I Hope The Protest At Least Made You Feel Better Because It’s Not Going To Do Much Else

“We have met the enemy, and he is us” – Walt Kelly

The protest I refer to is the climate protest that took place in New York on Monday where the guy in the polar bear costume was arrested (note: I’m not talking about the larger protest on Sunday). The protest was intended to send a message to Wall Street. They wanted Wall Street to know that it had to stop destroying the environment and instead invest in renewable energy. They wanted Wall Street to know that they’re angry.

Sadly, I think the only message that the protesters actually conveyed went like this:

“We do this to feel better than everyone else.”

This really makes me wonder just how strong the drugs they’re using really are. Alternatively, they could be doing their best to beat Occupy Wall Street’s record level of ineffectiveness. Consider polar bear guy’s bio in the Washington Post piece linked to above.

“Galvin lives in Shelter Cove, Calif. and once worked as a government contract wildlife researcher. He wears the polar bear suit to provoke discussion. (And because the kids love it.) “I want people to think of climate change in a different way,” he said. “We’re in a crisis, and our economy is driving it. We’re all in danger.” Wall Street, he said, needs to invest in renewable energy — the kind that doesn’t “destroy our planet.” After police ordered protesters to disperse Monday, the polar bear parked his fuzzy behind at the intersection of Broadway and Wall Street, a block from the Stock Exchange. He was among about 100 protesters arrested. Twitter noticed.”

I guess the logic looks something like this.

  1. The greedy assholes on Wall Street fund big oil companies and haven’t invested in renewable energy because they’re greedy/evil.
  2. They really are so evil that they’ll “fund global destruction” just to make a little more money. They also cause carbon emissions.
  3. Occupy Wall Street failed to change anything about how Wall Street operates.
  4. There are no consequences if Wall Street suddenly stops funding activity harmful to the environment in any way all of the sudden.
  5. So we’ll block traffic and some of us will dress as polar bears to protest Wall Street.
  6. ????????????????????????????????????
  7. Profit Wall Street suddenly finds its heart, climate change is stopped, and everyone lives happily ever after.

All this does is make people associate environmentalism with crazy people.

Another Way To Think About The Monty Hall Problem

First, in case you don’t know about the Monty Hall problem, here’s a quick explanation. There used to be a game show called “Let’s Make a Deal” where the contestant would have to pick one of three doors. Behind one of the doors was an awesome prize (money, new car…whatever) and there was nothing behind the other two doors.

Pick a door, any door.
Pick a door, any door.

There are no hints and no way to guess what door hides the prize, so you have a \frac{1}{3} chance of guessing correctly. So far, so good. Let’s say, for example, you pick door number 2.

It’s important to note that the host knows the location of the prize. Before you can open door 2, the host will open one of the remaining doors that does not have the prize behind it. Let’s assume that the host opens door number 1, showing you that the prize isn’t there. The host gives you a chance to switch doors if you want. So, you can either stay with door 2 or switch to door 3. The Monty Hall problem is whether or not you should switch doors.

Almost everyone who hears this problem automatically assumes that it doesn’t matter if you switch, but that’s wrong. You are more likely to win if you switch than if you don’t.

The reasons have been explained in great detail elsewhere and even on Mythbusters, so I’m not going to go over it here. However, during a class discussion the other day, my professor used a great metaphor to explain why the result makes sense.

Imagine that instead of three doors there are 1,000,000 doors. You have a 1 in 1,000,000 chance of getting it right. Say you pick door 42. The host then opens every single door except door 42 and door 328,791. The only way that the prize is not behind door 328,791 is if you guessed correct. In other words, there’s only a 1 in 1,000,000 chance that you can go wrong switching. The same logic applies to three doors.

Reading – 9/23/2014

Alternatively, bubbles could be a massive conspiracy by Goldman Sachs to take over the world...wait, sorry, that's only when we're talking about gold....

Jean-Paul Rodrigue’s phases of a bubble chart.

Challenge: Can You Write An Unbiased Article About The FOMC Meeting That Actually Says Something Meaningful For A General Audience In 541 Words?

