Muttroxia

I read a lot of financial books. Personal finance, economic theory, the stock market, real estate investing, all sorts of stuff. Here are five of the best, in no particular order.

1. The Wealthy Barber (by David Chilton): This is the one that started it for me. At age 25, I came across this in the form of a TV show on PBS. I was intriuged enough to get the book from the library. I hadn’t even known there was such a topic as personal finance. This book was a revelation to me. I understood what compound interest was, I understood what budgeting was, I understood what investing was, but I had never seen it put together under one topic. I started saving 10% of my paycheck the next day, and I’ve never looked back.

   The book takes the form of four people, from various walks of life in various financial situations, getting lessons from a barber. Why a barber? Because he’s rich. And he did it in a way anyone can copy. The point of this book is to show how basic financial knowledge can make just about anybody wealthy over the course of a lifetime. If a barber can do it, you can too.

   The Millionaire Next Door (by Thomas Stanley and William Danko): This one is a bit different than the others, because it’s not prescriptive. It’s essentially a giant research study. The study looks at the millionaire next door. They interviewed hundreds of people, to find common factors in those who were successful and those who weren’t. The authors don’t tell you what to do, but the conclusions are obvious. When you look at the group of millionaires and see 80% of them have always bought their cars used, and the group of millionaire-looking-but-actually-very-poor people and see that 70% of them buy all their cars new, it’s hard not to draw the obvious conclusion.
2. The Only Investment Guide You’ll Ever Need (by Andrew Tobias): So now you believe in personal finance, what do you do with all that money you’re saving? This book is a very clear and funny guide to all the different investment vehicle. It walks a fine line between giving you specific advice based on market conditions, and not so specific that the advice becomes obselete a year later. This book gets huge props from me by having a solid page about Black Knight 2000 in the first chapter. Gimme your money!!
3. The Money Game (“Adam Smith”): A golden oldie, this book came out in 1976. This book is about The Money Game. There’s a lot of parts to finance that are pretty dry, this is about all the parts that ain’t. The gnomes of Switzerland, big oil, the psychology of traders, inside Wall Street… there’s a reason this still sells copies thirty years later. (Adam Smith was a pseudonym used by the author, he revealed his indentity years later.)
4. The Number (by Lee Eisenberg): If you’ve thought about personal finance at all, you’ve thought about “The Number”. It’s the goal you’re shooting for, it’s the number that means you can retire. It’s also known as the “F.U. Number”, the idea being that once you have this amount of money, you can tell anyone, F.U! without worrying about the consequences.

   But how do different people come up with the number? Why is it so different for different people? How does it change? Can it be zero? Do you have a plan to get there? A real plan? Are you on track? What do you do when you get to it? Why did you pick that number? What exactly do you plan to do with that money?

   If you’re interested in the questions, this book is for you. The author is not a professional financier, he works around the questions as an outsider to the institutions that are built around The Number. There is more psychology than numbers in this book. A very rewarding look at the “Why” over the “What” of savings and personal finance.

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And here are three authors to stay away from.

1. No to Robert T. Kiyosaki (“Rich Dad, Poor Dad”): His basic message is reasonable enough. You won’t get rich by working for the man and saving, you need to be your own boss and have multiple income streams working for you. Unfortunately, it’s not true. Or rather, it’s true for some kinds of people, but wrong for most.

   This wouldn’t be such a bad thing, except he also provides absolutely no hard reasoning, no logic, no facts, no evidence of any kind to back up his theories. What he provides is anecdotes. Great anecdotes so convincing that you don’t step back to think if the anecdote proves what he said it proves. And then (of course) it turns out that whole damn book is a lie, there is no rich dad or poor dad, and even the anecdotes are fake. You can do well following some of the monetary philosophies in this book, but you can also throw a lot of time and money down the toilet, money that would be making you a millionaire if you’d paid attention to better books. (Kiyosaki has done well by his own advice though, the Rich Dad, Poor Dad empire provides him with everything he will ever need.)

