Over 50? You probably prefer negative stories about young people

September 1, 2010 Comment On This Post!

Via PhysOrg

When given a choice, older people prefer to read negative news, rather than positive news, about young adults, a new study suggests.

In fact, older readers who chose to read negative stories about young individuals actually get a small boost in their self-esteem, according to the results.

And what about younger people? Well, they just prefer not to read about older people.

Click Here To Read: Over 50? You probably prefer negative stories about young people

Video: Google Talk- Tony Schwartz & Becoming More Productive

July 28, 2010 Comment On This Post!

Not sure I agree with all the facts but there are some interesting points in this talk…

Via-Google

“Demand is exceeding our capacity. The ethic of “more, bigger, faster” exacts a series of silent but pernicious costs at work, undermining our energy, focus, creativity, and passion. Nearly 75 percent of employees around the world feel disengaged at work every day. “The Way We’re Working Isn’t Working” offers a groundbreaking approach to reenergizing our lives so we’re both more satisfied and more productive—on the job and off.”

Watch The Video Below Or Click Here For Our Subscribers

Recognizing Friends By Their Walk

July 28, 2010 Comment On This Post!

Abstract (Via Cutting & Kozolowski)

Viewers  can recognize themselves and others in an abstract dislay of their movements. Light sources mounted on joints prominent during the act of walking are sufficient cues for identification. No other information, no feedback and little practice with such a display are needed.

Click Here To Read: Recognizing Friends By Their Walk

Finance Professor & Behavioral Real Estate Decision Making

June 19, 2010 Comment On This Post!

My friend  the Finance Professor found an interesting paper.Mental Accounting and False Reference Points in Real Estate Investment Decisions by Seiler, Lane, and Seiler.

Take a look at this excerpt

“If people were rational utility-maximizers, the decision to sell an asset would be independent of the price that was paid for the asset. The price paid in the past is a sunk cost, and should therefore be irrelevant to future buy/sell/hold decisions.”

Click Here To Read:  Behavioral Real Estate Decision Making

Silencing the Whistleblowers: When banks bulldoze their internal warning systems.

May 13, 2010 Comment On This Post!

Introduction (via The Big Money)

In early 2006, Darcy Parmer began to worry about her job. She was a mortgage fraud investigator at Wells Fargo Bank. Her managers weren’t happy with her. It wasn’t that she wasn’t doing a good job of sniffing out questionable loans in the bank’s massive home-loan program. The problem, she said, was that she was doing too good a job.

The bank’s executives and mortgage salesmen didn’t like it, Parmer later claimed in a lawsuit, when she tried to block loans that she suspected were underpinned by paperwork that exaggerated borrowers’ incomes and inflated their home values. One manager, she said, accused her of launching “witch hunts” against the bank’s loan officers.

One of the skirmishes involved a borrower she later referred to in court papers as “Ms. A.” An IRS document showed Ms. A earned $5,030 a month. But Wells Fargo’s sales staff had won approval for Ms. A’s loan by claiming she made more than twice that—$11,830 a month. When Parmer questioned the deal, she said, a supervisor ordered her to close the investigation, complaining, “This is what you do every time.”

Interesting Excerpts (Via The Big Money)

In interviews and in court records, 10 former fraud investigators at seven of the nation’s biggest banks and lenders—including Wells Fargo (WFC), IndyMac Bank, and Countrywide Financial—describe corporate cultures that allowed fraud to thrive in the pursuit of loan volume and market share. Mortgage salesmen stuck homeowners into loans they couldn’t afford by exaggerating borrowers’ assets and, in some cases, forging their signatures on disclosure documents. In other instances, banks opened their vaults to professional fraudsters who arranged millions of dollars in loans using “straw buyers,” bogus identities, or, in a few instances, dead people’s names and Social Security numbers.

Corporate managers looked the other way as these practices flourished, the investigators say, because they didn’t want to crimp loan sales. The investigators discovered that they’d been hired not so much to find fraud but rather to provide window dressing—the illusion that lenders were vetting borrowers before they booked loans and sold them to Wall Street investors. “You’re like a dog on a leash. You’re allowed to go as far as a company allows you to go,” recalled Kelly Dragna, who worked as a fraud investigator at Ameriquest Mortgage Co., the largest subprime lender during the home-loan boom. “At Ameriquest, we were on pretty short leash. We were there for show. We were there to show people that they had a lot of investigators on staff.”

Click Here To Read: Silencing the Whistleblowers: When banks bulldoze their internal warning systems.

Of Two Minds When Making a Decision (Type 1 and Type 2 Systems Thinking)

May 1, 2010 Comment On This Post!

Intuition & rationality.

Subtitle(via SciAm)

We may make snap judgments, or mull things carefully. Why and when do we use the brain systems behind these decision-making styles?

