Monday, December 11, 2017

Fear Of Math

Actually, Peggy Sue's life would have turned out better if she understood Algebra.  Maybe she wouldn't have ended up marrying that loser, Nicolas Cage.

Fear of math is rampant in the United States. The film clip above represents this typical fear - that an unexpected math test is coming, and it will be "hard" and that math is "hard" and not only that, useless in "real life" whatever that means.

But of course, the opposite is true.  Whether it is balancing a checkbook, understanding an investment, figuring out whether a political poll makes sense, understanding a politician's promises about taxes, financing a car or a house, taking out a student loan - just about anything involving serious issues in your life - revolves around mathematics.

Now, I'm not saying you need to study Calculus and Differential Equations or take Number Theory, but you should have a working understanding of basic mathematics, and by that, I don't mean memorizing the multiplication tables or doing your sums.

And sadly, I think the fear of math comes from poor math teachers.  In the 4th grade, we had a horrible teacher who taught us to memorize the multiplication tables.  That was pretty much the whole course.   The stupidest kids in the class could memorize the tables, but of course, they had little idea of what the answers actually meant.  It was all emphasis on rote learning and nothing on comprehension - an emphasis that the far-right thinks we should return to.   Citizens who comprehend are dangerous, whereas people who learn by rote can be easily manipulated.

As I noted before, in the first grade at Everett Elementary School in Lake Forest, Illinois, we were taught set theory and Boolean Algebra as part of this "new math" curricula, which was very controversial.   Twenty years later, a very frustrated Algerian teaching assistant tried to teach us these "high level" concepts as part of a course on microprocessor design.   He took us to task for being bored by it, and when we explained to him this was elementary school stuff here in the States, he flatly refused to believe us.

Anyway, my 4th grade teacher nearly held me back a year, as I could not memorize the multiplication tables.   Maybe I am Autistic, but 7 x 9 always stumps me.   This did not prevent me from taking three semesters of Calculus, Differential Equations, and Number Theory in college and scoring fairly well.  Of course, those courses teach (for the most part) comprehension not merely rote learning.  You can't fake your way through higher math by memorizing equations.

I think this failure in our educational system instills a fear of math in many people - a fear they carry with them their whole life.   As a result, their minds shut down whenever numbers are presented to them, and oftentimes, they cannot see through raw deals or understand things on a meta scale.

For example, on more than one occasion, I have had a conversation with Mark about the price of something.  He is a class mathphobe, having been punished psychologically in many math classes in High School in College where getting the "right answer" was harped upon, but understanding mathematics was really not taught.

The conversation would go something like this:

ME:  So how much was the price of the item? 
MARK:  I don't know, I would have to look it up! 
ME:  More than a dollar and less than a million? 
MARK:  Well, of course it was! 
ME:  Well, compared to infinity, we've narrowed it down quite a bit!

Of course, he doesn't appreciate my sense of humor.  But I would continue to present similar outliers - $10 to $100,000 and so on, until he would zero in on a price of about $40 (or whatever) which would be within a few dollars of the actual price.   Frozen by fear of math, he didn't want to say "it was about forty bucks" because his math teacher beat into his head that there was only right answers, down to ten decimal places and anything else is wrong, wrong, wrong!

And this has a crippling effect, as you cannot figure things out in your head if you are convinced that every number has an exact value and what's more that exact value is actually important.   A professor in semiconductor design neatly proved this point to us in a final exam that had us solve one problem to determine the depletion region of a semiconductor transistor.   The equation involved was monstrous - having over a dozen difficult components.   Those of us who cranked through the equation to the bitter end would (if they were lucky) finish it just in the nick of time before the exam ended and likely get a "B" as they would inevitably make a math error.  Those who didn't finish got a "C".

Those who saw the forest through the trees realized that the first four components of the equation were the most important, and the answer could be calculated in fifteen minutes if you dropped off the remainder of the equation.  They got an "A".   I got a "B" and a valuable lesson I should have already known as an instrumentation technician, that calculating things out to umpteen decimal places is an exercise in self-deception.  Just because an instrument reads out to ten decimal places in a digital display doesn't mean it is accurate to that amount!

In a later math course in Junior High, we had a better teacher, and he did a segment on rounding and estimating.   The idea was to get kids comfortable with coming up with rough answers to problems where exact numbers didn't matter.   For example, Joe want to spread fertilizer on his lawn.  Each bag covers 10,000 square feet.  His lawn is 515 feet by 198 feet.   How many bags does he need?

If you estimate, and say his lawn is 500 x 200 feet (or 10,000 feet) he needs 10 bags to get the job done.   The wrong answer would be 10.197 bags, as they don't sell 0.197 bags of fertilizer and spreading fertilizer is not an exact science.   Another good answer would be to say 11 bags, rounding up so there was a little left over.   But cranking out an exact number, in this case, was not necessary.  Rounding and estimating are better and faster tools than a calculator.

Most of the kids in class freaked out when handed this assignment.   There was no right answer down to ten decimal places.  There was no formula to memorize, or table to commit to.   You had to have a feel for numbers and how they worked.   Like I said, most kids freaked at this assignment, but I enjoyed it and did well.   And another kid in class, who was not a real math genius (in terms of getting "right" answers) also shined with it.  He later turned out to be a general contractor, where I presume estimating worked out very well for him.

And I have a friend like that, who was a contractor and later an HVAC Engineer, who never went to college and memorized equations.  But he could look at a building or a set of plans and tell you, without spending a lot of time with a pencil or calculator, how many 2 x 4's you'd need to build it and how many panels of oriented strand board - and maybe have one or two boards left over when you were done.   And I know this, because he planned and built our studio, and when it was all said and done, there were three studs and half a panel left over.

Having a feel for numbers is far more important than treating math as something "hard" that needs to be memorized in order to use it.   Once you understand mathematics at a gut level, memorizing 7 x 9 is really irrelevant in the greater scheme of things - provided you understand the answer is greater than 10 and less than 100.   You need exact numbers?  That's what calculators are for.

Sadly, few people seem to have this "gut feel" for numbers, but most have an inordinate fear of math.   They don't read the "fine print" on a contract because the math scares them.   They buy a car or a house or whatever, and all they want to know is the monthly payment.   So long as that number is less than their paycheck, they think they got a good deal.   But of course, shitty deals can be wrapped up in attractive monthly payments - which is how car salesmen sell cars.

