July, 2008

New Car

July 29, 2008 @ 8:02 am · Filed under Reality

I bought a 2005 Honda S2000 last night. Here’s some pictures:Honda S2000 Front

It’s sickeningly fast and low to the ground, and a blast to drive.

| Comments

The Naivety of Glenn Greenwald

July 20, 2008 @ 9:08 am · Filed under Reality

So, Glenn Greenwald, having apparently been in a stupor all his life, has just noticed that U.S. government policies don’t reflect the opinions of the majority of the U.S. people. As an example, he cites U.S policy towards Israel. However, he could have chosen immigration, taxation, or pretty much any other issue. Why he is surprised, I don’t know. First, in a republic, the government will never accurately reflect the direct will of the people. That’s inherent in the design of the system of representation. Secondly, he misses the fact that what is important is not opinion, but commitment. Commitment means that you give money, organize and vote around an opinion. And it is commitment that moves policy, not opinion. Most people have opinions on many issues, but they have commitment towards far fewer.

If Greenwald would bother to do some reading, he would find that his startling new discovery about the power of small, committed groups of people to mold policy was first made about 3,000 years ago. More recently, about 200 years ago, this power was a major concern of the founding fathers of the U.S. when they designed our government. Indeed, James Madison wrote an entire essay on the problem of these “factions,’ which he defined as:

“a number of citizens, whether amounting to a majority or minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens or to the permanent and aggregate interests of the community.”

I’d suggest Greenwald read this essay, but he’s probably too busy blogging about his startling new discovery of how the checks and balances of the U.S. governmental system makes real change hard.

UPDATE: Major mess-up, I wrote Reynolds instead of Greenwald when I originally wrote this piece. Thanks Dag for pointing out my mistake.

| Comments

Sullivan Mistakes Nostalgia For Conservatism

July 8, 2008 @ 11:50 am · Filed under Reality

Normally, I don’t comment on Sullivan, because he is so philosophically incoherent, but I can’t resist this one time. In Misreading Obama, he makes the common mistake of thinking nostalgia is conservatism. Obama’s idealization of village markets is as bad as the 19th century critics of British industrialization who used to go on about the joys of English village life. Nostalgia is a longing for an ideal that never was. Conservatism is a reluctance to make cultural changes that have uncertain outcomes. True, a lot of conservatives suffer from nostalgia, but that doesn’t make them identical.

| Comments

Huntsville and Palo Alto: Two Worlds

July 6, 2008 @ 4:47 pm · Filed under Reality

There’s not much in common between Huntsville, Alabama and the Bay Area

Lake at sunset in Harvest, Alabama

I’ve just returned to Palo Alto after spending two weeks in my birthplace of Huntsville, Alabama (Technically, we were mainly in Harvest, which is just outside of Huntsville). I took my children down there to visit my parents and my brother and his family. As a bonus, my other brother was also able to fly down from Boston at the same time. It was a relaxing visit, but now that I am back in the Bay Area, I can’t help but reflect on how it seems like a trip to another world.

In Palo Alto, Republicans are invisible. In Huntsville, Democrats are. I literally saw no bumper stickers for either Democratic candidate. I did see plenty of NRA bumper stickers, though. In Huntsville, society revolves around the military and church. In Palo Alto: not so much. Technically, Palo Alto is more diverse, except that are almost no African-Americans. Huntsville, is still pretty much just Black and White. Other than the usual chain stores and brands, there seems almost no point of contact between the two places.

Not much of a redneck yet

That’s unfortunate, because a little overlap would be good. There’s a great article in The Economist on the political segregation of America. It makes the point that Americans increasingly live in “Landslide Counties” where presidential candidates win by 20 percentage points or more. Huntsville and Palo Alto are prime examples of this phenomenon. Both exhibit a startling lack of political diversity, and we are all the worse for it, because (as the Economist notes) a lack of exposure to opposing viewpoints tends to increase the extremity of people’s views. Living in an echo chamber is bad for our country’s politics, and it is bad for each of us personally.

| Comments

Picking Up Pennies In Front Of A Steamroller

July 4, 2008 @ 9:42 am · Filed under Reality

I am a huge fan of Nassim Taleb. I think his books The Black Swan: The Impact of the Highly Improbable and Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets are essentially the last word on economics, life, and investing. Despite that, I have recently been pursuing an investing strategy that is fundamentally at odds with what I have learned from him. In his books, he derides common option strategies as “picking up pennies in front of steamrollers.” By this, he means risking a huge loss in return for making small, regular returns. So, how does this apply to me?

While I have been on vacation, I’ve been logging in to my online brokerage, and if the market starts going down, I buy short financials or real-estate ETFs. At the end of the day, I sell them, and I pocket a 1 or 2 percent return for the day (those are the pennies). Now, objectively, this strategy is senseless. If I had simply bought and held the ETFS for two weeks, I would, by my calculations, have made 50% more. Moreover, I ran the real risk of having all of my daily gains, and more, wiped out by an unexpected rise in the stock market (that would be the steamroller). Given that I knew all this, why did I still pursue this strategy?

First, I wasn’t risking much money. More importantly, though, the strategy makes psychological sense, in that it provides the kind of small, regular reward that we all enjoy. Which illustrates a major point of Taleb’s: that humans thrive on small, regular reinforcements of worth, but unfortunately the world is not built that way. Instead, for the most part, we get irregular, large rewards (and blows). Vacations should be a refuge from that irregularity, and a time of small rewards and disappointments. Having said that, I wouldn’t recommend this strategy to anyone. Eventually, you will get burned.

UPDATE: Today, I got run over by the steamroller

| Comments