This is a multiple choice test. Select the best answer after reading the following article: Vox – “The 4 most important words in the economy right now.”

a) Yes, I don’t like to spend more than 5 minutes validating my political/social/economic biases and I don’t believe I’m biased. The other side is just wrong and the article had TWO charts, what more could you want. Plus, they used facts, so it was unbiased. Time to get back to [insert inane activity of your choice].

b) Yes, if I accept that the boring details actually matter and things are not black and white I would be forced to either do extensive research about the subject or admit that I have no idea. Don’t worry, I vote based on campaign ads, so no harm done.

c) [original in all caps] It’s all a conspiracy between the Fed, Obama, CIA, UN, FBI, World Bank, IMF, CNN, Goldman Sachs, [names of all other major banks omitted], PETA, Greenpeace, NYSE, COMEX, CME, futures, HFT, hedge funds, the ECB, DARPA, Area 51, bankers, politicians, Obama, Yellen, George Soros, NRA, Brady Campaign To Prevent Gun Violence, Congress, GE, MADD, Jack Daniel’s, this blog’s author, MSM, [lengthy list of random blogs omitted], DEA, Communist Party, CEOs, Obama, [...next 70,000 entries in the list omitted], and the Federal Reserve to keep down the price of gold and prop up the worthless US Dollar to keep funding the out of control spending and debt and enrich the [see list] at the expense of the average person. Havent [sic] you seen the price of gas, food, stocks, bonds, water, guns, [long list of random shit omitted], and food and gas!!!!????!!!????!!! Hyperinflation is just around the corner, buy gold or you’ll die because your assets are worth nothing and it will take $50 trillion to buy bread. Only gold will have value because it’s been used for thousands of years and it’s shiny and people don’t change and it’s not fiat currency and can’t be printed by the Fed and Germany in the 20s/30s and Zimbabwe and Ron Paul said so and [50 pages of crazy omitted followed by an offer to sell you gold].

d) No, it’s never that easy.

Eventually I’ll get around to writing about my objections to that article. Here’s an amusing video to hold your attention until then.

My Portfolio – First Year’s Performance – Part I

Early last September I started managing a virtual portfolio using Morningstar’s portfolio manager. I’ve learned a ton by managing this portfolio and I’ve decided to take a few hours and go back over what I did right and what I did wrong. In English, this is going to be a long post. I’d appreciate any comments, particularly if you disagree with my reasoning.

Continue reading

It’s Been 13 Years…

It has been 13 years since the September 11 attacks. I have many thoughts, but few words to share. I was in fourth grade at the time and I hardly understood the magnitude of what was happening. My teacher did have a TV in the room and I vividly recall seeing when the second tower was hit. I went to school in Dallas. I have no story to share. I was not there. I had no family in New York. It would be years before I fully understood just how significant the consequences were. Still, I’ll never forget that day. As young as I was, 9/11 had a profound effect on me. Every year on 9/11 I spend a few hours alone, reflecting on my life, the world, what happened in the past, what might happen in the future, and what it all means.

I have read many of the first hand accounts of what happened and recollections from people thousands of miles from New York. Below are two accounts of 9/11 that I made a point of reading and thinking about today. I think both are worth reading if you can make time for it. As I said, I have no story to tell, I can only point you to the stories of others.

Reading 9/11/2014

Politics/International

Finance/Economics

  • I can’t believe France is not going to make its deficit target this year. I mean, it would have taken math or some other magic to figure anticipate this problem. (BBC)
  • Two articles by Barry Ritholtz that are worth reading. First, why didn’t bankers go to jail (Bloomberg View). Second, who has to pay for their crimes (Bloomberg View).
  • Josh Brown has a great chart showing that income fell for the bottom 80% of earners. (The Reformed Broker)
  • Who controls interest rates. (Pragmatic Capitalism)

Law

  • Ken White “…when journalists don’t take even minimal steps to find out what the law actually is, they are promoting civic ignorance.” Umm…with a rare exception, I think journalists would rather let the world burn than try to understand whatever they’re reporting on. There’s a reason I rarely read mainstream financial news and I tend to read finance blogs instead. After reading Ken’s blog, I stopped reading mainstream legal news. Anyway, here’s the link. (Popehat)
  • I hadn’t heard about the Wisconsin “John Doe” case. Worth looking into. (Overlawyered) also (Cato)

That’s all so far today. Suggest anything you think is worth reading in the comments.