It also explains why everything in your life is priced at $1.99 or $5.99 or $59,999.99 or whatever - because people don't bother to think that these numbers actually mean $2, $6, or $60,0000.    When it comes to rounding off numbers, it seems most of us only know how to round down.

I am not sure where to go with this, other than this idea that "you don't need math in real life" needs to be shouted down roundly.   You do need it.  And you need art class, and music, and English, and Physics, and Chemistry, and History, and all the rest of it - yes, even Gym.   Because ignorant people can be easily lead astray.

You can tell a mathphobe, because he is the one who believes that abolishing the "death tax" means he can leave his double-wide to his kids, tax-free.   And he also doesn't know what "marginal rate" means, but believes that cutting taxes of the very rich will somehow affect him.   People who are ignorant about numbers are always at the mercy of those who aren't.

And maybe that is why there is such hatred today toward Bankers, the "1%", Wall Street, Lawyers and whatnot - much of it couched in terms of anti-antisemitism as well.  Yes, bankers understand math better than the average person - which is why they come out ahead in financial deals and so many others do not.

Do the math - it is a mantra I have repeated many times in this blog.   And it is hard for me to "feel sorry" for "victims" of poor math comprehension - college students who borrow a hundred grand to go to school and then later find out they can never pay it back (or so they think).   Smart enough to be accepted at a prestigious college, not smart enough to understand compound interest, job market futures, or even the simple concept that borrowed money has to be paid back.

Do that math - it is your friend, and sometimes your only friend in a cold, dark, and cruel world.

Should We Make The World Safe For Heroin?

Should we make the world safe for heroin? Maybe not.

Lately, the press has been enamored of the tear-jerking heroin overdose story.  Not a day goes by when the Wall Street Journal, the New York Times, or the Washington Post has some tragic story about a young man or woman who overdoses on heroin, oxycontin, or fentanyl.

There are often weeping interviews with surviving family members describing the tragedy of the overdose and how this was also so unavoidable.  Or, perhaps they argue it was avoidable if only the State or County governments with equipped all their ambulances with Narcan, an opiate antidote, so they could rush to the scene of the latest heroin party and resuscitate the over-imbibers.  At taxpayer's expense, of course.   Why stop the party?

While these deaths are certainly a tragedy - cutting short the lives of many young people on indeed many middle-aged it even older people - they are not entirely unpredictable events.  When I was a youth, we had drug education classes in junior high school.  It was explained to us the relative dangers of each type of drug that was available.   The drug epidemic was raging in the 1970s - at least one third of my high school class was regularly smoking pot and more than two-thirds had at least tried it.

The hippie generation was then morphing into the Yuppie generation and many were getting into cocaine.  In the late 1970s and early 1980s, they started cooking down cocaine into rocks which was called "rock" which was eventually the abbreviated term crack.

But we all knew the dangers of these drugs. The drug education classes I took were back in 1973. And back then we were told that heroin was deadly as was methamphetamine and cocaine.  These were serious hard drugs that could kill you.  Marijuana, the other hand, we were told wouldn't kill us, but might sap the will to live from us.  And of course alcohol could destroy your body and your mind and possibly your marriage and career.  Needless to say, drunk driving deaths were epidemic then as they are today.

The point is, we've known about this stuff for decades now.  Perhaps more than a century.  One-hundred years ago, opiates were legal in this country and available over the counter in the form of laudanum.  But even back then, people knew that taking laudanum could result in opiate addiction. And that was one reason why opiates were made illegal other than as prescription drugs.

A new generation has grown up apparently ignoring all of this sage advice.  And part of the problem is the pharmaceutical industry has been promoting opiate painkillers as a panacea (pardon the pun) for various ailments. You got injured on the job or during an athletic competition, and the doctor writes you a prescription for Oxycontin.  Months later you're trying to score heroin behind The Rite Aid.

Perhaps we no longer have drug education classes in this country. Or perhaps the push by the pharmaceutical companies to normalize opiate prescriptions has made opiates seem safer than they actually are. But the plethora of newspaper articles heralding the deaths of yet another opiate addict would seem to negate both of these explanations.  There really is no excuse for anyone today not to know that taking opiates can be deadly.

These articles in the Press, however somewhat disturbing.  I'm not sure what the point of the articles are. They want us to feel sorry for those people who are basically drug addicts. One young man is described as being a harmless fellow, age 23 weighing 330 pounds at 6 foot 4 (which is severely overweight) and drinking beer and occasionally smoking pot. His parents didn't know he was also and opiates - although they certainly were aware of his marijuana use.  He was living at home.

Unfortunately this is a predictable outcome of keeping adult children at home as pets.  Many people allow their children to live at home well into their twenties and even thirties thinking that it is harmless or perhaps even helping them due to the high cost of rent or the difficulty in finding good paying jobs these days.

However, I have noted before, when you allow people (a young man in particular) to live in your basement, they will spend their time and energies on video games and drug use, rather than trying to better themselves, their lives, or career.  And I know this because I spend a lot of time when I was young man with others who were living in their parents' basements.  We would sit around and smoke pot and talk about how all the women were bitches and their ex-girlfriends were "ho's".  The topic of discussion was not which drugs were good or bad but where to find them and how to score them and how much to take of them.  It was a dead-end lifestyle and I was happy to be rid of it.

But at that time, I had a job and a career and the home of my own.   I had to survive on my own and advance myself, as my parents made it very clear that they were not willing to let me live in their house as a perpetual 20-something slacker.  Forced to sink or swim, I swam.  Others were coddled and not surprisingly, never left the wading pool.

What I find disturbing about these newspaper articles, is it appears that many of them advocate that we should make heroin use safe for heroin users.   Many argue that there should be "safe spaces" to shoot up so that heroin users can get high without being hassled.  Others argue that States and Counties should spend tens of thousands if not hundreds of thousands of dollars stocking all of the ambulances and fire equipment with Narcan all so they can respond to overdose calls and revive drug addicts - running up huge bills which are course never paid.

While this may seem like a humanitarian gesture, I'm not sure it is the right answer.  We need to get people off drugs, not make drug abuse more attractive.  Once we normalize drug addiction, more people will start to think of it as normal behavior.  Why bother giving up heroin when the government is saying it's perfectly fine to do?

