Where the jobs went – continued
Interesting article in the New York Times yesterday providing additional examples of many of the scenarios I described in my article on how the loss of jobs is rapidly progressing from a cyclical issue to a structural one.
Playing not to lose
Every now and again I meet someone in a professional setting who is terrified of the internet. Now these are mostly highly technical individuals who use the internet for news, entertainment, etc. Most are even capable of building their own computers from scratch. However, the fear is around what the internet could do to their career.
Everyone has heard (or more likely seen online) a story about some 20-something not getting a job or being fired from a job due to things they found out about their past on google/facebook/twitter. There are two ways to handle this possibility, one is to play not to lose and try your best to keep the internet clear of any mention of you. The second is to go on offense and make sure that when someone does search for you, they find your online presence.
What the media never covers is how many people have gotten jobs because of their internet presence. How valuable is it when a potential employer googles a developer candidate and sees a link to their blog chock full of valuable programming techniques? Or their numerous contribution to open source projects?
Put yourself in the employers shoes, you receive two java developer resumes of equal quality and immediately look for them on google/facebook/twitter. Candidate one has almost no presence at all. Candidate two has numerous hits related to previous java programming work and blog posts containing thoughts on trying to develop an iPhone App. A further search on facebook also shows him doing keg stands with numerous young co-eds at a frat party two summers ago.
Which would you hire?
Wither the “Flash Crash”
Now that the markets have closed near the lows of the “flash crash” day, thought it would be a good time to revisit my theory on the real “reason” behind the crash.
Don’t talk to Aliens
Interesting thoughts by Stephen Hawking on what would happen if we did make contact with aliens -
“If aliens ever visit us, I think the outcome would be much as when Christopher Columbus first landed in America, which didn’t turn out very well for the Native Americans.”
What the NFL gets right
The NFL understands that despite what fans say on talk radio about a season’s purpose being to determine the “best” team, that what actually keeps fan watching is the large role that randomness plays in the NFL versus other professional sports. By having the entire playoffs be sudden death, it virtually guarantees there will be scenarios where the “better” team loses. Contrast this with MLB where seemingly every season the winner of the AL Central will get lucky and take game 1 of a series against the Yankees/Red Sox only to be eventually overwhelmed by the superior talent of the favorite. This scenario does not exist in the NFL and for good reason. Would anyone remember the Giant’s David Tyree’s amazing catch against the Patriots in the Super Bowl if they’d been playing best of 5 or 7? Does anyone think the Giants could have defeated that Patriot’s team in a best of 7? Whenever you watch an NBA or MLB game 7, the announcers always talk about the magic of a game 7 due to it’s finality and how every play’s impact is magnified, with the NFL, every playoff game is a game 7.
Greed is Good – Why Punitive Taxes don’t Work
New column of mine on HuffingtonPost – Greed is Good – Why Punitive Taxes don’t Work
Fallacies of “no cost is too high” model for fighting terrorism
Love this blurb by Nate Silver on how our over reaction to these botched terrorist attempts increase their value to those who commit them -
no cost is too high, they say, to prevent the next 9/11. But if history is any guide, the next attack will probably not be like 9/11—it will be like NWA 253, something which threatens the lives of dozens or hundreds of people, not thousands. To the extent we overreact to these incidents—allowing them to disrupt our economy and our way of life—we do little but increase the value to terrorists of committing them.
Book Review – The Ivy Portfolio
Read Mebane Faber‘s The Ivy Portfolio yesterday and found it to be very well written. For a book dealing with asset allocation and some statistics, it is a very easy read and avoids ever droning on like a college textbook. The premise of the book is twofold . First is that the majority of the incredible outperformance of the “super-endowments” (Harvard and Yale are the two examples in the book) over the past 23 years (over 15% / year compounded) is due more to their asset allocation than outperformance in any specific asset (though they have achieved this as well). The second is that individual investors would be well served to follow a similar asset allocation model and can enhance their performance using a simple market timing method outlined in Faber’s 2007 paper.
I found the approach to be well thought out and refreshing. Faber makes a very strong case for the significant inclusion of foreign equities (already common on most allocation models but in smaller percentages) as well as REITs (less common) and commodities (rare). The most illustrative chart on including all 5 of the suggested asset classes (US equities, foreign equities, bonds, commodities and reits) is on page 137 which along with the accompanying table shows how surprisingly close the total returns for each of those classes have been over the previous 25 years.
The second premise and the one that has gotten more attention on the web via Faber’s blog is the timing portion where an investor moves to cash when the price of the asset class crosses below its 10 month moving average and buys back in when it crosses above. Based on the data provided in the book and updated on the accompanying website, this method provides a safeguard against scenarios like 2008 where the correlation of the major asset classes went to 1 as the entire global financial markets melted down. This meltdown resulted in losses to the Harvard and Yale endowments of 25-40% while Faber’s timing model had a positive return of ~1%. Impressive performance for model that was public as of 2007 and can be duplicated for a fraction of the cost of the average mutual fund.
This book should be read by anyone who still believes the common axiom that the key to asset allocation is adjusting the % of stocks versus bonds based on your age.
