Weekly Roundup 75: A Curated Linkfest For The Smartest People On The Web

I spend 8 hours every Sunday putting this together. If you like this roundup or plan on linking to it kindly include a reference to SimoleonSense Thanks!

Weekly Cartoon

Weekly Jokes (Via Purdue)

What’s the definition of an accountant?
Someone who solves a problem you didn’t know you had in a way you don’t understand.

What’s the definition of a good tax accountant?
Someone who has a loophole named after him.

When does a person decide to become an accountant?
When he realizes he doesn’t have the charisma to succeed as an undertaker.

What does an accountant use for birth control?
His personality.

What’s an extroverted accountant?
One who looks at your shoes while he’s talking to you instead of his own.

Must Read Articles For All Visitors

51 Pragmatic Suggestions: Mix, Match, Dismiss, Do! – via NeuroNarrative –

1. Learn how to enter and exit the daily vortex (it will swallow you if you don’t)
2. Don’t give people the power to direct your life (because if you do, they will)
3. Beware those with an inflated sense of self (they’re always trying to expand their pyramid scheme)

Debt: The first five thousand years – via Eurozine – Throughout its 5000 year history, debt has always involved institutions – whether Mesopotamian sacred kingship, Mosaic jubilees, Sharia or Canon Law – that place controls on debt’s potentially catastrophic social consequences. It is only in the current era, writes anthropologist David Graeber, that we have begun to see the creation of the first effective planetary administrative system largely in order to protect the interests of creditors

A Home Library’s Educational Edge
– via NYT – Home libraries, and the fostering of learning they represent, correlate with extra years of educational attainment and better odds of finishing college, a study says.

Con Artistry Hall Of Fame Awesome!

World Bank Data Released For Free!~via Geary Behavior Center – This week has provided free access to over 2000 data series

Most Important Links of The Week

When Talking Stocks, Mind Your Metaphors – via Columbia Ideas At Work – The recent volatility in the stock market undoubtedly drove many casual investors to search popular financial news outlets for clues to the market’s next leap or plunge. But listening too closely to stock commentary can actually be detrimental to investors’ portfolios because commentators unwittingly describe the stock market using metaphorical language that can cloud an investor’s judgment, shows research by Professors Michael Morris and Daniel Ames.

Don’t talk to aliens, warns Stephen Hawking – via Times – The aliens are out there and Earth had better watch out, at least according to Stephen Hawking. He has suggested that extraterrestrials are almost certain to exist — but that instead of seeking them out, humanity should be doing all it that can to avoid any contact.

Iceland volcano: why we were lucky we weren’t wiped out – via Guardian – The volcanic ash cloud from Eyjafjallajokull has caused travel chaos and misery. But we were lucky. An eruption in the future could wipe out the human race

Unemployment for Those Who Earn $150,000 or More is Only 3%, While Unemployment for the Poor is 31%– via Naked Capitalism – Workers in the lowest income decile faced a Great Depression type unemployment rate of nearly 31% while those in the second lowest income decile had an unemployment rate slightly below 20% … Unemployment rates fell steadily and steeply across the ten income deciles. Workers in the top two deciles of the income distribution faced unemployment rates of only 4.0 and 3.2 percent respectively, the equivalent of full employment. The relative size of the gap in unemployment rates between workers in the bottom and top income deciles was close to ten to one. Clearly, these two groups of workers occupy radically different types of labor markets in the U.S.

Hard cash underpins the spirit of independence – via FT – Energy. Ambition. Confidence. Patience. Fearlessness. All these traits are associated with that mysterious quality of “entrepreneurialism”. Self-made men, such as Richard Branson and Alan Sugar, seem to exude different qualities from ordinary wage slaves. But that is not the way things look to economists. It’s not that we are blind to the very idea that personality matters; it’s just that the evidence suggests a different story.

The Radical Notion of Making Education Free – via Big THink – Howard Gardner, educator and psychologist is fond of saying, “If you think education is expensive, try estimating the cost of ignorance.” It’s become all too relevant in today’s struggle against a worldwide recession, intensifying global competition, and the ever-mounting cost of higher education.

Importance of Blended Learning -via MIT – Even when children are high achievers and facile with new technology, many seem gradually to lose their sense of wonder and curiosity, notes John Seely Brown. Traditional educational methods may be smothering their innate drive to explore the world. Brown and like-minded colleagues are developing the underpinnings for a new 21st century pedagogy that broadens rather than narrows horizons. The typical college lecture class frequently gathers many students together in a large room to be ‘fed’ knowledge, believes Brown. But studies show that “learning itself is socially constructed,” and is most effective when students interact with and teach each other in manageable groups. Brown wants to open up “niche learning experiences” that draw on classic course material, but deepen it to be maximally enriching.