Some people point to Holland's experiment with Heroin users as an example of how this safe space approach might work.  They argue that heroin use in Holland is actually down as the number of heroin users attend methadone clinics or able to take heroin in safe environments.  Younger people, seeing that heroin use leads nowhere, don't take it up.  Or at least that is the story we are told.

Regardless of whether you believe the Dutch experiment is working or not, the reality of life in the United States is that Americans are not going to endorse such an approach.  Despite the fact this is 2017, we have Senate candidates discussing the merits of slavery.   America is not about to go all Euro anytime soon.   Look around you at the political landscape today - is anyone going to vote for safe spaces for drug users?  No, of course not.

Sadly, I think this is another nail in the coffin of the Democratic platform.  Many on the left are pushing for things such as this, which do not resonate with the vast majority of Americans. When the left is seen as the party of welfare recipients and drug abusers, most Americans will vote for the right, even if it means electing odious politicians.

And that in a, nutshell, is how we ended up with Donald Trump.  Thanks, Bernie!  Thanks for nothing.

Sunday, December 10, 2017

Why Harley-Davidson Has A Problem

Can Harley-Davidson appeal to the next generation of motorcycle riders?

A lot has been written recently about the declining sales of Harley Davidson.  Last year we went to Milwaukee to visit their Museum and I found it very fascinating.  The only motorcycle that appealed to me personally was an antique museum-piece Flathead from the early 1930s - like the one shown above, but in better shape, of course.  It had that great old-timey motorcycle look, and was really not a very large motorcycle.  But then again I used to own a Russian-made replica of a 1939 BMW motorcycle - complete with sidecar. So I kind of like these old-timey things.

The Ural wasn't very fast, powerful, or intimidating, (or expensive) but it was a whole lot of fun - something I think Harley lost along the way.  Ever seen a Harley rider smiling?

At the end of the tour they had a lineup of the current models of motorcycles, and none of them really appealed to me too much.  IThe only current or recent vintage Harley-Davidson that would really spark my interest would be a used Police Special.  I've seen these for sale at government auctions, and although they are battered and scratched, they have that very industrial and purposeful look to them that is lacking from some of their other more modern bikes.  It seems the entire Harley lineup has bit hit with an ugly stick - twice.  Their low-cost lineup looks cheap-looking, as if to punish the buyers.  The rest of the lineup seems to favor "tough" looks.  They are not pretty bikes.  Someone needs to tell them it's OK to make an attractive product.  Not everyone wants to be an outlaw.

An old used Police Special, replete with faded decal outlines, scuffs on the pipes and holes where the radios and lights went, that's more my style.

In the product lineup at the museum, they had a number of trikes on display, and two very, very, overweight men we're looking at one of the trikes and contemplating purchasing one. The demographic for Harley-Davidson tends to trend older, and this does not bode well for the company.  Also, the image that the company has carefully nurtured - that of the outlaw biker - doesn't necessarily appeal to mainstream America.

If millennials don't see themselves riding this monstrosity, maybe there isn't something wrong with millennials, but rather the product being offered.

Regardless of whether the stereotype is accurate or not, when most people think of a Harley biker they think of some large heavy overweight middle-aged man who probably smells bad and wears a jacket with patches on it and a skull and crossbones on the back. He has a large mane of dirty hair covered with a bandanna, and enjoys annoying people with his loud straight pipes.

The stereotype of the Harley biker doesn't exactly sell bikes.  And when you posit that your product is not for the general public, well, you can't blame the general public for not buying it.

Maybe that is an inaccurate stereotype, but it does seem to reflect what a lot of people are aiming for when they buy a Harley. And increasingly it is a role model that more more people are not very comfortable with.  Not everyone embraces the culture of belligerence, although it sells a lot of monster trucks and Dodge Challengers.

Harley-Davidson cornered the market in large American-style motorcycles. They did this by being the last American motorcycle manufacturer standing when all others went out of business.  It also didn't hurt that they went to the International Trade Commission and got an exclusion order preventing Japanese motorcycle makers from selling bikes larger than 750cc without paying a huge import tariffs.  This left them with the large motorcycle market in the United States to themselves.

The other thing they had going for them was the image of the American Motorcycle.  Overseas, this tends to sell, as people in foreign countries, despite our often atrocious behavior, pine to emulate Americans in many respects. A sizable percentage of Harley-Davidsons sales are from exports, just as Airstream sells an awful lot of trailers in China and Japan these days. These American icons become expensive status symbols overseas.

And they are expensive status symbols here as well.  A basic Harley-Davidson can cost you more than a fairly decent new car these days.  So it is not surprising that many millennials are not forking over $10,000 or $20,000 for what is basically a fair-weather friend and part-time toy that could end up killing or maiming them.

But the problem with any monopoly is it that other people will try to hone-in on your deal.  And there is no secret sauce to making motorcycles.  The Indian company purchased the rights to the Indian name and started making Indian brand motorcycles. Polaris, another American company which had made snowmobiles and ATVs, got in the game with their own version of the American V-Twin as well.  Eventually Polaris and Indian merged and are turning out to be a formidable competitor for Harley-Davidson.

Indian has cut into Harley's sales, and much of the appeal is in their retro-styling.

Using the International Trade Commission to impose tariffs on products is really only a temporary measure as companies can simply move manufacturing to the United States, or indeed homegrown companies will move into that space.

And other motorcycle companies have sprung up to serve the needs of the next generation of customers. The Janus Motorcycle company, for example from Indiana is selling a line of 250cc single-cylinder bikes that appeal to the younger generation that want something smaller and simpler. They offer three models one an enduro, one a retro, one in a cafe racer format. These are smaller simpler and less expensive bikes that a 20-something might find more interesting than some big bloated hog.

Janus sells this retro 250cc bike which might appeal to a younger generation.

And while the people at Harley Davidson might dismiss the Janice folks as selling mere toys, like anything else they might morph to a larger bike down the road - just as Harley did originally.   250cc's can lead to 500cc's and then to 750 and then who knows what.  Again, there is no secret sauce to making motorcycles and there are no barriers to entry in this marketplace.

Hipsters are making and selling motorized bicycles, which have a very retro look that seems familiar...

Oh, right, that's where I've seen this look before - in the Harley-Davidson Museum.  The 1915 Harley Board Track Racer....