   This guy says it better than me.

2. No to The Motley Fool: I read three of their books, but by the third one I was wondering why I bothered. They start with some sound basics. Compound interest, savings, index funds, etc. Then they must have got bored, because the rest of everything they write is specific advice for specific people with specific strategies in specific markets. Everything they write is guaranteed to be outdated within five years.

They have two specialities. First, the contrarian advice. When everyone else advises x, you can bet that their website will have an article that advises y. This is given because it fills books, and if they get a lucky hit, they look like geniuses. Second, the backwards facing model. Take six of the top-ten Dow stocks in April ranked by reverse shoe-size, or some such garbage, and you find an amazing 14% rate of return over the market. Wow, that sounds incredible! Then you think about all the millions of theories that work great for years and years, until they don’t. (Exercise for the economically-trained reader: prove why any theory of this type is inherently self-defeating, and cannot be a successful long-term strategy.)

1. No to David Bach (“Smart Nouns Finish Rich”): There’s nothing really wrong with his books. He doesn’t say anything that’s wrong. It’s just that there are hundreds of better personal finance books out there. He’s incredibly glib and reasons by anecdote just like Kiyosaki. There is one thing he’s very good at though. He can take one simple idea that would take me one long blog post to explain, and he can stretch it to a full length book, which will unfailingly sell a million copies. The guy is still milking his precious “latte factor.” (Get it?) At this point, he tours around the country collecting his speakers fees. Every once in a while someone in the audience will say something interesting, then he’ll steal their story and write another best-seller about it. Again, the advice he gives is not wrong, there’s just better sources out there.

For years now, I’ve kept 2-3,000 songs in .mp3 form on my various computers and mp3 players. I run it on shuffle, and I’m always guaranteed to hear something good. Shuffle is such an obvious feature that Apple can put a crippled version of it’s Ipod, call it an I-shuffle or something, and sell millions of them.

The feature I’ve always wanted is a weighted average shuffle. Each song has a “slider”, that goes from 10% to 1000%. 100% is the default setting, and it means that a song has a normal change of being played. If you have 500 songs, it comes up 1 in 500 times. If you set it to 10%, it has roughly one tenth of it’s normal probability of being played, and 1000% means it has roughly 10 times it’s normal probability of being played. I suppose we’d probably label them “less often” and “more often” for the innumerate.

For example, I know every Who song inside out. I won’t ever actually delete Baba O’Riley from the playlist, it still rocks the house, but I don’t really need it to come up very often. On the other hand, I got a few new Wolfmother and Martha Wainwright tracks and I would like those to come up a lot more so I can learn them and decide whether to keep them.

I haven’t yet seen an .mp3 player that will do this. I’ve seen custom playlists, ranking with stars, and other versions of filtering, but not what I’m describing. Anyone seen one?

Sidenote 1: Mathematically, I see it like this. If there are 500 songs, by default each song has 100 “entries” in the pool of songs, so the random number generator is choosing from a population of 50,000. The percentage is applied to the 100 entriess. A song with a 10% setting only gets 10 entries instead of 100. That is why I said “roughly” one tenth, it’s odds actually go from (100/50,000 = 1/500 =) .2% to (10/49,910 = 1/4991 =) .020036..%. (As I write this, I’m laughing that I bothered to work out this nuance for a completely imaginary feature.)

Sidenote 2: I am apparently the only person in the world with a handheld .mp3 player that is not an I-pod. It amazes me that I-pod has, like Kleenex or Xerox or Frisbee, come to describe the entire field of products. My brothers Prius comes with an Ipod jack. That bothered me because it was so exclusionary, very poor technological. Then I found out it’s just an ordinary input jack, that they choose to market as a I-pod jack. Of course that bothered me because it was so demeaning to .mp3 player I had. I’m very easily bothered.

Some recent spam I got:

…I am a friend and attorney to the family of the oil tycoon Mr James Howard Marshall 2 before his death; he made an investment here that I was later instructed to prepare a will on the investment for his son Everett Pierce Marshall3 shortly after they settled their differences…Meanwhile this will was prepared in my chambers by me with all copies in my possession.

