Thursday, July 29, 2004

Slate on Financial Planning

Slate has an 4-part series by Henry Blodget (the guy who hyped up tech stocks in the Dot Com era and then got dinged for it in the post Dot Com era) on financial planning. Given Blodget's past, it's hard to take it seriously - the guy who predicted Amazon would hit 400 (which it briefly did) is telling me that I'll be lucky to get 6% returns out of the stock market? - but it's actually pretty good and seems to be full of reasonable financial advice. Blodget takes a trip to a financial advisor who, in perhaps the greatest single most ironic event in the universe, fails to mention the assumptions and hidden fees associated with the advice. The estimates of future performance are based on "historical data" to give a return of ~10% (before fees). Blodget picks the analysis apart and looks at what you could really expect to get but he does go through the rough work about where he's coming up with numbers (sadly, if he'd only been as diligent at Goldman Sachs, he might not be banned from the securities industry...).
In the financial markets, the "long term" is long. Over the past 200 years, U.S. stocks have, on average, returned approximately 10 percent a year (about 7 percent, after adjusting for inflation). For many of those 200 years, however, stocks have returned nothing—or worse. The fallow periods, moreover, have not just lasted months or years. They have lasted decades.

Blodget links to a Fortune article which details what that "historical average" that everyone talks about really means...
Next, Blodget talks about something which you rarely hear about - fees. All those Mutual funds that people love charge management fees (usually around 1-2%) that are taken off the top. Whether the fund increases in value or not. When your fund is only returning 3-5%, it makes a big difference (for the record, Index fees like the S&P 500 funds usually have lower fees because you don't have to pay for all that "advice"). Blodget also delves into inflation costs and taxes, all which eat away at your meager returns. Taking this into account, his projected return is -1% (although remember, this is taking into account inflation - just leaving the money in your checking account is losing money as inflation marches on).
When it comes to individual stocks, the best advice is not to play. Index funds will on average get better returns, especially if you place any value on your own time (and happiness). And you definately shouldn't listen to stock advisors, analysts (like Blodget himself or the lastest fad IPO).

In the bull market of the late '90s, the stock-picking mantra for the casual investor was, "Do it yourself!" In 2001, after the crash, it became, "Hire someone to help." Unless you just enjoy the stock-picking game—a common and perfectly acceptable reason to play—the permanent mantra should be, "Don't do it at all." As numerous studies have shown, the vast majority of professional investors can't beat the market.

And in case you had not grasped that everyone in the financial industry has some angle and is full of crap, Blodget has a financial analysis / consulting business he is plugging.

Wednesday, July 28, 2004

Transportation Futuristics

Berkeley has a fascinating online exhibit of 50s era futuristic automotive ideas - some of them are just ideas, others are drawings that were (frighteningly in some cases) made into prototypes - Warning: This will suck you in and make you lose track of time! (From Gizmodo)

Sunday, July 25, 2004

NPR has RSS Feeds!

NPR (that national treasure that everyone like but very few are willing to pay for) now has RSS Feeds for news. Now write them a check you cheap bastard!
The first (of no doubt many) link to NPR is this tidbit about the War on Terror running out of money:
The Government Accountability Office reports the U.S. military is more than $12 billion shy of being able to fund operations in Iraq and Afghanistan through the end of September. The GAO says the military is trying to make up the difference by cutting funding for training and maintenance.
Nice to see their taking the long view. If there is any other way that the "War on Terror" could be screwed up, I'd like to know what it is!