I'm not sure how Harley can pull out of this nosedive. I'm not sure the next generation wants to be bad-ass biker dudes like their parents and grandparents before them.  And I'm not sure they want to buy the previous generations idea of a Harley-Davidson - the Fat Bob's and Lowriders and Trikes. But if the success of Indian and Janice is any indication, as well as surprising success of Triumph, Ural, Royal-Enfield, and Indian brands illustrate, the retro look is very much alive and well in America, and people appreciate the old style of motorcycles.  Indeed, one of the largest growing segments today is folks restoring old Japanese bikes from the 50's and 60's.  Some young hipsters today are even making their own versions of the motorized bicycle, much as the original Harley Davidson was back in 1915.

The Royal-Enfield, once a British make, is now being built in India - and imported into America.  Again, note the old-school styling.

Maybe the inspiration for the next generation of Harley-Davidson is sitting right there in their Museum, if they bothered to look for it.  Just a thought.

Which Elevator Do You Ride?

Is it worth the ride to the top in an elevator whose cable is about to snap?

I had a dream the other night.   A reader had chastised me for saying that regular investment in a diversified portfolio that is re-balanced over time (as you age) is probably the best bet for working middle-class people to fund their retirement.  He argued that only wild risky investments were the way to "get rich" and he may be right about that.  Although according to statistics, my dull-and-boring technique has put me in the top 1% of wealth worldwide and top 5% in the USA.  And I'm pretty grateful for that.  I'm not one of these people who says, "I'll just work until I'm 70" - in fact, I am retired at 57.

But anyway, this must have been rattling around in my brain, as I had a dream about elevators.   Suppose you were trying to climb a tall building, one step at a time.  It is a tedious task, and you have to carry a load on your shoulders (all those loans you have) at the same time.   Day in, day out, one step up the stairway, and maybe after years of hard work, you end up on the second or third floor.  Doesn't sound like much of a good deal.

But suppose there was an elevator you could take?   It would take you up several floors without much work on your part.   This elevator represents the idea of investing money - putting money aside so that it works for you, elevating your net worth with no effort on your part.  Much better than slogging up the staircase.

But suppose there was also an express elevator, that promised to take you right to the top floor penthouse?   Express right to the top, step this way!   There is a catch, though.  The cable attaching this elevator car is frayed and weak.  It may snap at any minute.   You may make it to the top, or go shooting down to the basement, to be crushed in the wreckage.   Do you take that chance?

Maybe this is a flawed analogy, but again, it was a dream, and dreams are rarely logical.  But it struck me as apt.  My reader wants to "get rich quick" and take that express elevator to the penthouse.   And it may get him there, but odds are, it will likely land him in the basement.

Slogging up the staircase with a heavy backpack of loans to pay doesn't seem like much of a good deal, either.

P.S. - Yes, the analogy is flawed, particularly since elevators rarely come crashing to the ground, due ot the use of multiple cables, counterweights, braking systems, fail-safes, and the mechancial and air friction that slows them down naturally.

Many years ago, (according to company folklore) we did have a hydraulic elevator fail at GM, which injured several executives, when the car crashed into the basement and the shock absorbing springs that were supposed to cushion the blow instead poked through the floor of the car.  Seems the hydraulic cylinder - buried many stories beneath the ground, had started leaking, and the "maintenance man" just kept adding hydraulic fluid, never bothering to think where it was going.  The cylinder rotted out and the elevator fell - but again, not in a total free-fall, although several were injured.

You Can Lead A Horse To Water...

There is an old saying about leading a horse to water.  Don't bother - you'll just annoy the horse!

I write this blog for my own amusement and to clarify things in my own mind.   I am not in the business of giving advice, preaching, or "telling you what to do."  If you get something out of what I wrote, fine.  Even if it is just amusement.  If you don't like what I have to say, don't read it.  It seems like a pretty simple proposition, but it gets lost on many.

I get e-mails from some folks saying that not only am I wrong about everything, but I have no right to even say things in my blog!  This is the bizarre new world we live in, the post-truth era of alternative facts.   Shouting down contrary ideas is the new vogue.

I also get supportive e-mails, which is nice.   One reader writes that they tried to talk a sibling out of investing $5000 in some cockamamie startup company.  The sibling made only $35,000 a year, so five grand was a lot of money to them.  And invested over 30 years would come to about $40,000 in retirement. Not a lot, but a lot  more than $5000 and a lot more than zero.

But the sibling would have none of it, and I could have told him to save his breath.  You can't "fix" people as I have found out the hard way.  You can't save people from themselves and if your friend is driving their car off a cliff, the best thing you can do is make sure you are not in the back seat.

Sure, that may sound "selfish" but as I have explained time and time again in this blog, the greatest thing you can do for humanity is not to go out and save the world, but save yourself.   If there is one less person in the world who is wandering around clueless in life, then you've done humanity a favor.  Fund your own life and retirement.  Make sure your oxygen mask is secure before you go and try to help others.   Maybe when you die, you can leave something to charity.  But if you squander your life energy on "saving the world" and end up broke, not only are you not helping others, you are now an additional burden to that world.

If you look at this from a decision matrix point-of-view, there are four possible outcomes if you try to dissuade a friend from buying some idiotic investment.   You could be right about it, you could be wrong, they could take your advice or not.

If they take your advice and you were wrong, and the investment takes off like a rocket, then you are really in trouble.  Not only did you annoy them about their life choices, you were wrong about it.  This is why I don't give advice - I have a hard enough time keeping myself together.    Well, that and when you give advice, people take half of it, mis-apply it, and then it all goes wrong and they blame you.  But getting back to our matrix, this first outcome isn't likely (idiotic investments rarely pay off) but you can see the outcome isn't good for you.  So why risk it?

The second outcome is that they don't take your advice and the investment takes off.  Again, not likely, but they will tell you what an idiot you were and you end up looking like a foolish old fuddy-duddy, so why bother?  Better off to keep silent.

The third outcome - and the most likely - is that they invest the money (ignoring your advice) and it fails miserably (as most of these startup deals do, even the "legit" ones).   Now they are mad at themselves for losing all that money and mad at you, too, as you are the smug bastard who said, "I told you so!"   Again, best to not have said anything at all, other than, "Oh, what a great opportunity, good luck with that!"