I was supposed to hand over the will documents to the son Mr Everett Pierce Marshall3 at the end February 2007, the maturity date of the investment. But unfortunately Mr Everett Pierce Marshall3 the son did not make it to February 2006. He died a sudden death on June 20th 2006 trying to stop Anne Nicole Smith his father last wife from claiming the $475million that was initially awarded to her that was later over turned by the federal court in California.

Now there is a need for me to prepare a new will to claim the investment funds here since nobody would ever come for it, than to loose the money to the bank. You should let me know how much percentage you would like to get to enable us work together as partners, all I need is honesty. I will eventually let you into the amount of the investment if we both agree on mutual terms. [etc, etc…]

I just love it. Con men watch the news. When life gives you Anna Nicole Smith, then make Nigerian-scam-ade.

Why is the GOP pessimistic about 2008?

And Katon Dawson, the party chairman in South Carolina, expressed confidence that the party would recover from any internal damage it suffered as its candidates took shots at each other.

“We don’t do well until we have a common enemy,” Mr. Dawson said. “Right now, our enemy is ourselves.”

This is the way the modern conservative movement defines itself. Mr. Dawson, a state party chairman, can only think about the party and strategy in terms of enemies. Enemies all around, which one should we pick!? We don’t know how to do anything except fight! I sure hope there’s some enemies around, we’re in trouble if things are going well.

Here’s a thought: Spend some time thinking about policies. Thinking about people. Thinking about the war, the deficit and the economy, the politicization of non-partisan government agencies, etc. If you come up with some good ideas that people like, maybe they’ll, you know, vote for you. Just a thought.

I have your garden variety thermostat, the basic model from Home Depot or Lowe’s — it’s pretty much the same one everyone has. It’s my third one, they all work the same way. The same wrong way.

It divides the week into days, and the days into 4 timezones. You then program any of these time-sections to a certain temperature, and voila, it takes care of it. Why they even come with suggestions, for instance you can easily select either Winter or Summer for their pre-defined programs.

And if you want to go manual? Even better, you just push the up or down button until you hit the right temperature and walk away. Sounds pretty good, no?

No.

You walk away and everything is fine, until you hit the next time-section. Then it goes back to the programmed temperature. In effect, it overrides your override. Suppose I go on vacation for 5 days. Or I’m sick and need a little more heat than usual. There’s no way to simply tell it, “stay at 72,” because a couple hours later it will decide that 68 would really be better all things considered.

This is my third thermostat as a homeowner, and all three have had this “feature”. The weird part is that it can’t take any more effort to make it work the right way. How hard it is to build a manual override that actually, you know, overrides the other programming?

It’s a small thing, I know. But when I order something from a menu, I expect to get what is described. If I order a sandwich and it unexpectedly shows up with mayonaise all over it, that’s going right back to the kitchen. If I had wanted mayonaise, I would have ordered mayonaise.

This is surprisingly common with desserts. For some odd reason, any establishment that wants to look upscale can’t resist serving anything chocolate without a criss-cross pattern of rasberry sauce all over the plate. Look, your menu said “Layers and Layers of Fudge Cake with Chocolate Truffle Cream and Chocolate Mousse”, it didn’t say anything about putting red sauce all over everything. If I had wanted red sauce, I’d have ordered it. Don’t make me feel weird for sending back dessert.

Start with a map of the world thousands of years ago. In 90 seconds of animation, watch the spread of the major religions sweep over the world. Very neat, and educational to boot.

Great video on China, Youth, MySpace, Information, Technology and other trends, all of which seem to be moving a lot faster than you would think. Some sketchy extrapolations, but well worth it.

The Worst April Fools Day pranks ever. Number one and two are just sickening. (The best ones are here.)

