Jack’s Links

Was out of town most of the last couple of weeks. Moving links to Saturdays going forward.

Good post from Ben Carlson on benchmarking. For the individual investor, just being aware of what a benchmark is and why you should pay attention to one puts you way ahead of the game. I’m always amazed how many “sophisticated” investors (endowments, corporations, etc.) spend months selecting an investment manager, and then don’t have a benchmark to compare their performance to going forward.

Scott Sumner on gov’t mandated salary increases and market “tantrums”. My rule of thumb is that anyone who refers to market actions as a ‘tantrum’ is probably not very smart, just got whipsawed in the market, or both.

Scott Alexander on happiness in China (and elsewhere). I can’t help but jump to the (obvious?) conclusion that happiness is felt on a scale relative to something other than the rest of the globe, e.g., their fellow countrymen, the same scale on which the change in wealth is measured.

Promising study on ‘tracking’ (the practice of separating high-achieving students from their peers).  Everything I know intuitively and from my own anecdotal experience says that being with higher-level people day in and day out results in better outcomes. The really interesting part is how there is no negative effect on those who aren’t elevated to the higher level.

Finally, Arbital, which I think has a chance to be a huge step forward in house people learn about concepts. Their (I don’t know what to call it, curriculum?) Bayes’ stuff was really fun to go through. Since if we round to the nearest 10, I have 0 readers, I don’t think they’ll mind my link.


Jack’s Links

A post on negative gearing in Australia – I’ve noticed attitudes there about real estate seem to be similar to the way millenials in the US view real estate. Whatever happens in Australia might be a good leading indicator. Lots of good points from John here, I think another factor that influences people is the assumption that real estate values will continue to appreciate in excess of interest rates.

Good post on timing the bottom (or the fiendish difficulty thereof) from Ben Carlson. Bull markets tend to start hard and fast, but there can be lots of head fakes during a bear market.

Spending in retirement – Wade Pfau gives some thoughts on sustainable draws and a welcome refresher on the 4% rule, something that has become such a well-known guideline that many professionals don’t remember where it came from or how it should or shouldn’t be applied.

Coordinating work & leisure has value – this is one of those second level ideas that seems obvious once it’s brought up. I wonder what sorts of implications this has on the ‘gig economy’ and work-from-home jobs that are becoming more common.

Tariffs and unintended consequences – fun read on some of the accidents of history that affect the goods and services (mostly goods) that we have available today.

No pay-wall paper on the value of financial advisors – I’m not sure there’s much here that doesn’t fall into the self-selection category (where people who hire advisors are already much more likely to have better outcomes), but some interesting differences found between people who call themselves advisors but do no actual planning and those who are more comprehensive.

Children who start school later perform better in the labor market.

Zappos’ holacracy – I’ve been a fan of Zappos for a while, I really liked their famous policy of offering new trainees a bunch of money (I think it was 2-3 months salary or something) to quit. This article was fascinating and extremely confusing. I can’t help but feel like they are onto something, but think they are onto something totally different and are just sprinting down the rabbit hole at full speed. I can’t imagine working there.

Jack’s Links

A dozen things from Richard Thaler: lots of interesting thoughts about how the academic collides with the market, EMH is a theme.

Children can tell abstract expressionist art from work by animals and other children: the real kicker here is that they can’t actually “tell”, it’s just that children as young as 4 are already capable of rating works by animals as “higher quality” than abstract expressionism. Contrary to the researchers’ thoughts, this does not seem to me like a good result for fans of the abstract.

Reaching training for babies: This makes a ton of intuitive sense and lines up well with a lot of pet theories I have about skill development in general. I think there’s a decent chance (25%?) that velcro mittens become a real thing.

The relationship between reading and writing: A lot of parallels to other disciplines here, it’s not just about creating, it’s about consuming and understanding what’s been done, what’s being done, and what people think can’t be done. I really liked the quote “The only people for a serious writer to compete with are the dead that he knows are good.”

Words to eliminate from your vocabulary: I agree that most people would do better in their speaking and writing to take heed (especially using ‘but’ when they should be using ‘and’), although I wonder what the other side of the coin when asking for help vs. assistance is. Maybe people are more likely to aid you if you ask for assistance than help and it’s a win-win? I’m not sure.

File Under ‘Markets Working As Intended’: A NYT article about the fact that if you are diagnosed with depression you will pay higher insurance rates. This article has some of the most confusingly chosen quotes I’ve ever seen, e.g., “It is scary to think that I am less insurable when I am likely someone who needs life insurance more than those without mental health issues” which is not so much ‘scary’ as it is ‘obvious’. Adverse selection is something insurance has been grappling with since the day it was first used.