There is a variation on the third outcome - it all goes horribly wrong and then they blame you for not warning them.   Yes, it sounds crazy, but this has happened to me with an inventor.  After I explained carefully to them why the invention broker they were talking to was trying to rip them off, they went ahead and gave them $10,000.  A year later, they call me and berate me for not warning them about what a ripoff these people were - when I explicitly told them it was a ripoff.   Human nature is a nasty thing, and no one wants to blame themselves for their problems - they want to externalize them.  So in their mind, it was you who said it was a good deal, not a rotten one.   Best to keep silent!

The fourth variation is less likely - they take your advice and don't invest in the rip-off scam or whatever, and your advice was correct.   Don't expect any thanks.   In fact, they will still be pissed at you for pointing out their foolishness.   Also, this is a very unlikely outcome.  Most of these raging true believers invest in spite of your warnings, so again, why bother?''

As you can see, there is little personal gain in "leading a horse to water" and a lot of downside.  You will lose a friend, or there will be angry words exchanged at the Thanksgiving dinner table.

It's not a pyramid scheme!

So when a friend or relative wants to do something stupid, well,  you might calmly point out the risks involved, but don't get into an emotional debate with them, as it simply isn't worth it.   And for God's sake, never loan them money.  In fact, distancing yourself from unreliable or unrealistic people is probably a good idea, because odds are, they will start asking you for money down the road, and you might as well cut to the chase.

The problem with long-shot investments is that the laws of probability are weighed heavily against you.   It is what I call Quantum Investing.   Sure, there are one or two people who win millions at a Casino.  But there are thousands who win nothing or lose horrendous sums of money.   Sure, you might be able to ride a motorcycle without a helmet and not get hurt.  But those who do get hurt (which is every motorcyclist, if they ride long enough) can be horrifically injured or killed.   Is it worth the risk?

The plebes of the world - you and I - are not likely to strike it rich.   But we can comfortably strike it middle-class comfortable without too much effort.   Risking large sums of money on improbable outcomes is just a risk we can't afford to take, when we have so little and are trying to get by on salaries.

Yes, the big-time players in the world can afford to throw millions at some sort of startup.   They can afford to take the risk.  They also know they can hype that startup and later on sell shares in an IPO to the "little people" like you and me.   We give them a few hundred or a few thousand each, and they take in millions.   This is how the 1% got to be the 1%.  They didn't steal our money from us, we begged them to take it from us.

And it goes on even today - in fact, right now.  People are lined up to buy Bitcoins, making a thousand people who own the bulk of these "coins" very rich, while impoverishing themselves.   And so long as human nature is as ugly as it is, the racetrack, the casino, the con artist, the IPO, and the roulette stock market will continue to fleece the plebes.

But that is their choice in the matter, not a mandate.   And sadly, no amount of talk will convince them otherwise.  In fact, as I noted above, they will shout you down and say "how dare you!" for disagreeing with their world view!

Keep your own counsel and look out for yourself.  It sounds selfish, but it the best thing you can do for yourself and society at large.

Saturday, December 9, 2017

The Bitcoin Debacle

When Bitcoin crashes, it will crash hard.  Wait for it.

Some interesting news about Bitcoin.   One article notes that about 40% of all "coins" are owned by less than 1,000 people.   Yes, you read that right - a small cadre of people own a huge chunk of this, and if they decide to sell all at once... well, the price could plummet.

Second, the trading of Bitcoin futures is about to begin.  So you could go long or short on Bitcoins and cash in if the price goes up or down.  Say, for example, you were one of those 1,000 people who has a lot of Bitcoins.  You could "short" Bitcoin and then dump your coins on the market to depress the prices and then clean up on your short.   You then buy back your bitcoins at the new lower price (likely lower than what you sold them for) and wait for the price to ratchet back up.

Third, Joe Paycheck is getting into Bitcoins.  They now have Bitcoin ATMs where any idiot can walk right up and buy them - and they are.  The search term "Buy Bitcoin with Credit Card" is rising on the search engines - a sure sign the suckers are getting in, and that everyone else should get out.

I had a friend do that back during the "dot com" craze - he bought tech stock futures and put them on a credit card.  Not only was he out the $10,000 he put on his credit card, since these were leveraged derivative trades, he was out $100,000.  He ended up bankrupt.   When ordinary Joes and Joesphines get into a hyped trading environment, the end is nigh.

And of course, the underlying problem with Bitcoin is that you are buying nothing.   The value of the "coins" is not determined by the meaningless puzzles solved to generate them, but by the perception of the buyer.   Now some smart-aleck readers have replied to this argument by saying that any stock or investment could be similarly construed.

And yes, that is true to some extent, particularly when it comes to speculation and not investment.  When you speculate that a stock price will go higher, you are basically gambling in most cases - and this is true particularly for so-called "tech stocks" which are trading at P/E rations in the hundreds.   You are buying the perception of the value of the stock, not its actual value.  And not surprisingly, these tech stocks - historically - have been particularly volatile, often going way up and then way down in value.

On the other hand, if you are investing based on rates of return, the track record of the company (or government) it is a different beast.  You are trading based on the return on investment - the profits the company makes, the dividends it pays, the interest on bonds that a company (or government) pays.  When you buy a stock that cranks out a regular dividend and has a solid product line and a rational P/E ratio, you are not buying the perception of others, but rather a mathematical valuation which can be calculated.

When gold hit $1000 an ounce a few years back, prognosticators said it would hit $5000 an ounce.  That has yet to happen.  Oh, it will, some day.  Maybe tomorrow, maybe after I am long dead.  Inflation will eventually make it worth that much.  But the idea that gold would go to $5000 an ounce "just because I said so" is idiotic.   Gold, like anything else, is subject to the laws of supply and demand.

Oh, but the supply of Bitcoin is limited, right?  Maybe.  The worldwide supply of pocket lint is arguably limited too - that doesn't make it worth much.   The problem with supply and demand, as I have discussed numerous times here, is prices will swing wildly in response to small changes in supply and demand.

In the housing market example I like to use, if there are 100 houses for sale in Century City and 101 buyers, one buyer will end up with no home.  He will offer 5-10% more in price to buy a house and a bidding war will start.  A 1% difference between supply and demand can result in a 10% difference in price - maybe more.  And on the selling side, the same is true.  If there are only 99 buyers, one seller will lower his price 5-10% to snag one of those buyers and a race to the bottom ensues.