Physical Contact and Financial Risk Taking – via APS – We show that minimal physical contact can increase people’s sense of security and consequently lead them to increased risktaking behavior. In three experiments, with both hypothetical and real payoffs, a female experimenter’s light, comforting pat on
the shoulder led participants to greater financial risk taking. Further, this effect was both mediated and moderated by feelings of security in both male and female participants. Finally, we established the boundary conditions for the impact of physical contact on risk-taking behaviors by demonstrating that the effect does not occur when the touching is performed by a male and is attenuated when the touch consists of a handshake. The results suggest that subtle physical contact can be strongly influential in decision making and the willingness to accept risk.

Miguel’s Weekly Favorites

Re Examining Eye- Witness Investigations -via NSF – Scientists are trying to determine why errors in eyewitness identifications occur, and how to prevent these errors

Dan Ariely – Power and Moral Hypocrisy – via Predictably Irrational – When a certain former New York State Attorney General became New York Governor, he pledged to “change the ethics of Albany” and make “ethics and integrity the hallmarks of [his] administration.” Sure enough, he went on to fight collar crime and corruption, reduce pollution and prosecute a couple prostitution rings. Oh, but then the New York Times disclosed that this same law-and-order Governor was bedding high-priced prostitutes. So much for changing the ethics of Albany.

Shopping for Certainty
via Columbia – Consumers’ goals for what to buy and how much to spend become increasingly concrete as they navigate the shopping process.

Narrative and Persuasion in Fashion Advertising – via Chicago Journals -Narrative transportation—to be carried away by a story—has been proposed as a distinct route to persuasion. But as originally conceived, narrative transportation is unlikely to occur in response to advertisements, where persuasive intent is obvious and consumer resistance is expected. We analyze fashion ads to show how narrative transportation can nonetheless be a possible response to ads, if specific aesthetic properties are present, most notably when grotesque imagery is used. We then situate narrative transportation as one of five modes of engaging fashion advertising, each of which serves as a distinct route to persuasion. Interviews showed that consumers variously engage ads to act, identify, feel, transport, or immerse. We explain how aesthetic properties of ads call forth different modes of engagement and explore how grotesque imagery can lead to either narrative transportation or immersion. As routes to persuasion, transportation and immersion work by intensifying brand experience rather than boosting brand evaluation.

When You Expect Rapid Feedback, the Fire to Perform Gets Hotter – via Neuronarrative -Let’s say that you’re preparing for an extremely important test that you and roughly 100 other classmates will be taking in a week. A few days before the test, you find out that your instructor will be going on a trip not long after the test is over and will be providing written and verbal feedback to the students within a day of the test.

Boredom is a Killer – via h+ – Please, readers! If you experience disinterest, apathy, ennui, malaise, dysthymia, lassitude, or neurasthenia as you peruse this essay… click away to safety! If you sense your cognition tumbling towards a fetid swamp of brain-paralyzing boredom — abandon me! I don’t want your death on my conscience.

Science Education and Literacy in the US – via Neurologica – he National Science Board, which oversees the National Science Foundation, is tasked with assessing periodically scientific literacy in the US, which manifests as their biennial Science and Engineering Indicators. In the 2010 edition the NSB made the odd and controversial decision to omit the data regarding belief by Americans in evolution and the Big Bang. Hiding data is never a good idea. Science thrives on transparency – better to publish the data with an explanation than just sweep it under the rug. As usually happens, the data is now going to get far more attention than it otherwise would have.

Magnetic manipulation of the sense of morality – via Science Blogs – When making moral judgements, we rely on our ability to make inferences about the beliefs and intentions of others. With this so-called “theory of mind”, we can meaningfully interpret their behaviour, and decide whether it is right or wrong. The legal system also places great emphasis on one’s intentions: a “guilty act” only produces criminal liability when it is proven to have been performed in combination with a “guilty mind”, and this, too, depends on the ability to make reasoned moral judgements.

How would your life change if you suddenly got handed a lot of money?
– via Bakadesuyo – Looking at inherited wealth and lottery winnings: Your health wouldn’t change much, your mental health/quality-of-life would probably improve, you’d definitely drink a lot more and maybe smoke more:

Full Disclosure: Most Risks Hide in Plain Sight via Jazon Zweig – Without full and proper disclosure, investors can’t make an informed decision. Even with full and proper disclosure, however, many investors still can’t make an informed decision.

How to quickly and easily improve your marriage:via Bakadesuyo- . However, if partners experience excitement from other sources (such as novel and challenging activities) in a shared context, this shared experience can reignite relationship passion by associating the excitement with the relationship.

Can we say whether a drug would have enabled someone to live longer? Sadly not. – via Understanding Uncertainty – In the first televised election debate last Thursday, David Cameron stated that “I have a man in my constituency … who had kidney cancer who came to see me with seven others. Tragically, two of them have died because they couldn’t get the drug Sutent that they wanted..”. How reasonable was it to claim that two would not have died had they had access to Sutent? Some statistical analysis can give us an insight.