Introduction (via Alan G. Sanfey and Luke J. Chang @ SciAm)
One of the more enduring ideas in psychology, dating back to the time of William James a little more than a century ago, is the notion that human behavior is not the product of a single process, but rather reflects the interaction of different specialized subsystems. These systems, the idea goes, usually interact seamlessly to determine behavior, but at times they may compete. The end result is that the brain sometimes argues with itself, as these distinct systems come to different conclusions about what we should do.

The major distinction responsible for these internal disagreements is the one between automatic and controlled processes. System 1 is generally automatic, affective and heuristic-based, which means that it relies on mental “shortcuts.” It quickly proposes intuitive answers to problems as they arise. System 2, which corresponds closely with controlled processes, is slow, effortful, conscious, rule-based and also can be employed to monitor the quality of the answer provided by System 1. If it’s convinced that our intuition is wrong, then it’s capable of correcting or overriding the automatic judgments.

One way to conceptualize these systems is to think of the processes involved in driving a car: the novice needs to rely on controlled processing, requiring focused concentration on a sequence of operations that require mental effort and are easily disrupted by any distractions. In contrast, the well-practiced driver, relying on automatic processes, can carry out the same task efficiently while engaged in other activities (such as chatting with a passenger or tuning in to a radio station). Of course, he or she can always switch to more deliberative processing when necessary, such as conditions of extreme weather, heavy traffic or mechanical failure.

In terms of decision-making, the description of System 2 bears a close resemblance to the rational, general-purpose processor presupposed by standard economic theory. Although these economic models have provided a strong and unifying foundation for the development of theory about decision-making, several decades of research on these topics has produced a wealth of evidence demonstrating that, in practice, these models do not provide a satisfactory description of actual human behavior. For instance, it’s been recognized for several decades the people are more sensitive to losses than to gains, a phenomenon known as loss aversion. This doesn’t fit with economic theory, but it appears to be hard-wired into the brain.

Click Here To Read: Of Two Minds When Making a Decision (Type 1 and Type 2 Systems Thinking)

Jonah Lehrer Enculturation and Wall Street – Why Are Financial Modelers Unaware of Their Blindspots

April 30, 2010 Comment On This Post!

Familiarity breeds blindness…

Excerpt  (via Jonah Lehrer @ Frontal Cortex)

Let’s begin with a classic experiment, led by Jerome Bruner and Leo Postman. A group of undergraduates was briefly shown a series of playing cards. The vast majority of the cards were normal, the usual assortment of face cards and numbered suites. Every once in a while, however, one of the cards was “anomalous,” so that Bruner and Postman would flash the students a card that couldn’t exist, such as the red ten of spades, or the black five of diamonds. Interestingly, the subjects almost never recognized these aberrations. Instead, they distorted the perception to fit their expectations, so that they remembered seeing a black ten of spades, and a red five of diamonds. They were so familiar with the standard deck of cards that they could no longer see what was unfamiliar. This meant, of course, that they ended up missing the most interesting bits of information.

Such are the hazards of enculturation. The only difference is that, instead of becoming too familiar with a standard deck of cards, we become too familiar with the standard model of physics, or the Wall Street models that assume real estate prices won’t drop simultaneously all across the country. And so we become blind to our blind spots

Click Here To Read: Jonah Lehrer Enculturation and Wall Street – Why Are Financial Modelers Unaware of Their Blindspots

SumZero top investment community looking for top buy side analysts! Want to join?

April 26, 2010 Comment On This Post!

I’ve written about SumZero before, it is the largest community of buy side analysts (think private equity, hedge fund etc) and I think most serious investors should join. I have free invites if you are interested…just email me

Repeat

I’m interested in inviting many more people to the community. If you are a buysider (analyst, portfolio manager, researcher) or have compelling investment writeups please email me for an invite to SumZero at:    Miguel@SimoleonSense.com


Letter From The Founders Of SumZero

Thanks to SumZero members, SumZero has grown to be the leading online community of buyside investment professionals with nearly 3,000 members and 5,000 companies in the SumZero database – members routinely use the database to set up conversations with other buyside analysts who follow the same names they do and wish to trade notes. ..there are now over 1,500 investment ideas in the SumZero idea database and over 100 financial models (including LBO, 3 Statement, Merger models, etc.). Finally, expect a robust job vault in the coming weeks as SumZero partners with leading hedge fund recruiting firms and hedge fund human resources departments to offer specific career opportunities.