Whether it is stocks, bonds, houses, gold, or Bitcoin, the price paid for the last share, condo, or coin is what the last sucker paid in, not what all shares are actually worth.   And that is why "Market Cap" is a bullshit term.  Just because some sucker today paid $100 a share for ACME company doesn't mean ACME has a "Market Cap" of $100 Million of there are a million shares outstanding.  It only means the last guy in paid a hundred bucks.

Thus, the run-up in the price of Bitcoin doesn't represent the actual value of Bitcoin - something that could be readily demonstrated tomorrow if those 1,000 folks who own 40% dump their coins on the market.   The same is true for Microsoft stock - if Bill Gates sold all his shares tomorrow, the value of the stock would plummet, simply because there would be more stock than buyers.

But what about all those Bitcoin Billionaires?  Everyone is making money at this, why not you?  Well, because you didn't buy it five years ago when no one heard of it.  It is like gold.  If you bought it ten years ago and sold it five years ago, you might have doubled your money.  Today?  You're just parking money.

Today?  Well, Bitcoin has shot up in value - and that is the worst time to buy anything, whether it is a stock, bond, or gold.   But whether this "crypto-concurrency" whose value is backed by nothings, has a long history of volatility, has a long history of corruption and theft, will go up in value further is anyone's guess - and guessing isn't something you should do with your money.

Oh, and it isn't really limited, either.  Bitcoin recently spun off a sister currency, shattering the myth that the number of "coins" was finite.  Not only that, there are a plethora of "me too" currencies which have since come out, calling into question whether Bitcoin will really increase in value over time, or merely be one of a number of such "coins" that can be used to buy drugs, weapons, and children on the Internet.   Oh, and most of these "me too" currencies are rife with fraud, and the collapse of those currencies will likely take down the price of Bitcoin as well, when they ultimately fail.

You don't have to invest in everything, and falling victim to "Don't Want To Miss Out!" syndrome is how people ended up in trouble with tech stocks, gold, and houses, over the last three decades.

But, it seems people never learn, and the snake-oil salesmen come along every few years with a "can't miss" investment (or so they call it) that they can't really explain, but promise will make you tons of money.   And yes, a few people make out big - but the vast majority of the unwashed masses (you and me) lost it all.

In a way, it is like the Casinos.  Yes, a few people win big, the rest of us lose big, and the Casino always profits in the end.   Just don't go to Casinos.  You aren't missing much.

P.S. - our monetization experiment will be ending soon.  The income is paltry and the ads they put on my blog are appalling.  I am sure, for example, that this posting will be bookended by ads for a "free master class" in Bitcoin.   Don't click on them.   "Free" should be your tipoff that it is going to cost you in the end.   Don't be a chump!

Friday, December 8, 2017

Why The Democrats Strategy Will Backfire

The morality plank didn't work for the GOP - why would it work for the Democrats?

With the forced resignation of both Senator Al Franken and Representative John Conyers, the Democrats are heading down a new path and strategy to try to win elections in the future - winning elections being something they have not been very good at recently.

Sadly, their strategy I believe will backfire, based on history and demographics. The Democrats are hoping to claim the moral high ground by arguing that anyone who wishes to run for public office should have a squeaky clean background.

The problem with that strategy is that it has been tried in the past and failed.  You may recall in the 1980's when Reverend Jerry Falwell (pictured above) claimed to lead something called the "Moral Majority" and the Republican Party argued that in order for anyone to run for public office they had to be of a particular moral caliber.

The Republicans argument was that it was irrelevant what a person's position on the issues were or how they would vote on a particular piece of legislation - things that would actually affect the lives and outcomes for the nation's voters.  Rather, we should judge our candidates by the ambiguous and nebulous "moral standards" which often were interpreted in favor of the Republican Party.

Of course, the problem with this type of political argument taking aside the fact that is not really a political argument at all, is that it often backfires spectacularly.  During the Moral Majority crusade era, more than one Republican was forced out of office after being found with his pants down, often in a public restroom.  This is when the term "Wide-stance Republican" came into vogue.

The other problem is that what you may consider a moral or immoral, the other party may consider perfectly fine.  Thus, for example Democrats would not have any problem with a legislature being homosexual but Republicans would.  One man's morality is another man's immorality.

And the same is true in this Judge Roy Moore situation.  If Roy Moore was accused of dating 16 year old boys in Alabama he would be shunned from the Republican party.  But since he was dating 16 year old girls, they are less concerned.  The age of consent at the time was 16 so he was arguably doing nothing illegal.  And Republicans, particularly male Republicans, see little wrong in a 30-year-old man dating a teenage girl, provided she's above the age of consent.  As to the accusations he dated a 14-year-old girl, I am sure many Republicans would sweep this aside as either being fabricated or merely saying "well, she looked like she was 16!"

As the last election illustrated, Republicans, even Republican women, are less concerned with moral issues that electoral ones.  They voted for Trump not because he "grabbed pussy" but because he would nominate a Supreme Court Justice - something that would have a greater impact on their lives for decades to come - long after Trump is dead and gone.   They are more interested in the big picture, not mud-slinging accusations, even if the accusations are true.

And that is why they are supporting Roy Moore.  They care less about his personal life or transgressions than having another vote in the Senate.   Alabamans will vote on the issues, and they would rather have a child-molesting Republican voting on tax reform than a squeaky-clean Democrat voting against it.  The Democratic party seems to forget this - you cannot run for office based on scandals of your opponent.  Somewhere along the line,  you have to run on your platform, and get voters to want that platform.   It is not you they are electing, but your votes on the bills.

So this moral crusade of the Democrats really won't affect the Republican Party much. And I think it could actually turned away many voters from the Democratic party as a result.   While it may cement the loyalties of Democratic women, it won't cause the hard-core Republican women to cross parfty lines.

And for the men?   I have seen more than one man shift uncomfortably on his bar stool when the topic is raised, as he knows full well that he may have played a little slap-and-tickle 20 or 30 or 40 years ago and is worried now about being held to account for it  In the old days pinching asses and cupping breasts was, well, a way of life in many parts of the country.  Such men are not quite ready to embrace the entire pussy hat movement.

The Democrats will do little in terms of gaining votes with this strategy and argubly may turn away male voters.  While no one endorses sexual harassment much less sexual assault, the Democrats risk coming across as a preachy organization, a bunch of Carrie Nation's with hatchets ready to chop up the saloons. This could backfire in a big way.