Cognitive training doesn’t work (much, if at all) – Via Citation Needed -There’s a beautiful paper in Nature this week by Adrian Owen and colleagues that provides what’s probably as close to definitive evidence as you can get in any single study that “brain training” programs don’t work. Or at least, to the extent that they do work, the effects are so weak they’re probably not worth caring about.

Why Take Risk? – via Falken Blog – Risk taking, I argue, is uncompensated on average. There is no simple form of risk taking such that, if you can tie yourself to some intellectual mast and bear this psychic pain you should expect a higher return. There is a mistaken syllogism at the bottom of portfolio theory, as just because you have to take risk to get rich, or if you take risk you might get rich, this does not mean if you take risk you will become richer on average.

How to Win at Monopoly – via Book of Odds – Here is a quick, sportsmanlike guide to killing your opponents in Monopoly. Many thanks are due to Phil Orbanes for permitting Book of Odds to develop probabilities based on his definitive guide, The Monopoly Companion, a vade mecum for players of all levels. The following tactics are derived from the Master himself. His book contains many more strategies.

The ironic power of stereotype – via APS – Steele ends Whistling Vivaldi with prescriptions for countering the effects of stereotype threat—creating self-affirming narratives, for example, and mind-sets that emphasize growth and change rather than fixed abilities. These are proven strategies for creating “identity safety,” but they need to begin early in children’s lives. Ignoring the perils of stereotypes is just another way of whistling in the dark.

Bartlett on Shallow Think Tanks—and How the Press Jumps in Them – via CJR – Think tanks are in Washington’s DNA. But despite their outsized role in our politics and policy debates, the press rarely gives the institutions themselves the scrutiny they deserve. That’s why it’s good to see Bruce Bartlett lift the curtain a bit, with a Forbes piece that declares, “The End Of The Think Tank.”

Exclusive Picks + Financial Topics

Chanos on Municipal Bonds & What to Short Now Via Fox – Kynikos Associates President James Chanos weighs in on the future of municipal debt and why you shouldn’t invest in long-term treasuries

How hedge fund manager Steve Cohen averaged 30% returns for 18 years
via Washington Post – Although Cohen attends more golf and other outings than he once did, most days the balding, blue-eyed, stocky investment manager does what he knows best: He trades. He has a perch in the middle of the Stamford floor, and his bets account for about 10 percent of profits

George Soros: America must face up to the dangers of derivatives – via Soros.com – The US Security and Exchange Commission’s civil suit against Goldman Sachs will be vigorously contested by the defendant. It is interesting to speculate which side will win; but we will not know the result for months. Irrespective of the eventual outcome, however, the case has far-reaching implications for the financial reform legislation Congress is considering.

The Power of Porn – via Big Think – Do you frequent porn sites? If you do, you’ll be pleased to know that you are a customer of one of the most tech-savvy industries in the world. It’s a well-known secret that porn is the Apple of adult content, always thinking of innovative ways to provide the most intimate and real-time pleasurable experience possible.

Contagion through interbank markets via Voxeu – How important are financial linkages in transmitting shocks across the financial system? This column examines evidence from India and finds that if a bank has a high level of exposure to another failing bank, the probability that there will be a run on the bank increases by 34 percentage points. This effect is even stronger when the financial system is weak.

Rating Agency Data Aided Wall Street in Deals
– via NYT – One of the mysteries of the financial crisis is how mortgage investments that turned out to be so bad earned credit ratings that made them look so good.

More Proof the Bubble is Back via Naked Capitalism – A correspondent e-mailed me about his belief that credit market valuations are more than a big dubious. For instance, subordinated tranches of commercial real estate bonds, which at the lows of last year were trading at 30 cents on the dollar are now at 90 cents. He thinks (and this is a space he knows) that a lot of it will go to 5 cents on the dollar.

The Hollywood Economist: The Hidden Financial Reality Behind the Movies. – via Abnormal Returns – ALTHOUGH he appears not to like many of the films that Hollywood churns out, Edward Epstein admires the cunning of its inhabitants. “The Hollywood Economist” is full of tales of resourceful wheeler-dealers who are adept at exploiting tax breaks and fleecing outside investors. Lawyers and agents scheme to ensure that their stars take a cut of a film’s proceeds before anybody else gets to the pie. Actors and journalists scratch one another’s backs: the former lend their star power to magazines, the latter provide free publicity for films.

Mayhem with M&A – via PsyFi Blog – Most company acquisitions generate significant benefits. Unfortunately these accrue almost exclusively to the shareholders of the companies being bought, rather than the owners of the acquiring corporation. Time and again major mergers and acquisitions fail to work yet this doesn’t seem to stop the cycle of value destruction. Yet again, something in the corporate world seems to be a bit broken.