You may have heard about the FBI’s abuse of NSL (National Security Letters). Here’s a fascinating first hand account from a recipient. The Washington Post doesn’t usually post anonymous op-eds, but in this case, they had no choice thanks to the crazy laws.

Postmodernism Generator. Everytime you go here, you get a brand new paper on postmodernism. The catch is that it is all total gibberish, but indistinguishable from actual postmodern gibberish. (If you doubt they are indistinguishable, read more.)

“I was turned on the other day to the fact that Time Magazine’s Tony Karon has a blog about foreign affairs, Rootless Cosmopolitan. It’s really good. Good enough that a ten day old post on the subject “What’s Iraq Actually About Now?” is very much worth your time. It’s an excellent question to ponder when you hear debate about whether or not the surge is “working” — working to do what? And why?”

Was it Ally McBeal that started this awful trend? Was it CSI? I can’t remember anymore. I just know that every drama show on TV features prosperous people working at rich prosperous jobs, and none of them can afford decent lighting! Scene after scene takes place in dimly-lit ambience.

The upscale law firm in Boston Legal doesn’t choose to save money by not putting every employee in their own private office, or renting space below the penthouse, or even buying flourescent lighting. They save money by turning down the expensive lights that are there. That same pecuniary concern doesn’t seem to affect the floundering firm of Dunder Mifflin, who may be losing money but can always afford to see. Roseanne Conner had her lights turned off when she couldn’t afford the bill, but never turned them down.

The worst offender? The West Wing. I can believe a lot, but I cannot believe that the Office of the President of the United States of America, the most powerful man in the world, cannot figure out a way to keep staff working in good lighting.

C’mon!!

One of Bush’s attacks on Congressional efforts to end the Iraq war is that giving any specific timeline emboldens enemy attacks, and harms the troops. He is wrong.

Let’s say the bill passes with a clear deadline. Imagine it is Iraq, two weeks before that date. Question One. You are an American commander. Do you act:
(a) more aggressively
(b) about the same as ever
(c) less aggresively?

The answer is c. There is no point in risking your mens lives to achieve any short term goal when you’re just going to be packing up in two weeks. In fact, you probably wouldn’t take any offensive action at all. The only engagements you would be involved in would be defensive. Why look for trouble when there’s nothing to gain?

Question Two. You are an Iraqi fighter. Do you act:
(a) more aggressively
(b) about the same as ever
(c) less aggresively?

The answer is c, and for the same basic reason. There is no point in risking your life to achieve any short term goal when you would achieve the same goal by just waiting two more weeks. In fact, you probably wouldn’t take any offensive action at all. You’d continue the civil war of course, but not bother with the Americans. What’s the point, they’re leaving anyhow.

The mere declaration of a specific withdrawal date ought to produce a natural ceasefire before that date. I chose two weeks, but maybe the effect is longer. Maybe it’s a month. Maybe it’s two. Maybe more. Any way you slice it, the declaration of a withdrawal date ends up saving the lives of American soldiers.

This is the cover of the “users manual” for my new mouse:

It’s a mouse! Not a pointing device, a mouse!

Those of you not fortunate enough to live in the great Commonwealth of Massachusetts may have heard about our new Governor, Deval Patrick. Only the second African American Governor in American history, Patrick, a first time candidate for any office, won both the primary and the general election in a knockout. Hailed by his legions of die hard supporters as an agent of change and a true liberal, the expectations for Patrick were sky high after 12 years of failed Republican Governors. But after gliding through a virtually flawless two year campaign, Patrick has been nothing short of a disaster during his first two months in office.

Staking out a clear position in favor of gay marriage, and refusing to make a pledge against tax hikes, he quickly won over the liberal base of the Massachusetts Democratic Party. Patrick is as eloquent a speaker as you’ll find, and he criss-crossed the Commonwealth sweeping people off their feet. Without ever being too specific about what his plans were, what won people over was his intention to put an end, as he often said on the stump, to “Politics as usual.”

“I don’t have any use for politics as usual,” Patrick said at the state convention in June of last year. “I’m here to put an end to politics as usual.”