This entire hysteria - I use the term hysteria not pejoratively but in the actual sense of its meaning - started with the accusations against Harvey Weinstein which indeed were very serious. Non-consensual sex, rape, and sexual harassment in the workplace are not funny. But as the weeks unfolded, accusations started to fly, some deadly serious and others seeming really trivial.  "He made me feel uncomfortable" doesn't quite rise to the level of rape.  Nevertheless, the media treats both accusations at the same level.

While these moral values are important, the Democratic party should think long and hard before making this the centerpiece of their party platform - after all, it didn't work for the GOP in the 1980's and 1990's, either.  And in fact, it raises the hypocrisy level somewhat in that Bill Clinton, victim of the Republican's moral crusade, was protected by the Democrats back then.   Maybe both sides are wrong to embrace morality as a political test.

Because, when you get right down to it, the morality of our elected officials doesn't really affect the country much.  No, little Billy doesn't "look up" to elected officials as exemplars of moral behavior.  Odds are, like most Americans, he can't name his Senators and Representatives anyway.   But the laws those elected officials pass are of more importance to little Billy down the road.  And if we use this "moral" litmus test to see who can and cannot hold office, we may end up with a lot of really shitty laws being enacted.

But hey, we will have the satisfaction of knowing our immoral laws were enacted by moral people.  That's something, right?

Thursday, December 7, 2017

Please Rate Your Purchase - And Buy More Crap!

Are online sites really interested in your opinion about purchases, or are they just using this as a gambit to get you to return to the site and buy more stuff?

I've noticed lately that every online site that I purchase something from sends me follow-up emails asking me to rate my purchase or review the product.  Amazon, of course is the king at this, but other sites such as eBay and Walmart are also at it, too.

Increasingly, I am thinking that they really are not interested in my review of the purchase or rating of the product but rather just using this as an excuse to get me to go back to the site and buy more junk. The online marketers call it engagement - the amount of time people spend on a site and how often they visit that site. The more you're engaged with a particular mercantile website, the more likely you are to purchase things.  They also want to make sure you return to their site and don't go to anybody else's.

Again, Amazon is the king of this sort of thing, with their "Prime" feature - a customer loyalty program, basically, to get people to exclusively buy things at Amazon rather than shop around on price.  Once you have a customer hooked on your site, you can charge them higher prices as they will stop cross-shopping with other outfits.

And again, many people think that sites like Amazon are "tech" companies, but they really just mercantile establishments and these loyalty programs are as old as the hills.  Back in the 1960's, the local gas station or grocery store would give you S&H Green Stamps which you could accumulate to purchase things like toasters and small appliances.  Or they gave you a free dish or glass with every fill-up or with so many dollars worth of groceries purchased, so that you would be induced to come back again and again to get a full set of dishware for your house.

The idea back then was to build customer loyalty - so that you'll always come back to the same store and shop around less on price.  Once you establish customer loyalty, you can then charge slightly higher prices and the customers may not notice, as they are no longer comparing prices with a store across town.

I'm not sure what the point of this is, other than today I'm less and less inclined to accept Amazon's generous offer to rate the purchase of the toothbrush or whenever it was I bought on their site, as I don't sincerely believe they care about my opinion, they just want me to go back to the site and possibly buy more things.

That's the name of the game, really.

Wednesday, December 6, 2017

Dinner's Ready! - No, It's Not!

Why, as human beings, do we try to trick one another?

One of the more annoying things about human nature is how we try to spoof each other through passive-aggressive games. When I was a child, that is to say a teenager, my parents used to always call us down to dinner every evening.

My brother and I did not like to go to dinner, as it was the time my father used to call us out on our various faults or perceived faults and then ridicule and run us down as to why we were horrible people.  Usually this involved the length of our hair, which although it seems odd today, was a big issue back in the 1960's and 70's.  "Why don't you get a God damn haircut!" my Dad would always say.  And of course we would then rebel even further by refusing to get our hair cut.

Since we didn't want to attend dinner with our parents, we always were trying to delay the inevitable. So our parents would call us down to dinner, and we would dilly-dally, often working on some projects such as building a model rocket or model airplane or just goofing off or watching television or whatever.  They would call us to dinner, and we would delay, and they would get more and more angry.  It was a vicious circle.

My father, being a manager, thought that one solution was to call us to dinner early.  Rather than waiting until dinner was on the table, he would wait until five minutes before dinner was ready, and then call us for dinner, figuring that we would dilly-dally for five minutes and arrive just in time as the meal was served.  This might have worked the first time, but once we realized we had been tricked, we adjusted our schedules.

Thus, the next time Dad calls us for dinner, we figured that it was actually five minutes before dinner and then waited ten minutes before showing up.  This became a classic game of passive-aggressive behavior.  Dad now calls for dinner ten minutes early, in which case we would delay fifteen minutes, and so forth.  In the end, it got to the point where he was calling us to dinner before the stove was even turned on and we would delay for half an hour to an hour or more. We really had communication problems, in retrospect.

Mark's Dad did the same thing with the bus.  Since Mark liked to sleep in (and still does) his Dad was always worried he would miss the bus, which he did on occasion.  So the same game was played, with his Dad calling, "Mark, the bus is here!" when in fact, it was at least a half-hour away.  So I guess this is a common game that is played in families.

Now that my parents are dead, I wish that I could say this sort of behavior was in the past and just a mere curiosity of one's childhood.  But it continues on to this very day.  Every morning, we make breakfast and sit down to eat. About 4/5 of the time Mark makes breakfast which is usually some simple 400-calorie egg sandwich or something of that nature. About one-fifth the time I will make breakfast to relieve him of the burden.

Lately, I've been noticing that Mark will do the same trick my Dad did, namely calling me, saying "breakfast is on the table!" when in fact it isn't.  And usually this is because I am working on a blog entry and he gets upset when I am late for breakfast and thus wants to call me in early.

He knows I'm in the middle of a blog entry, and not willing to just abandon it, would rather spend two or three or five minutes finishing it before sitting down to eat.  So instead of waiting until the food is actually on the table to call me breakfast, he has been increasingly calling me earlier and earlier much as my Dad did for dinner when I was a child.  Needless to say this is frustrating, as I thought I put this sort of behavior behind me for good.

