic and clinical research. Recent developments warrant a serious reconsideration of this conventional wisdom. The tocotrienol subfamily of natural vitamin E possesses powerful neuroprotective, anti-cancer and cholesterol lowering properties that are often not exhibited by tocopherols. Current developments in vitamin E research clearly indicate that members of the vitamin E family are not redundant with respect to their biological functions. α-Tocotrienol, γ-tocopherol, and δ-tocotrienol have emerged as vitamin E molecules with functions in health and disease that are clearly distinct from that of α-tocopherol. [Tocotrienols: The Emerging Face of Natural Vitamin E] 
• If those of us who uphold the spirit of high-tech groups fail to reproduce, we are wasting that progress. If we allow the world to slide back into low-tech mode, the very painful and costly process of social evolution toward higher levels of technology development will have to be repeated. That is both wasteful and will cost immense human suffering, just as it did last time it was done. The very reason for people in high-tech groups to have more children is to avoid such a rerun of history. What was achieved by our societies during the last couple of hundred years is immensely valuable and was immensely costly to achieve. Wasting that progress through not defending our civilization is, I dare to say, deeply unethical. [Wood from Eden]
• The continuation of life, as Ayn Rand famously explained, is contingent. It requires choices, every moment of every day, correct choices that avoid harm and achieve value. In the absence of animalistic instinct, making correct choices requires rationality, e.g. the use of reason to achieve one’s values. Because they are insane, the Neo-Marxist capitalist ruling class is no longer capable of rationality. As such, they are no longer capable of making rational choices that will sustain their own — or our! — existence. Indeed, they won’t even try to sustain our existence because they do not value it. Their insanity is such that they willingly will choose course of actions that are self-destructive. I am not the first to point this out, of course. (I never am!) James Burnham’s 1964 book Suicide of the West foresaw what was to come, though the full fruit of the evil tree had not yet ripened. [Tree of Woe]
  
• Simultaneous invention makes biographies of inventors philosophically uninteresting. Who cares about the idiosyncrasies of somebody who discovered something at the same time as two other people? Note that the oldest of the three official Black-Scholes discoverers was Fischer who was born in 1938 and the youngest was Robert Merton who was born in 1944. Right place, right time; like Aubrey McClendon and Tom Ward who were born three days apart in Oklahoma. Similarly, J.S. Bach and G.F. Handel were both born in 1685. [CBS]
• One meta-lesson that was learned was that the Federal Aviation Administration was too politically compromised to run crash investigations disinterestedly. So in 1974, during the paranoid Watergate era, the National Transportation Safety Board was made independent of the Department of Transportation on the grounds that “no federal agency can properly perform such [investigatory] functions unless it is totally separate and independent from any other...agency of the United States.” Paranoia has paid off in fourteen years without a major crash. Unfortunately, we haven’t applied the lesson of the NTSB to other functions of government, such as immigration. For example, in Ireland a Muslim madman recently stabbed multiple small children. The Irish government has since been trying to hush up its malfeasance in not deporting the criminal twenty years ago after his first arrest. It always strikes me that countries need their own National Immigration Safety Board to investigate egregious cases like this and issue recommendations to keep them from happening again. But that doesn’t seem to occur to anyone else. [Steve Sailer]
• Unless you can have reason to believe that the decline in customer losses is about to stop, there does not seem to be a margin of safety in the unsecured debt. If 13% of customers (net - more after figuring churn) left over the past two years, they probably went somewhere, since they are not likely just canceling their internet entirely. There must be competitors in Frontier's markets that are better or cheaper and are eating their lunch. For all we know, the most alert or savvy customers are the ones who just left and it is the beginning of an S-curve of the slower to react customers leaving too. [CBS]