Additional Information On SumZero

The following is a very long article in FINalternatives (a hedge fund trade publication):
http://www.finalternatives.com/node/7348

SeekingAlpha:
http://seekingalpha.com/instablog/103990-zack-miller/10539-expert-investment-community-sumzero-coming-soon-to-a-hedge-fund-near-you

The SumZero guest page for a blurb on the site:
www.sumzero.com/guest

Please email me for an invite to SumZero at:    Miguel@SimoleonSense.com

Banking and Financial Crises in United States History: What Guidance can History Offer Policymakers?

April 21, 2010 Comment On This Post!

Abstract (Via Tallman, Ellis W and Wicker, Elmus R. @MPRA)

This paper assesses the validity of comparisons of the current financial crisis with past crises in the United States. We highlight aspects of two National Banking Era crises (the Panic of 1873 and the Panic of 1907) that are relevant for comparison with the Panic of 2008. In 1873, overinvestment in railroad debt and the default of railroad companies on that debt led to the failure of numerous brokerage houses, an antecedent to the modern investment bank. For the Panic of 1907, panic-related deposit withdrawals centered on the less regulated trust companies, which were less directly linked to the existing lender of last resort, similar to investment banks in 2008. The popular press has made numerous references to the banking crises (there were three main ones) of the Great Depression as relevant comparisons to the present crisis. This paper argues that such an analogy is inaccurate in general.

Click Here To Read: Banking and Financial Crises in United States History: What Guidance can History Offer Policymakers?

George Orwell: On Writing Well – Politics & The English Language

April 21, 2010 Comment On This Post!

I have been working very hard on a related surprise…..

Click Here To Read: George Orwell: On Writing Well – Politics & The English Language

Introduction

Modern English, especially written English, is full of bad habits which spread by imitation and which can be avoided if one is willing to take the necessary trouble. If one gets rid of these habits one can think more clearly, and to think clearly is a necessary first step toward political regeneration: so that the fight against bad English is not frivolous and is not the exclusive concern of professional writers.

As soon as certain topics are raised, the concrete melts into the abstract and no one seems able to think of turns of speech that are not hackneyed: prose consists less and less of words chosen for the sake of their meaning, and more and more of phrases tacked together like the sections of a prefabricated henhouse.

As I have tried to show, modern writing at its worst does not consist in picking out words for the sake of their meaning and inventing images in order to make the meaning clearer. It consists in gumming together long strips of words which have already been set in order by someone else, and making the results presentable by sheer humbug. The attraction of this way of writing is that it is easy. It is easier — even quicker, once you have the habit — to say In my opinion it is not an unjustifiable assumption that than to say I think. If you use ready-made phrases, you not only don’t have to hunt about for the words; you also don’t have to bother with the rhythms of your sentences since these phrases are generally so arranged as to be more or less euphonious. When you are composing in a hurry — when you are dictating to a stenographer, for instance, or making a public speech — it is natural to fall into a pretentious, Latinized style.

Main Point

A scrupulous writer, in every sentence that he writes, will ask himself at least four questions, thus:

1. What am I trying to say?
2. What words will express it?
3. What image or idiom will make it clearer?
4. Is this image fresh enough to have an effect?

And he will probably ask himself two more:

1. Could I put it more shortly?
2. Have I said anything that is avoidably ugly?

This Bit Reminds Me Of CNBC

When one watches some tired hack on the platform mechanically repeating the familiar phrases — bestial, atrocities, iron heel, bloodstained tyranny, free peoples of the world, stand shoulder to shoulder — one often has a curious feeling that one is not watching a live human being but some kind of dummy: a feeling which suddenly becomes stronger at moments when the light catches the speaker’s spectacles and turns them into blank discs which seem to have no eyes behind them. And this is not altogether fanciful. A speaker who uses that kind of phraseology has gone some distance toward turning himself into a machine. The appropriate noises are coming out of his larynx, but his brain is not involved as it would be if he were choosing his words for himself. If the speech he is making is one that he is accustomed to make over and over again, he may be almost unconscious of what he is saying, as one is when one utters the responses in church.

Hmm  CDO’s, MBS, etc

The inflated style itself is a kind of euphemism. A mass of Latin words falls upon the facts like soft snow, blurring the outline and covering up all the details. The great enemy of clear language is insincerity. When there is a gap between one’s real and one’s declared aims, one turns as it were instinctively to long words and exhausted idioms, like a cuttlefish spurting out ink. In our age there is no such thing as “keeping out of politics.” All issues are political issues, and politics itself is a mass of lies, evasions, folly, hatred, and schizophrenia. When the general atmosphere is bad, language must suffer. I should expect to find — this is a guess which I have not sufficient knowledge to verify — that the German, Russian and Italian languages have all deteriorated in the last ten or fifteen years, as a result of dictatorship.

What is above all needed is to let the meaning choose the word, and not the other way around.

Click Here To Read: George Orwell: On Writing Well – Politics & The English Language