Running against Attorney General Tom Reilly, who was never a true Beacon Hill insider, but nevertheless an old White Irish guy, Patrick represented something new. His supporters counted on him to be the renegade outsider who would put an end to the patronage and special interests that have dominated Massachusetts politics for so long. He pledged to fill his cabinet with fresh faces, and flush out the backroom cigar smoking insiders who know their way around the State House better than their own living room. In his first two months in office he has done just that, and it shows.

After a weeklong series of inaugural balls and galas celebrating himself at a cost of more than one million dollars, Patrick was mostly silent during his first month. Aides said he was quietly working on where to make cuts in the state budget to help offset the tremendous deficit. While cuts were made in some areas, others saw a rather healthy increase in spending.

For example, there was a hefty increase in the area of office drapes. Patrick spent $12,000 dollars on fancy new drapes, and another $15,000 on new couches and other furniture for the Governor’s office, courtesy of the taxpayers. Another area that saw an increase was “Governor’s official state car,” which has traditionally been a reliable but modest Ford or Chrysler. For Patrick, it’s a fully loaded Cadillac Coupe Deville, for a mere $46,000. It’s truly amazing that someone whose entire campaign was based on symbolism and rhetoric would fail to see the problem with a multi-millionaire Governor spending $83,000 in taxpayer money on new furniture and a suped-up Cadillac. It was only after the Boston Globe reported on this for four days straight that Patrick partially reimbursed the state for his new office furnishings and fancy wheels.

Mistake number two came the same week, when it was revealed that the administration had made up a new position in state government titled “Chief of Staff to First Lady.” Since Patrick’s wife has no official state duties whatsoever, she does not actually have a staff, but she did have a Chief of Staff. Amy Gorin, a campaign contributor from Wellesley, the fourth wealthiest town in Massachusetts, was briefly in charge of Diane Patrick’s “Scheduling” for a mere 72,000 taxpayer dollars per year. The really pathetic thing about this is that Ms. Patrick does not need someone to handle her calls and schedule her appointments, since she already has a secretary. The reason I know that is because her secretary’s phone number is listed right here on Ms. Patrick’s bio on the website of Ropes and Gray, the major Boston law firm where Ms. Patrick is a partner. After the Boston Globe reported on this, Gorin resigned and her position was eliminated.

But public relations mistakes are merely signs of a rookie who does not understand the nature of his office. The real reason that I spent a year and a half warning everyone I spoke to not to vote for Deval Patrick was because of where his heart really lies: it’s not with the grassroots activists he energized, or the working class he claims to represent, it’s with the big businesses whose corporate boards he served on that helped get his campaign off the ground. Most disturbing to me was his service on the board of directors for Ameriquest, the predatory lending firm run by Roland Arnall, the single biggest contributor to President George W. Bush in 2004. (Click here for some further reading on the moral giants at Ameriquest.) Patrick made over $1.5 million for his service on the board, money made mostly off the backs of poor minorities, and money that he used to kick-start his campaign.

During the campaign, Patrick used poetic slogans and inspirational speeches filled with glittering generalities, masterfully selling to the public the utterly fantastic notion that his deepest sympathies lay anywhere other than with corporate America. After the décor and Cadillac fiasco, and the assistant for his wife, Patrick showed his true colors with mistake number three.

In mid-February, Patrick placed a phone call to former Clinton economic chief Robert Rubin on behalf of his former employers, Ameriquest. Rubin is now a top executive at Citigroup, a major financial services company. Patrick called to urge Rubin to lend economic support to Ameriquest, which was badly in need of financial help. Apparently aware that a Governor is not supposed to be trying to influence private business transactions, Patrick claimed he was not calling as Governor. “I made this call solely as a former board member,” Patrick said. Sorry big fella’, but you’re the Governor whether you’re swearing in a Judge, kicking your feet up in the corner office, or taking your kids to Chucky Cheese on a Saturday. When you call Robert Rubin, he’s not thinking of you as a private citizen who once worked for Ameriquest, he’s thinking of you as the Governor of Massachusetts.