The other day, this reached a crisis point, as he call me to breakfast and when I got up and went into the kitchen, I found the stove was not even turned on.  Apparently he thought that he should call me to breakfast almost a half an hour in advance as he felt that I would dilly-dally for that amount of time before sitting down to eat.

I realized we needed to work on our communication skills. The reason why I wasn't sitting down to breakfast when he called was not because I was being obstinate or didn't want to eat, but rather I was in the middle of a project and want to finish it before I sat down.  Breakfast could wait five minutes or ten minutes at the most.

But I understand his perspective.  The days that I make breakfast - granted which are not the majority - it is frustrating to get everything working together, toasting the toast, cooking the eggs, boiling the coffee and whatnot.  And when it all comes together you want to serve it hot and fresh at its peak enjoyment.  And it is frustrating when you realize that your audience is gone missing and doesn't show up for until minutes later when everything is gone cold and no longer is palatable.

I'm not sure what the answer is, other than communication is the key.  I'm not sure that trying to trick or fool your spouse or your children by calling them out earlier and earlier is necessary the answer. Because in a way, that is just deceiving your partner in the deal, and they will realize they've been tricked when you call them early and then show up and nothing is ready.  It isn't fixing the problem, only making it worse.

Maybe it is wrong to show up late for supper with somebody calls you to the table.  But calling people to the table earlier and earlier is not necessarily the solution. Two wrongs don't make a right. And passive-aggressive behavior never results the satisfactory outcome.

Tuesday, December 5, 2017

Cheapness With No Purpose

Taking the owners manual when you sell the car is just cheapness with no purpose.

I wrote before how I was approached by a casting director for a reality TV show.  They wanted to do a show about people who are stingy or cheap.  She indicated in her email that they were looking for people who annoy their family members with their thriftiness.  I got the impression what they wanted was some cranky old Dad who collected pocket lint and yelled at the children to turn the lights off.  And the kids would all say "Oh Dad!" - and it would all be so hilariously funny on reality TV, which of course is not real.

But this got me to thinking, that there are indeed people who are cheap for no apparent real purpose.  Or to put it more precisely, they are cheap, but they receive no benefit from their cheapness. Back when I was a kid in the 1960s, I remember a friend's Dad was selling his car and he took out the owners manual from the glove box. I asked him why he did this, and he said, "it's free so I might as well keep it!"

And I thought, "You might as well just take the spare tire and the jack as well."  And I'm sure there are some people who do just that sort of thing.  And I've seen this in my life, people hoarding old parts from cars they sold off years ago, as if they somehow got a bargain in the deal by keeping things like extra sets of keys or whatnot.  For some reason, rental car companies do this when they sell their cars - stripping out every accessory from the car, such as the floor mats, before it goes on the sales lot.  They usually also keep one of the extra keys for some reason which is a real pain in the ass in an era where an extra key can cost $200 or more at the dealer.

These sort of things are cheap, but with no real purpose.  There's no gain to the individual, and in fact it often is just a pain in the ass, hoarding old owner's manuals and bits from your cars that are no longer of any use to you, and just clutter up your life.

Similarly, even if such things might benefit you incidentally, if you neglect larger items, they seem kind of pointless.  For example, my Dad always yelled at us for leaving lights on, but he left thermostat set at 72 in a house with resistive heat.  The 60-watt light bulb in the living room wasn't causing his electric bill to skyrocket, it was a horribly inefficient heating system and the fact that they had the house so warm in the winter, you could walk around in your underwear without being cold.

Being rationally stingy means perceiving where the real savings are, and in that example, the savings would be in turning down the thermostat, insulating the house, or putting in a more efficient heating system.  Yes, you should turn off lights when they're not in use, but plugging tiny holes in the dam doesn't make any sense when there's a huge breach pouring water.

And of course, today, with LED lights, the savings in turning off lights is becoming less and less important.  A whole generation will be raised not at being yelled at by their Dad for leaving the lights on!

Some readers have taking me to task for not being cheap in every area of my life.  They argue that I should always be looking for the least-cost option, the cheapest thing to do, or avoiding engaging in some activities entirely, just to save money.  I think this misses the point of my blog, which was to live a better and more rich life for less money, not to live like a monk and deprive yourself.

The secret is to save money on things in life where it really doesn't count and thus save money to do things that you really want to do.  I run into a lot of people who do just the opposite.  They complain they have no time or money to do the things they truly want to do with their lives, but spend inordinate sums on things that really are of no use to them. Or worse yet spend inordinate sums of money on things that actually harm them.  Or just squander money on status items to impress others, but not satisfy themselves.

And sometimes this means you miss out on real savings and real opportunities.  Take replacement windows, for example.  We spent about $3500 replacing the windows on our house with more energy-efficient ones, saving a ton of money by doing the installation ourselves.   But the real deal is, every month, our utility bill is about $50 less than before - so it pays for itself.   But many people, convinced that they could not "afford" to replace the windows, would spend the $50 more a month on the utility bill instead - they can afford, so they think, small charges, but can't make big capital expenditures, unless of course, they financed it on a high-interest-rate consumer loan.

It is like the thinking of a server we met on the island.  It was her first day on the job and she said she didn't like paying the daily $6 toll.   We pointed out that an annual pass was only $45, and she said, "well, I'll have to wait until payday to buy that, as I can't afford it right now!"   Payday was at least a week away, yet she was convinced that paying $6 a day for a week was a better deal than coughing up $45 all at once.   But she had the latest smart phone, of course.

Spending is like that - it kills you in little dribs and drabs, not in huge big-ticket items.  That is one reason so many people in the financial press like to attack things like Starbucks.   Buying a coffee at Starbucks isn't going to destroy your finances.  But buying one ever single day of your life while not funding your retirement, is.  It is the slow death of 1,000 cuts.   Recurring expenses like cable TV, cell phone plans, convenience foods, and the like - they are "only" a few dollars a day, but the days pile up and they turn into huge expenses, over time.

And this is where it pays to be cheap.   Which would you rather do, have a coffee at a gourmet coffee shop and eat lunch at a restaurant near work every day for a year, or brown-bag your lunch and bring a thermos and go to Disney with the family?   If your choice is the former, then good for you - but bear in mind it was a choice, not a mandate.  No whining about "living paycheck to paycheck" when you fritter away your cash on a daily basis on trivial things.