Pesos, Ponzi, And Financial Sector Profits via Paul Krugman – There’s been an interesting exchange over my suggestion — which is by no means original — that the stability of banks between 1935 and 1980 or so had a lot to do with lack of competition, which gave banks a franchise value that executives didn’t want to endanger with risky strategies.

Back from the Dead: The CLO Revival – via Distressed Debt Investing – Last week it was reported that Symphony Asset Management is launching a $500M CLO. To give you some historical context of CLO issuance, please see the chart below from an 2009 LSTA conference:

Meyer on the Music Industry and the Internet – via Steve Meyer, music industry veteran and publisher of the Disc and Dat Newsletter, talks with EconTalk host Russ Roberts about the evolution of the music industry and the impact of the digital revolution. After discussing his background and experience in marketing at Capitol Records and elsewhere, Meyer argues for the virtues and potential of the internet in enhancing the music industry. He points out that the internet allows numerous artists to make money through their music and particularly enhances revenue from live performances. He describes the challenges facing record companies as a failure of imagination and suggests that the full potential of the internet as a distribution channel has yet to be fully exploited.

Academic Research

Go Down Fighting: Short Sellers vs Firms – via My Investing Notebook -I study battles between short sellers and firms. Firms use a variety of methods to impede short selling, including legal threats, investigations, lawsuits, and various technical actions intended to create a short squeeze. These actions create short sale constraints. Consistent with the hypothesis that short sale constraints allow stocks to be overpriced, firms taking anti-shorting actions have in the subsequent year very low abnormal returns of about -2 percent per month.

New Paper on Low Risk Investing
via Falkenblog – This was pointed to me by Pim van Vliet, a quantitative researcher at Robeco. He has a nice presentation on Robeco’s low risk portfolios here, and an SSRN paper on low-risk equity portfolios here.

The impact of the financial crisis on poverty and income distribution: Insights from simulations in selected countries – via Voxeu- A shortage of real-time data hinders evaluations of the impact of the global crisis on developing countries. This column uses a “microsimulation” approach to assess the poverty and distributional effects in Bangladesh, Mexico, and the Philippines. It finds that poverty will increase by well over a million, and that the crisis has been hardest for middle-income households.

Other Great Reads

How Ron Conway became the valley’s most influential start-up investor
– via Sillicon Valley – While venture capitalists are usually judged by the money they’ve made and the IPOs they’ve launched, the best way to measure the unrivaled influence of Ron Conway is by the people he knows. More than a thousand of tech’s elite squeezed into the Herbst Theatre in San Francisco earlier this year for the Crunchies, the startup industry’s version of the Oscars. Conway was on stage to receive an award when the moderator, TechCrunch CEO Heather Harde, stopped the proceedings with an unusual request

HP Designjet 3D Printer Now On Sale, Churns Out Solid Plastic Objects From the Desktop – via PopSci – The Designjet 3D is based on Stratasys’s Fused Deposition Modeling (FDM) technology, which turns three-dimensional CAD drawings into tangible prototypes by extruding partially molten ABS plastic in extremely fine layers one atop the other, forming the entire 3-D model in a single piece from the ground up. Designjet 3D will print in ivory-colored plastic only while Designjet Color 3D will print single-color parts in up to eight different colors (we’re not sure why you can’t just put a different hue of ABS plastic in the Designjet 3D).

Night Clubs Really Are Mating Grounds – Via Herd – “Data revealed that more than 80% of people entering the nightclub did so without a partner and so were potentially sexually available. There was also an approx. 50% increase in the number of couples leaving the nightclub as compared to those entering it seen on each occasion this was measured, indicating that these congregations are for sexual purposes.”

When Familiarity Breeds Connections – via Columbia – For young biotech firms seeking prestigious industry alliances, who their top management team knows may be as important as what they know.

Clothes Do Make the Person – via nyt- -It is precisely because fashion is transient that it cannot be dismissed as trivial, says a writer calling for a high-minded appreciation of dress. After all, people are impermanent too.

The future of books – via Steve Hsu- To get a better feel for the digital future of books, play with an iPad for a few hours. The experience is so pleasing, the app response times so quick, that you’ll begin to imagine just how rich and integrated (text, sound, video) the consumption of media is likely to become. This isn’t something you’ll get from using a Kindle.

Guess the number – a game theory puzzle – via Mind Your Decisions – I came across a highly amusing puzzle in Impossible?: Surprising Solutions to Counterintuitive Conundrums. What distinguishes this brain teaser from other “guess my number” puzzles is the method of solution. The answer is not an arithmetic trick or a mathematical sleight of hand like in your age by restaurant math.

About Miguel Barbosa

I run this site.

25. April 2004 by Miguel Barbosa
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