Perhaps this series of pathetic moves can be explained by looking at who the Governor has surrounded himself with in key positions. Think the era of patronage jobs is over in Massachusetts? Puh-leeze!!!!!! Consider Patrick’s appointment for Deputy Chief of Staff. After a nationwide search and a review of thousands of resumes, Patrick settled on 25 year old Brendan Ryan. (Ever seen The West Wing? It’s Josh Lyman’s job for the Commonwealth of Massachusetts.) For further reference, Patrick’s predecessor Mitt Romney’s Deputy Chief of Staff was Renee Fry, whose previous occupation was the Director of the Department of Business and Technology, and prior to that she was the Undersecretary of Economic Development. For all of Romney’s faults (and there are plenty) his administration hit the ground running. Brendan’s previous occupation: driver for Deval Patrick during the Deval Patrick for Governor Campaign. (Yes…driver. As in, he drove the car and parked it at the event and then drove it to the next event.) He’s 25, and the number three man in the Governor’s office, at the mere cost of 95,000 taxpayer dollars per year. If that doesn’t say “Politics as usual,” I don’t know what does.

How does this sell? You can buy chocolate, or vanilla, or strawberry, in any proportions. But instead, you choose to get exactly equal portions of each, all shoved in the same container, why? Why would you limit yourself like that? You can’t even eat your favorite flavor in isolation. You eat vanilla, some strawberry’s gonna get in. That’s just how it is.

And strawberry. Strawberry? What the heck is strawberry doing there? Who, at any time, would rather eat strawberry than chocolate or vanilla!? This was meant to be rhetorical. But informal polling has convinced me that there’s an awful lot of strawberry weirdos out there. To all of them I say, you are seriously weird. Seriously.

Growing up, my father would occasionally purchase neapolitan, just for kicks. And our family would destroy the chocolate and vanilla in about, oh, 35 seconds. The strawberry would just sit there. And sit. A few months later, my father would get a strange urge to buy another carton of neapolitan, and it would repeat. Eventually there would be three or four boxes of ice cream left, each with one carefully sculpted strawberry third remaining. Once in a while, my father would see these and begin to lecture us about waste and how much things cost.

How did strawberry even get in there? Rumor has it those were the most popular flavors when neapolitan ice cream was invented. I think there was just a really good strawberry salesman somewhere! (That’s a ripoff of Brian Regan’s cranapple bit by the way.)

It’s hard to believe they are still the most popular flavors. And indeed, they are not. Per the International Ice Cream Association, here are the top 10 flavors.

1. Vanilla, 29%
2. Chocolate, 8.9%
3. Butter pecan, 5.3%
4. Strawberry, 5.3%
5. Neapolitan, 4.2%
6. Chocolate chip, 3.9%
7. French vanilla, 3.8%
8. Cookies and cream, 3.6%
9. Vanilla fudge ripple, 2.6%
10. Praline pecan, 1.7%

(Isn’t it funny that neapolitan is counted as it’s own flavor?) So it seems that the strawberry should be replaced with butter pecan. Which just sounds sickening, honestly.

That site has other gems. We all know the “I scream, you scream, we all scream for ice cream!” song, right? Well, they have the complete lyrics!

…Iceberg, Lindberg, Sol Berg and Ginzberg,
Ice cream Cohen.
I scream, you scream, everybody wants ice cream.
Rah, rah, raaazberry!

No, they really don’t write ’em like that anymore. They’d get picketed.

Update: This is from 2019. Neapolitan is now at number 10. This is a good trend. Cookies n’ Cream is the best flavor ever invented, and has moved all the way up to number 3.

1. Vanilla
2. Chocolate
3. Cookies N’ Cream
4. Mint Chocolate Chip
5. Chocolate Chip Cookie Dough
6. Buttered Pecan
7. Cookie Dough
8. Strawberry
9. Moose Tracks
10. Neapolitan