Friday, July 23, 2004

Microsoft to unload Slate

Apparently Microsoft is trying to unload Slate. On the one hand, this might be an effort to shed unprofitable businesses (although who would want to buy?). Or it might be due to articles like this:
For the American public, Microsoft finds itself in much the same role AT&T found itself in the early '80s. Its service is a great enabler of commerce and personal communication. It enjoys universal name recognition and near-complete market penetration. And yet it is not beloved. Customers know it doesn't always provide the best value or the best product; they often use it because they have no other choice. On the other hand, the company generates cash reliably.
Or maybe it's articles like this:
Meanwhile, all-conquering Internet Explorer has been stuck in the mud for the past year, as Microsoft stopped delivering new versions. The company now rolls out only an occasional fix as part of its Windows updates. Gates and company won the browser war, so why keep fighting it?
On the one hand, it's great that Slate is so independent but at some point, one can imagine the powers that be deciding that they could get the same sort of publicity from, say, Slashdot and get the same results without having to pay for it! It seems like this is following a more general trend of shedding the unprofitable businesses (which some will see as a encouraging sign) mostly to do with MSN. Interestingly Search looks like it's going to be a massive money pit for Microsoft (they have a lot of catching up to do with Google, Yahoo and the rest) but that is a big initiative.

Monday, July 19, 2004

Free Duke Education with iPod!

Apple also said that this fall Duke University will give iPods to all incoming freshman. Duke will hand out approximately 1,800 iPods that will be pre-loaded with Duke-related content and will allow students to download supplementary university material in addition to being able to play music
This is the logical extension of "free" laptops or handhelds with your college education. In completely unrelated news, tuition at Duke is going up by $399.99 this fall...

Saturday, July 17, 2004

Capsule Review: The Fabric of the Cosmos

From the author of The Elegant Universe comes The Fabric of the Cosmos. This book updates the ideas from The Elegant Universe with more of a focus on the nature of space and time and the origins of the universe (and less on String Theory). If you saw the Nova special on The Elegant Universe, it introduced ideas (like the universe is a big 3-dimensional brane) that were not in the book, although they are in The Fabric of the Cosmos. One of my concerns was that this book would be required to cover alot of the same ground (relativity, quantum mechanics, string theory) again - while this was true to some extent, I found it was easy to skim over these sections.

The Good
After getting fundamentals out of the way, the book talks about how space and time are related and how time behaves (unusually on it's face) when talking about large distances. There is a section on how time having a direction requires the universe to have been monotonically descreasing from a state of extremely low entropy to a state of higher and higher entropy. The book does a very good job of motivating the inflationary model of the universe through the higgs field and how this is thought to give particles mass. The book makes some pains to make it clear how much of this is verified experimentally and how much of it could be verified experimentally. The book finishes up with a grab bag of more esoteric ideas (Universe is a hologram, how to make a time machine) which is interesting but tended to be less involving than the earlier sections mostly because it is so divorced from the currently theoretical knowledge.

The Not so Good
The book makes extensive use of anaologies, most of which are not good. This was somewhat irritating in The Elegant Universe and seems to have gotten a lot worse in the current book. Most (but not all) anaologies involve characters from popular television programs (Simpsons, the X Files, oddly NO Futurama) which becomes fairly grating. The analogies typically fail to make things any clearer - in a lot of cases, I really wonder what the point of them was meant to be. The book is woefully short on diagrams to explain points. The limited amount of visual aid that is provided tends to be pictures rather than diagrams and (sadly) involve the characters from the anaologies. These pictures are very dark (I think they were intended to be rendered in color) and in a lot of cases, not worth looking at. Look at John Gribbon's "In Search of ..." books for how to make clear diagrams of these things.

The book is a success mostly in spite of it's execution. The ideas are very interesting and that's what keeps you reading past the analogies and the pictures.

Monday, July 12, 2004

WiFi Range

The range of WiFi at my house is not great - the DSL is upstairs where my desktop computer is but I usually work downstairs. I typically get 2 bars (out of 5). So I'm going to build a range extender for my Linksys WiFi box. I'll report back here when I'm done.

