Archive for 20/07/2013


Each Peach Pear Plum

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King Cross Sydney

Rushing around and unable to walk on this day, I took this photo through my car window. The ‘Fizzy drink’ sign (as my siblings and I liked to call it as children) signifies the entrance to the red light district of the East. The unholy culture of these streets is not only announced by the billboard’s illuminated nocturnal beauty but by the hookers who regularly stand under it. Funny though, I wasn’t aware they had painted the building green. Owp. No. That would be the state of my windscreen.

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Relative Imperfection

Argoflex Seventy-Five (1949-1958)

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The Situationist

Caltec Image

FromCaltec News (by Marcus Woo):

When it comes to economics versus psychology, score one for psychology.

Economists argue that markets usually reflect rational behavior—that is, the dominant players in a market, such as the hedge-fund managers who make billions of dollars’ worth of trades, almost always make well-informed and objective decisions. Psychologists, on the other hand, say that markets are not immune from human irrationality, whether that irrationality is due to optimism, fear, greed, or other forces.

Now, a new analysis published the week of July 1 in the online issue of the Proceedings of the National Academy of Sciences (PNAS) supports the latter case, showing that markets are indeed susceptible to psychological phenomena. “There’s this tug-of-war between economics and psychology, and in this round, psychology wins,” says Colin Camerer, the Robert Kirby Professor of Behavioral Economics at the California Institute of Technology (Caltech) and the corresponding…

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My informal MBA

Today I would like to recommend you Coursera class: “A Beginner’s Guide to Irrational Behavior”  by Dan Ariely, professor of psychology and behavioral economics Fuqua school of business, Duke University. You can easily notice from the sample video that Dan is a great presenter and storyteller.
My personal take away from this class: several findings that are useful for marketing and UX (made a 2  page summary) and an inspiration for at least one idea.
Here you can read other people reviews on this course.

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Greenbackd

Here’s the updated St Louis Fed’s FRED on Warren Buffett’s favored market measure, total market capitalization-to-GNP:

FRED Graph

The Q1 2013 ratio – the most recent point – is 110 percent.

According to the FRED data, the Q1 2000 TTM/GNP peak ratio was 158 percent, and the Q3 2007 TTM/GNP peak was 114 percent. The average for the full period – Q3 1949 to Q3 2012 – is 69 percent. The last time the market traded at a below-average ratio was Q1 2009.

Here’s the log version:

FRED Graph

Order Quantitative Value from Wiley FinanceAmazon, or Barnes and Noble.

Click here if you’d like to read more on Quantitative Value, or connect with me on LinkedIn.

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MythGinger

Keith Sawyer has a lot to say about creativity and I find myself listening closely. He has a great academic pedigree and is a jazz pianist, does improv and writes games. So … he practices what he preaches. He focuses on some key questions – how can each person be more creative  and – how can the organization work together to translate individual creativity into organizational innovation. As that is my primary area of research, I dove into this book.

It seems that most books on creativity have steps or stages attached 🙂 I guess it comes with the territory of attempting to harness the creative impulse into something that we all can both understand and replicate.  Psychology has been studying creativity for decades and one thing we know for sure – these stage models work. Creativity is a non-linear process which is why there are so many ways to…

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Citiography

I recently got a wisdom tooth removed. My dentist had been nagging me to do it for years. Why the delay? I don’t have dentophobia. I’m not an anti-dentite. I just didn’t want to save the money (or spend it). But for the grace of my flex account, I was able to squirrel away nearly $700 (tax free, no less), and pop that tooth out.

My flex account automatically takes money out of my paycheck and saves it for medical expenses. It’s an example of behavioral economics. Traditional economics assumes people make rational decisions; behavioral economics assumes we’re human. And flawed. And irrational. And it creates systems to correct for these weaknesses. Instead of assuming that I’m a rational person who knows I need to pay the dentist and will save money to do so, behavioral economics knows that I’m much more likely to save money…

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Greenbackd

Warren Buffett’s favored market valuation metric, market capitalization-to-gross national product, has passed an unwelcome milestone: the 2007 valuation peak, according to GuruFocus:

TMTGNP 2007

The index topped out at 110.7 percent in 2007, and presently stands at 111.7 percent. From GuruFocus:

As of today, the Total Market Index is at $ 17624.4 billion, which is about 111.7% of the last reported GDP. The US stock market is positioned for an average annualized return of 2.2%, estimated from the historical valuations of the stock market. This includes the returns from the dividends, currently yielding at 2%.

I’ve seen several arguments for why this time is different, and why it’s not a bubble. I don’t buy it. When we see clear skies, that’s all we can imagine, and so we extrapolate it over the horizon. From Seth Klarman’s latest:

Investing, when it looks the easiest, is at its hardest

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Center for Advanced Hindsight

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Do you remember Segway, that odd, upright, (and sometimes dangerous) electric scooter?  Pundits once predicted the Segway would revolutionize personal transportation and reduce American oil dependency. As it turns out, these days, it is used either by corny tour groups in large cities or it’s been relegated to the object of sight gags and physical comedy, from “Arrested Development” to “Paul Blart: Mall Cop.”

After examining Google’s latest product, Google Glass, it is hard not to question whether it is ready for the market. With a design reminiscent of the “Terminator” films and a preliminary price tag of $1,500, Glass risks being the biggest flop since Segway if Google doesn’t learn from Segway’s mistakes.

The Segway failed, not because of poor engineering, but because of poor attention to consumer psychology. Similarly, Google Glass might be functional from an engineering point of view, but does it have the form…

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