Tuesday, July 06, 2004

Slate on Brian Greene / The Elegant Universe

Slate has an article written by Amanda Schaffer on the popularity of Brian Greene and the Elegant Universe and The Fabric of the Cosmos. The article is, in a word, idiotic. The claim is that people like Greene's arguments about the "elegance" of the universe but that the scientific community "disagrees" somehow with it all. The evidence of this cited in the article is based on the comments of Sheldon Glashow (part of the Nobel prize winning Weinberg, Glashow, Salam team that unified the Weak Nuclear Force with Quantum Electro-Dynamics) and Freeman Dyson who wrote a review of "The Fabric of the Cosmos".
In the NOVA special, Nobel laureate Sheldon Glashow drove home the obvious but downplayed fact that string theory has not been—and may never be—experimentally verified, and that it may be more philosophy than physics.
This is all true and is in some ways unsatisfying but theory has been running ahead of experimental particle physics for some time. If theory cannot really be reconciled with experiment, then the theory won't fly. Greene if he is guily of anything, has carried on a long tradition of popularized science books with presenting the latest theories as neat and complete solutions. And to be fair, Glashow's comments were in the Nova Special and the reason they were was because they were also in the book! Can no one write a book on string theory till it's proven by experiment?
More recently, in the New York Review of Books, Freeman Dyson, an octogenarian and self-proclaimed "old conservative, out of touch with the new ideas," suggested that string theory may simply be one of history's "fashionable" ideas, the kind that flourish briefly, then forever fade away. Glashow and Dyson raise important points. But in the eyes of a captivated public, such reservations appear to be little more than theoretical technicalities.
I watched the Nova special and read the books and that was simply not the impression I got. If alternative viewpoints were not presented then one could make an argument about it. In this case though, you can't. And what "important point" does Dyson raise? That the theory might turn out to be true? Well then string theory will have alot of company with the other physics theories which have proven to be untrue. Einstein argued vehemently that Quantum Physics was an experimental limitation (regardless of experimental evidence) but history has not be kind to this viewpoint.
Although many features of the physical world do conform to simple equations, there is no guarantee that the unknown will be "elegant" as well. That is to say, research may be prejudiced by aesthetic considerations, and as a result, we may miss out on truths that turn out to be messy and inelegant. Some, including Glashow, worry that many talented young physicists are drawn to the hip realm of string theory and pay virtually no attention to experimental work: "What we do is not of any direct interest to them," Glashow told NOVA.
Glashow's quote applies to the first critism - that String Theory is not backed up by experimental evidence. Considering that Glashow was one of the architects of ElectroWeak symmetry, it's a little dubious to (incorrectly) imply that he does not believe that symmetry has been one of the most important revolutions in physics.
(Dyson goes so far as to say that quantum mechanics and relativity need not be reconciled at all, though he is clearly in the minority here; most physicists would agree that some theory capable of bridging general relativity and quantum mechanics would eventually be needed for a full understanding of black holes, for instance, or of the Big Bang.)
I think it is fair to say that Dyson is in a minority that is perilously close to 1. I challenge anyone to name a real physicst (i.e. one who write papers in journals and not just popular books) who holds this point of view. The recognition of symetry in the universe is, at this point, not controversial. On one point, the article is clearly on point. The analogies used make reading parts of the book painful (there is a stretch in the Fabric of the Cosmos where all of the analogies use Simpson's characters - I'm a Simpsons' fan but it was just annoying). I frequently found myself skimming past huge swaths of the book (both for this and the General Relativity boilerplate).

Monday, July 05, 2004

Driving is a right?

Alex over at Marginal Revolutions has a mini-rant about a trip to Canada where he encountered a sign that read "Remember, driving is a privilege not a right." :
Despite the fact that I am Canadian, everytime I see this sign my stomach churns with anger and I must suppress a desire to turn back to the U.S. The sign is a reprimand from the rulers to the ruled reminding them of their place. I want to tear it from the ground but my fellow Canadians think my reaction odd. More Americans, I think, would understand and that I suppose is why I call America home.
Riiiight. Thing is, before you can get a driver's license in most US states (and certainly in California) you MUST agree that DRIVING IS A PRIVILEGE NOT A RIGHT. It's usually written on the frickin' inside cover! Now what is the state doing here? Are are liberties under assault? No, they are trying to let you know that you Latte Drinking, SUV driving, 12 mpg getting chowder heads can't just do whatever you please without considering the effect it will have on others. And that is something that is very Canadian... Now if only setting off mexican fireworks was also a privilege, and not a right. Happy Independence Day and Happy Canada Day.